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Economics
Microbicide development will require public subsidy.
Drug development is a complex and expensive process, normally undertaken by large, well-funded pharmaceutical companies. These companies are some of the most profitable enterprises in the world.
Large pharmaceutical companies have generated many important, life-saving drugs--including anti-retroviral therapy for HIV disease. But often people need drugs or devices that are not profitable for the pharmaceutical industry to develop. In such cases, the market fails and government and donors must step in to ensure that the public interest is served. On this page, you will find:
- Big Pharma is not investing substantially in R&D
- Government and donor money are required to develop a product
- Current government investment is grossly inadequate
- In the long-term, the profit potential for microbicides is promising
Presently, no major pharmaceutical company is investing substantially in microbicide R&D.
Despite repeated efforts to engage their interest, no major pharmaceutical company has yet invested in conducting its own microbicide research & development. Few companies (Merck & Co, Bristol Myers Squibb, GSK and Gilead) have released compounds already on their shelves to the International Partnership for Microbicides and agreed to let the IPM test these compounds to see if they are viable candidates microbicides. But these companies retain the license on these compounds and will be able to take them back if they prove viable.
Given the lack of involvement of Big Pharma, the task of development has fallen to non-profit research institutes, academic scientists and small biotech companies --all of which depend on government grants to move their leads forward. Major pharmaceuticals remain reluctant to get involved because of concerns about scientific and regulatory uncertainty and competing opportunities to invest in products that are potentially more profitable. More on why Pharmaceuticals are not investing...
Government and donor money are required to bring the first microbicide product to market.
We can not rely on pharmaceutical companies to develop the first microbicides because it is not in their economic self-interest to do so.
In 2001, the Rockefeller Foundation commissioned the Boston Consulting
Rockefeller Foundation Report:  Pharmaco-Economics Working Group |
As such, microbicides are a classic "public health good", an innovation that would yield enormous returns to society in terms of productivity and health benefits, but where the incentive structure of the private market fails to drive investment. Contraceptives and vaccines to prevent the diseases of poverty such as malaria are other public health goods.
Current government investment is grossly inadequate.
In 2000, roughly $65 (55€) million total was being invested globally in microbicide research, development, testing, policy and advocacy. The vast majority of investment was then, and still is, provided by governments and the philanthropic sector. By 2004, global investment had more than doubled to $142 million annually, due to sustained activism and growing scientific promise.
Projections developed by the International Partnership for Microbicides (IPM), the Alliance for Microbicide Development and the Global Campaign for Microbicides estimate that the global annual investment to ensure timely development of a safe and effective microbicide must re-double to at least $280 (220€) million per year over the next five years. And remain at approximately $280 (€220) million a year until satisfactory microbicides are licensed. More on resource needs and shortfall...
In the longer-term, the profit potential for microbicides is promising.
Thus, public and philanthropic investment will be required to bring the first generation of products to market, but the public obligation will be short-lived; eventually market forces will take over to propel innovation. More on market projections...
