In addition to identifying viable markets in the developing world, BVGH plans to identify situations where alternative mechanisms
are needed to improve the market opportunity for a specific product, explains BVGH Executive Director Wendy Taylor. One strategy
is to create advance market commitments (AMCs) or advance purchase commitments (APCs), which have gained support from European
financial ministers and the World Bank. Current scenarios call for sponsors (governments, donors, international organizations)
to guarantee to pay a company that develops an effective vaccine or treatment for a specific number of doses at a certain
price. This might be a $3-billion market guarantee for, say, a malaria vaccine at $15 per treatment for the first 200 million
doses. The recipient country would contribute a small co-pay, with the sponsors absorbing the remainder of the bill. Once
the manufacturer realizes the $3-billion market commitment, gaining a reasonable return on its investment, it would agree
to drop its price to designated countries to ensure them access to the product over the long term.
Similar mechanisms have been included in BioShield legislation in the US in an effort to encourage industry to develop counter-terrorism
therapies. To date, these measures have failed to attract broad manufacturer participation on the domestic front, largely
due to liability concerns and uncertainty about future returns on investment.
While the noticeable increase in funds available to support treatment programs to combat AIDS and other third world diseases
may spur biotech R&D in this area, manufacturers still face many challenges in producing quality products and ensuring their
proper distribution in developing countries. Rising global demand for AIDS therapies already is spurring drug counterfeiting
and illegal diversion of low-cost fixed-dose combination drugs (FDCs) from third world markets. The United Kingdom's National
Health Service reported in April 2005 that it had erroneously purchased ARVs that were illegally diverted from Kenya. The
Global Fund to Fight AIDS, Tuberculosis and Malaria recently halted its AIDS programs in Uganda after audits uncovered discrepancies
in program accounts.
To prevent such problems, donors and health programs seek to establish secure distribution and warehousing systems to manage
the fast-expanding quantities of drugs and medical products going to developing countries. PEPFAR and the US Agency for International
Development (USAID) are designing their own secure supply chain management system (SCMS) to procure pharmaceuticals and other
medical products for the program's 15 focus countries. USAID is negotiating a contract, which could amount to $7 billion over
five years, to establish a "one-stop shopping point" for medical supplies which will also negotiate low prices, prevent drug
theft and diversion, and verify product quality.
Many observers consider the PEPFAR/USAID initiative redundant with similar programs already under development. PEPFAR officials
claim that local governments and third-party donors will have the option of using their own systems instead of the PEPFAR/USAID
SCMS, but organizations receiving PEPFAR funds may well feel pressure to adopt the US program.
Distribution is just one of the many challenges that biopharmaceutical manufacturers face in developing and producing new
treatments for needy populations. But the situation also presents an opportunity for industry to demonstrate its ability to
provide affordable, effective treatments for deadly diseases affecting so much of the world.
Jill Wechsler is BioPharm International's Washington editor, 7715 Rocton Avenue, Chevy Chase, MD 20815, 301.656.4634, email@example.com