Center for Global Health R&D Policy Assessment

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Is there a better way to advance TB diagnostics? The Center discusses prizes on World TB Day.

R4D Managing Director, Gina Lagomarsino conducts a Q&A with Paul Wilson and Amrita Palriwala about prizes for global health

Read Prizes for Global Health Technologies.

World TB Day, which falls on March 24 every year, marks Dr. Robert Koch's discovery of Mycobacteriumtuberculosis, the bacteria that cause tuberculosis (TB). Dr. Koch's discovery was a remarkable step forward in diagnosing, treating and fighting the TB epidemic, which takes almost two million lives a year around the world. Despite the global interest in curbing the TB epidemic, the technology to diagnose the disease in most resource-poor countries has not changed in 125 years. Prizes could pave the way to develop a new and improved TB diagnostic.

In this blog, R4D Managing Director, Gina Lagomarsino Interviews Paul Wilson and Amrita Palriwala about their forthcoming report “Prizes for Global Health Technologies,” which will be released next Tuesday, March 29th on the Center’s website.

Gina: This is a really interesting concept. Many programs profiled by the Center for Health Market Innovation have difficulty diagnosing patients in rural settings—the laboratory needs of available technologies are extensive. When I was visiting World Health Partners in [the northern Indian state] Uttar Pradesh the program staff expressed a need for better point-of-care (POC) health technologies. Another Indian program, Operation ASHA, uses an innovative system to treat TB, and if they had inexpensive tests that they could use at the point of care in the slums where they work, they could certainly benefit.

Amrita: This on the ground experience is indicative of not only the urgent need for low-cost, rapid and accurate POC tests that can be easily used in rural settings but also that the market for these tests might not be so small. One WHO report estimated that as many as 80-100 million tests might eventually be used every year, if we have this product.

Gina: Do diagnostics receive less attention from product developers than drugs? Is the market smaller?

Paul: It is certainly a smaller market, but there is some money to be made. But the same way there is less investment in drugs and vaccines for diseases affecting the poor, there have been low levels of investment for appropriate diagnostics.

Gina: Can a prize substitute for a market? How?

Paul: Currently, the motivation to invest in R&D is the market share that you access in the end. The size of that market, granted by the patent system, is the reward or the degree of the incentive to conduct R&D. For some prize proponents replacing this market or creating one from scratch is a primary goal and for others it’s not a goal at all. The current patent system enables firms to charge substantially above what it costs to make the product, but this negatively impacts patients and governments. A prize could allow you to change the R&D investment decision by aligning incentives with public health needs instead of sales revenue. By substituting prizes for markets, where they don’t exist, or by asking firms to give them up, you ameliorate the problem of access.

Amrita: For TB diagnostics, a prize is not a substitute but a complement to the market – as it can help bring new minds and solutions to address the difficult technological challenges with developing a TB POC tool.

There are different objectives for why people want to conduct prize competitions. The X Prize Foundation is trying to unlock latent markets, and the AMC is trying to substitute or create a market for a product that doesn’t naturally have one. The Prize4Life Foundation, which recently awarded a biomarker prize to track the progression of ALS disease, is interested in reducing the technological barriers to carrying out R&D.

Gina: Prizes seemed simple until I read your report, which highlights the importance of design. What are important design considerations and how do they affect the prize?

Paul: The prize rises and falls on the technical specifications and the amount of the prize purse. One aspect of structure that we haven’t explored as much is the number of winners. Typically, you assume that there will be one winner—a so called “winner takes all competition,” but you could structure the prize to have multiple winners.

At first I was confused as to why firms view prizes so differently from markets, but they perceive prizes to be winner take all, which markets are not. Having multiple winners, akin to controlling a certain share of the market, would reduce the perceived risk for firms. This hasn’t been implemented before.

Gina: Once the pay-off happens, how do you ensure that the technology is carried forward after the award of the prize?

Paul: This is a critical issue. In addition to the time and cost, you may need to find a very new type of organization than the one that carried out the original R&D to carry a product forward. Clinical trials and manufacturing require different skills.

There are IP ramifications as well. Ideally, you’d want the IP to be open and available, but then the prize purse has to be large enough to compensate for the loss of the rights to technology.

If the product is in the right stage then, you could leave the prize approach behind after the technology is developed and use a more conventional route like a partnership with a PDP. Push mechanisms are useful here too. During the time of the AMC, there was discussion around how a pull mechanism is useful for late stage R&D and push is good at the beginning, but after carrying out this study, our opinions have evolved. It seems like a competition is most helpful in the beginning.

Gina: Your report discusses various strategies for ensuring that technologies—once developed—actually get to the target population. What are some ways to design prizes to ensure that any innovative technologies are more likely to get to the market?

Paul: The most important thing is getting the technical specifications right so that you have a product that people want and will use. If you get that right, then you need to make sure that there is supply of the product that’s affordable.

Gina: Did you find that prizes are an effective tool? If so, under what circumstances?

Paul: Prizes are helpful when you don’t know the way forward to answer an innovation question, and you have the sense that there are a lot of solvers out there who could help find the solution. This is what economists call information asymmetry. You don’t know who’s out there and what they’re thinking; if you did you could simply contract them directly.

Amrita: The other consideration is the market potential for the product. If it’s a large market, then a milestone prize might be sufficient, but if there’s little or no market, then you need a large final product prize or a milestone prize plus some subsidy. Our report lays out a decision tree which can help funders decide whether a prize is a useful tool for a particular innovation objective.

Paul: Very broadly, you need to think about who you’re trying to incentivize that’s not currently participating in the innovation space. Once you decide that, then you can systematically think through these questions. If there are only 3 organizations in the world that can solve a problem, then it may be better to engage them directly.

Gina: Who can benefit from this report and what will its impact be?

Paul: We do hope that our Center's assessments give donors more information about what mechanisms will be most impactful for accelerating R&D for needed health technologies. We also hope that this information on prizes is reaching the private sector and helping firms think about how they might respond to prizes and whether it could fit into their business models. It’s not an advocacy document, but an attempt to help people sort out when prizes are most useful.

Amrita: More broadly, we hope our report can inform potential sponsors and practitioners in health and other fields about when and how prizes can be useful so that they are leveraged well. For example, the U.S. government is interested in using prizes to spur innovation in general and recently passed the America Competes Act, granting broad prize authority to federal agencies.