AsianScientist (Oct. 26, 2015) – When it comes to drug development, the invisible hand of the market can sometimes lead to less than satisfactory outcomes. Case in point: neglected diseases, conditions that disproportionally impact the poorest countries in the world. The reasoning is simple: because drugs, diagnostics and vaccines are extraordinarily expensive to develop and poor countries are unable to pay for them, there is little financial incentive for for-profit companies to invest limited research and development (R&D) resources into diseases like HIV, tuberculosis and malaria.
In the interest of public health, governments around the world have stepped in to fill the gap. In particular, the United States is the number one funder of R&D on neglected diseases, spending 12 times more than the next largest funder, the European Commission, according to the 2014 G-FINDER report. In 2012, the US accounted for 72 percent of all public spending on R&D for neglected diseases, a staggering US$1.4 billion.
Japan, despite its considerable R&D capabilities and position as the world number three in terms of new drugs developed each year, spent only US$2.4 million on R&D for neglected diseases in 2012, just 0.1 percent of the global figure. In contrast, India spent US$42.6 million in the same time period, almost 18 times more than Japan.
One man hopes to change this situation, through a public-private partnership called the Global Health Innovative Technology (GHIT) Fund. Dr. BT Slingsby is the founding CEO and executive director of GHIT, a unique collaboration between the Government of Japan, five of Japan’s largest pharmaceutical companies, the Bill & Melinda Gates Foundation and the United Nations Development Program.
Founded in 2013, the GHIT Fund more or less singlehandedly increased Japan’s R&D contributions to neglected diseases by more than 360 percent that year, from US$2.4 million in 2012 to more than US$12 million in 2013.
Slingsby, who was a professional triathlete on the US World Cup team before going into medical school, is only just getting started. Prior to GHIT, he served as the director for global access strategies at Eisai & Co, one of Japan’s largest pharmaceutical companies. While there, Slingsby met Dr. Tachi Yamada, then the chief medical and scientific officer of fellow Japanese pharmaceutical juggernaut, Takeda. After excitedly sketching their ideas on the back of the proverbial napkin, Slingsby quickly got other pharmaceutical companies on board and launched the program in a record 18 months.
Asian Scientist Magazine caught up with Slingsby at the Financial Times Asia Pharma-Healthcare Summit held in Singapore earlier this year.
Could you describe how the GHIT Fund works?
GHIT is based on a mechanism that provides a solution to a market failure. The technologies that we’re trying to develop right now—drugs, vaccines and diagnostics—are essentially non-profit. So it’s very hard for private companies to invest in them because there’s no return on the investment.
The idea was to partner with the government, the Gates Foundation and the leading pharmaceutical companies in Japan, to come together to create a fund so that we can finance the development of these technologies.
This is the first time in the world in which these companies are putting skin in the game, so to speak. They’re putting in financial commitments and investments into the fund. The fund right now is around US$120 million and the private sector steps away from the decision-making processes for the investments.
In that regard, there is a firewall between the funders, and the investment decision-making from the private sector, respectively. But this also allows the private sector to be beneficiaries of the fund, so that they can partner with academic and research organizations in order to develop these new drugs, vaccines and diagnostics.
What do companies get in return for their cash contributions?
The funds come in from the companies, government and foundation, but they can go to anyone, even the funders themselves—it’s very open and competitive.
For instance, we have a partnership between Mahidol University in Thailand and KAKETSUKEN, a vaccine developer in Japan. Or, for instance, we have a partnership between Kitasato University and Medicines for Malaria Venture (MMV). Or we have a partnership between Create Vaccine, a biotechnology company in Japan, and the National Institute for Biomedical Innovation Organization (NIBIO).
The one criterion for all of our investees is that they have to be an international partnership between a Japanese organization and a non-Japanese organization. By doing that, we’re driving forward an open-innovation model, in which organizations are working together. We’re also driving forward an international approach to developing drugs and vaccine and opening up Japan in a sense. So it’s really about becoming engaged on these global issues as global partners.
If a commercially-viable drug is developed, who retains the intellectual property (IP)?
The IP rights are 100 percent property of the product developer, the investee. The funder and investee have to negotiate between themselves in terms of who is going to receive the royalty or IPs—we do not do that. What we do in our contract and access agreement, is to ensure that once the innovation or product is marketed, it has to be accessible to the endemic populations.
If the drug or vaccine is applicable to developed nations like the US and Japan, they can price it at whatever they want. However, if it is for the low or middle income countries, then they have an obligation to provide it royalty-free at a “no gains, no loss” policy, which basically means that the company or the manufacturer is not losing money but they’re also not making an enormous profit.
When you say “no gains, no loss,” what percentage profit are companies allowed to make?
The rough figure right now, including around manufacturing costs, costs of goods, is around 14 percent. That usually covers pharmacovigilance, the marketing materials, whatever’s necessary to cover the responsible provision of that product. That’s our benchmark right now
How will this figure be enforced?
Essentially, we enforce through audits of the manufacturer. We have the privilege to audit the manufacturer and we do that bi-annually. Because when the volume goes up, the costs go down. That means that [the manufacturers] have to reduce their price.
