Three Donor Investment Choices: What Would You Do? Adrian Towse Office of Health Economics, United Kingdom

Agenda Choice 1. Funding R&D as compared to greater access to existing treatments? Choice 2. Which PDP? How to measure PDP performance? Choice 3. To fund Push or Pull – the role of AMCs?

Choice 1: The Basic Framework R&D INVESTMENT OUTLAY FOR DONOR Annual cost for each phase of R&D Duration of each phase Current distribution of PD PPP programs by phase Failure rate by phase Cost of getting products to market $X R&D RETURN FOR DONOR Estimate expected quality of product Estimate the likely take-up of product in target markets Estimate the number of DALYs averted in target markets DALYs DALYs averted across countries R&D Cost-Effectiveness Combine DALYs averted with R&D cost estimates to generate cost/DALY ratio Donor decides how that compares with other options

TARGET REGIONS

Efficiency frontier PD PPP technology pushes efficiency frontier outwards

Introduction of new technology

Base case results for notional portfolios

Conclusions and Policy Issues Funding R&D via PDPs for neglected diseases offers good value to donors. Crucial feature of the donor-funded R&D approach is the extent of participation/co-operation required from the recipient countries. If the latter do not adopt a new technology in spite of its proven cost-effectiveness, then the donor’s R&D funding will have been wasted. Donors could end up in the position of having to fund take-up to ensure that the fruits of its R&D investment are realised. Linked to this is the issue of recipient governments placing a very low willingness-to-pay value for a DALYas compared to the donor.

Choice 2:PDP metrics -FSG Report It is possible to classify PDP performance metrics in a way that makes sense for PDPs and donors. Four areas of performance –R&D to Commercialisation –Organisational Strength –Enabling Environment –Health Impact

Portfolios Donors have to deal with the low likely success rates of individual projects. The best way to do this is through a portfolio of investments. PDPs are better placed to manage a portfolio of projects. PDPs need quantifiable objectives to enable donors to assess performance. Donors should seek to align funding with objectives: –Productivity goals can only be achieved with realistic portfolios. Having a portfolio that is large enough to deal with project failure is crucial. –Supply of candidate projects is an issue in some disease areas. There is no point in PD-PPPs building a portfolio that is larger than justified by the scientific merit of the projects available.

Measuring Performance: Use of productivity goals: –specific goals help funders evaluate performance –some PD-PPPs do have measurable goals But funders still have to judge whether goals are ATTAINABLE, REALISTIC or TIMELY

Choice 3: Push versus Pull Push Initiatives PD-PPPs Funding for specific trials or development /discovery programmes within specific objectives of achieving licensed products. ADIP Activities to support market access for key products in development. Pull Initiatives AMCs Funding to purchase products that have not yet completed development, including a return on R&D. Supply contracts Funding to purchase products already on the market (it does not reward R&D)

Factor Estimated effect on donor discounted cost/DALY averted 1. Speed of uptake of productVery High 2. Cost of capitalHigh 3. Higher product qualityHigh 4. Success rate (especially Phase III)High 5. Cost of developmentMedium / low 6. Cost of discoveryMedium / low 7. R&D timelinesMedium / low Results of sensitivity analysis

Push versus Pull

Summary