Center for Global Health R&D Policy Assessment

Over the past two years, much work has been done to design and market cash prizes aimed at motivating scientists and companies to invest in and create new health technologies to fight the major diseases affecting millions of people in low income countries around the globe, including major killers like tuberculosis, malaria, and childhood pneumonia.

We have looked closely at several of these prize proposals, and have found that they are elegantly constructed and should be attractive to innovators, especially small biotechnology firms.

Yet no one with deep enough pockets to sponsor such a prize–governments, foundations, or wealthy individuals–has come forward with the funds required to get a prize off the drawing board and into the real world.

Having studied the field of prizes for a number of years, we find the lack of momentum in this area disappointing and a bit puzzling. In this post, we review some of the recent prize proposals, explain why we think prizes could work to drive global health innovation, and urge potential sponsors to take another look at a possibly game-changing idea.

Prizes for global health tools. The idea of prizes for global health tools has been around for a while. For a number of years, colleagues at Knowledge Ecology International (KEI) have championed the idea of prizes as a way to reward medical innovation for both the developing and the developed world. They have advocated for U.S. legislation and multi-lateral initiatives to establish large prize funds for a broad range of products to fight cancer, HIV/AIDs, and other diseases. Working with Medecins Sans Frontieres and others, KEI has also put forward several prize proposals for the development of specific products, including new drugs for Chagas disease and point-of-care TB diagnostics.

Last year, we released an in-depth report which examined product prizes in general and two proposals for prizes for a new diagnostic test for tuberculosis: the KEI/MSF proposal and one developed by the X-Prize Foundation. Both groups called for a prize for a cheap, accurate, easy-to-use test for TB – something the world needs badly to diagnose the millions of cases of the disease that go undetected each year in poor countries. The X-Prize proposal would reward up to four winners with $5 million dollars each for tests that met certain pre-specified technical criteria and outperformed competitors in a field trial sponsored by X-Prize. The KEI/MSF proposal would only offer its $100 million grand prize for one final product, but would also give several smaller awards for innovators that solve particular technical problems or contribute to a solution.

And last June, when the non-profit group BioVentures for Global Health (BVGH) came out with a detailed proposal for another kind of diagnostic prize, we wrote a blog post that highlighted its strengths and limitations. The BVGH proposal was for a low-cost technology that could simultaneously test for several of the most important causes of fever in young children in poor communities, especially in rural areas where sophisticated testing facilities are lacking. The medical need addressed by the BVGH prize is enormous: millions of young children are hospitalized and many of them die unnecessarily each year because the cause of their fever is not properly diagnosed.

An important feature of the BVGH proposal was that instead of primarily rewarding firms for producing a final product, the prize purse is broken in to milestone payments that reward firms for achieving key steps in product development.

A compelling idea. Though we pointed to areas where we felt that the sponsors could improve their proposals, our overall conclusion was positive: milestone prizes in particular have important potential to drive technical innovation and the creation of new diagnostic tests for TB and the diseases underlying common childhood fevers. A milestone prize is likely to be more attractive to small- and medium- sized biotech firms, because of the shorter time to payoff, reduced risk, and better fit with company capacity. We argued that a prize, if carefully constructed and launched, could be a better way to drive the development of certain new diagnostics than the traditional approach to paying for R&D upfront through grants. This is particularly true in cases where the way forward is not clear, but many companies have potentially relevant technologies. In these circumstances, a prize could bring previously uninvolved companies into the field, companies that would be overlooked if investors tried to pick firms and “push” funding to them in the traditional way.

We further argued that diagnostics could be a good testing ground for R&D prizes. Diagnostic R&D is less expensive and the product cycle shorter than for drugs and vaccines. There are many small firms with promising technologies. Including milestones would reduce the risk for small companies that cannot wait to bring a product all the way to market.

But no funders so far. To our surprise, it appears that no sponsor has stepped forward to back any of the proposals for a diagnostic prize. We are disappointed that the prize idea has failed to catch the imagination of public and private donors, whereas five years ago a consortium of European and North American institutions agreed to pledge much more money–$1.5 billion–for an Advance Market Commitment (AMC) to subsidize the development and purchase of a childhood pneumonia vaccine.