Why did you feel it was important for Japanese pharmaceuticals to get involved?
I think that Japan has an enormous amount of potential. If you look at the science in Japan, over the
last several decades, they’ve been number two in terms of basic science publications, second only to the US. If you look at the number of Nobel Laureates, an enormous number of them are coming out of Japan. In terms of drug discovery, some of the drugs that are currently being marketed by US and European companies were actually discovered by Japanese scientists.
There’s an amazing amount of potential in Japan in terms of science, drug discoveries, drug development, vaccines, platforms and technologies—but it’s not being tapped into. It’s not being exploited for global health.
I think that’s because of the lack of a funding mechanism for global health issues and also a lack of a driving force to facilitate partnerships. So it’s both funding and facilitation that are the two reasons why that has not occurred. I also think it also relates to policy and strategy as well. It’s about timing too.
Pharmaceutical companies exist for patients, for populations. They exist to improve the health of patients and populations through new innovations. So if you’re just trying to provide new innovations and technologies to the rich, it’s not really a full realization of that mission.
What about the Japanese government, how does contributing to the GHIT Fund help them?
Our fund is aligned with three different policies in the Japanese government. One is with the revitalization policy of the cabinet of Japan—that is [Japanese prime minister Shinz Abe’s] true revitalization strategy. If you ask why the global health entities are funding drug development, it turns out that the pharmaceutical industry in Japan is the number one taxpayer by sector. So it’s very
vital that Japanese pharmaceutical industry continues to thrive and grow, becoming an innovator at a global level.
We also align with the policy within the Ministry of Health, Labor and Welfare in their drive for biotech and translational research—that’s precisely what we’re doing. The majority of our portfolio is in translational research and within that, 75 percent of the drugs that we’re investing in right now are for new medical and chemical entities.
The last policy that we’re aligned with is with the Ministry of Foreign Affairs, and this is the global health diplomacy policy, an easy one to understand.
If you look at a long-term perspective, you’ll see that if these low-income populations become healthier, they’re able to work more. It means that they can become part of the middle-income class. That’s really going to drive forward the economies and their growth. For example, if you look at ASEAN, the populations of the ten countries that are in ASEAN are roughly 600 million. 200 million of these live in poverty, which means that if these 200 million were healthy and working, they could join the
middle-class. This means an enormous growth factor for these countries and the region in general.
So at both the government level and on the industry level, we’re realizing both policy and strategy through one initiative—the GHIT fund.
It’s been two years since you launched the GHIT fund. What is its main achievement to date and do you think the program is on track?
As I said, this was the first model of its kind on a global stage. It was a new initiative for Japan, a new attempt to bring several companies together with the government and the Gates foundation. So in the original projectile and track, we set out to be rather conservative.
We are leaps and bounds beyond that original projectile and track.
We have a very robust portfolio of drugs and vaccines right now. We have moved from discovery to clinical work. We have seven clinical trials going on right now, including one for a dengue vaccine and a robust horizontal portfolio in terms of malaria.
We’ve already funded US$43 million out of the door. Including the US$26 million in co-investment, this
means we have built a portfolio of over US$65 million in little over two years since we started, through a total of 39 partnerships facilitated and funded. I think we’ve been successful.
But you can never be content with success. Success is only a catalyst to work even harder, because success means opportunity. Now that we have the validation, acknowledgement and recognition that this model works, we have the opportunity to really make a difference—if we scale this up and are able to create an even more robust portfolio. That would increase the probability of a success in terms of getting product sales even higher.
Our criterion of success—true success—is not showing that this model works in terms of governance, investment, portfolio management, human relationships, innovation from Japan or diplomacy. To us, success means products.
Do you think the GHIT model will work in the rest of Asia, considering that developing countries have a very different landscape from Japan?
I think that the GHIT fund model works for countries that are looking to grow even further, in terms of
the global economy, global policy. But the one caveat to that is that they have to have really innovative sectors. So Singapore would work out very well, as would South Korea, Thailand, China or India. These countries all have the right climate and components to create a GHIT fund.
How do you think public-private partnerships such as the GHIT Fund will change global healthcare in the next ten years?
To try to speak to all public-private partnerships in one sentence is very difficult because there are so many different types. There are a lot of failures out there, a lot of public-private partnerships in which you see the majority of 95 percent being government and 5 percent or even less being private sector. Is that a really true public-private partnership?
So if I may narrow down the definition of public-private partnerships and say, public-private partnerships like GHIT, in which you’re really having the private sector come to the table and sit at the table with the public sector.
Those are absolutely vital for areas in our global economy in which we have market failures, like infectious diseases, anti-microbial resistance, rare diseases and climate change.
The reason for that is the private sector are the only ones that can actually develop the product. You can have the government and the research institutions that say, we’re going to step up and make a billion dollars’ worth of investments into a fund for this. They alone are unable to develop products; it’s the private sector—and only the private sector—that can actually develop the products, and that’s why they need to be at the table.
This article was first published in the print version of Asian Scientist Magazine, October 2015.
Photo: Cyril Ng/Asian Scientist Magazine.
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