We expected that the lower funding requirements of a milestone diagnostic prize–a few tens of millions of dollars–would be attractive to government and philanthropic donors in the post-global recession world.

The Bill and Melinda Gates Foundation (BMGF) backed the X-Prize Foundation and BVGH in developing their respective proposals. Beyond the BMGF, we would like to see other donors seriously consider getting behind a prize to make these proposals a reality. BVGH approached governments in Europe and Latin America, plus various branches of the US government such as USAID, which have voiced support for innovative financing mechanisms for health R&D. In response to donor concerns about the prize tab, BVGH even laid out options for reducing the overall prize amount from $150 million to as little as $50 million. They report that there have been a few nibbles from institutions or individuals who might be willing to pay for some part of the total prize purse, as long as someone else comes forward as the lead investor. But to date no lead investor has surfaced.

Unlike BVGH, X-Prize Foundation is not solely focused on prizes for global health products. It markets the concept of prizes more broadly, as a tool that can be applied to a range of development challenges from water and sanitation, to climate change and education. As far as we have been able to learn, the TB diagnostic proposal has not been X-Prize’s most popular offering, though we do not know the details about the Foundation’s efforts to market the TB prize.

No doubt the current climate for donor assistance has hurt things. In the wake of the global recession of 2008-9, official aid from rich country governments has flattened. Donor assistance for global health has been hit, after enjoying rapid increases during the first years of the 2000s. Some countries like the Netherlands and Sweden have cut their assistance to poor countries, at least temporarily. So there just isn’t as much money today to try new things like a TB prize as there might have been a few years back.

Or perhaps, due to BMGF’s influence in global health technologies, their reluctance thus far to move beyond funding the design of these proposals to be a lead investor in a prize may be putting a damper on efforts to launch a first prize competition.

Perhaps this unwillingness is partly because the BMGF feels confident in its current approach to product development. Much of its money continues to take the form of grants to the 20-plus non-profit Product Development Partnerships (PDPs) for new vaccines, drugs, and diagnostics. In 2010, these PDPs received more than $480 million dollars from foundations and governments, led by the BMGF ($253 million or 53%) and the governments of the United Kingdom ($97 million or 20%) and the United States ($40 million or 8%). And, in the diagnostics space, BMGF has also used the “Grand Challenges” approach to identify and fund new innovators in one of the important stages of diagnostic development–the creation of diagnostic platforms which serve as the “hardware” on which the rest of the diagnostic system is built.

We think that experimenting with a prize could complement these approaches. A prize could be possibly be managed by a PDP such as the Foundation for Innovative Diagnostics (FIND) based in Geneva, so PDPs need not see a prize as competition for resources. And any final product emerging from a prize competition could build on the investments in platform technologies financed through the “Grand Challenges” initiative. In fact, the upfront grant funding of these new platforms could reduce the size of a prize necessary to entice innovators, by removing obstacles to success.

All takers–please step forward! We think that the lack of momentum around prizes is troubling and we’d hate to see a good idea die because of bad timing.

While we understand that times are tough, we think fiscal constraints shouldn’t be an excuse for public donors. The obvious candidates would be the US or UK governments. Since each is currently spending well over a billion dollars annually in health aid (US disbursements are in excess of $6 billion a year, including support to HIV/AIDS in low and middle income countries), a pledge of $20 million for a diagnostics prize would make only a small dent in their budgets. If the BMGF would come forward and champion the idea, this might encourage other funders to buy-in as well.

It could be argued that since donors would pay only if a prize competition succeeds–if the needed new technology is developed–a prize should be more attractive to them in a tight funding environment than traditional grant funding. If it did result in a new, inexpensive test for tuberculosis or for child fevers, a prize could help to save hundreds of thousands of lives. And donor funding would buy valuable experience in managing this type of new and relatively untested mechanism to “pull” health technology innovation. If a product fails to emerge, scarce donor resources would not be spent and could be reallocated to another purpose.

We therefore urge potential sponsors–foundations, rich country governments, and individual philanthropists–to take another look at the X-Prize and BVGH prize proposals, and consider coming on board as pioneering investors.

No one can guarantee that a prize would work. But the idea is too promising not to try.

Thanks to colleagues Paul Wilson and Jean Arkedis for input on this post.