New diagnostics, drugs and vaccines for diarrhoeal
disease and malaria - PATH 2013-18
Business Case
Research and Evidence Division
Human Development Team
May 2013
PATH Product Development Business Case
Intervention summary
What support will the UK provide?
DFID will provide £16,050,000 over the period 2013-14 to 2017-18 to PATH, for
Product Development research to develop new diagnostics, drugs and vaccines for
diarrhoea, and a new G6PD test for vivax malaria treatment to prevent relapse.
DFID’s funding will support the development of the most promising candidates to
contribute to the improvement of health in developing countries.
Why is UK support required?
Diarrhoea and malaria are two of the leading causes of severe and life-threatening
illness in the poor, especially in children. Prevention and treatment of diarrhoea have
historically received significantly less attention than in other diseases. Vivax malaria,
the predominant form in South Asia, has received much less attention than
falciparum malaria.
There are no theoretical reasons vaccines to prevent several of the major causes of
diarrhoea cannot be developed and deployed, reducing incidence of disease and
transmission. Better treatment for diarrhoea would help reduce mortality; most
children who die or are permanently harmed by diarrhoea do so from dehydration.
With better treatment that is available in the periphery patient outcomes should be
significantly improved.
The majority of vivax malaria is recurrent malaria (relapse). There are drugs which
can prevent these relapses by killing the dormant forms in the liver, but both the
current drug (primaquine) and its successor (tafenoquine) cause potentially lifethreatening haemolysis and anaemia in people who have the genetic enzyme
deficiency G6PD deficiency. There are tests available for this in high-resource
settings, but they require laboratories not available in low-resource settings. Since
between 5% and 15% of people in malaria areas have G6PD deficiency this means
the drugs to prevent relapse cannot be used. Getting a cheap near-patient test would
be a massive step towards controlling vivax malaria.
There are market failures around the development of new technologies for diseases
of poverty. In the years between 1975 and 2000, only 13 new drugs were registered
for use for neglected diseases (approx. 1% of the total new drugs). With increased
investment by Governments, Donors, Philanthropic Foundations and others, there
have been 43 new products registered in the last 10 years with a further 350 in
development. These products, including drugs, vaccines and diagnostics for a wide
range of diseases (e.g. malaria, sleeping sickness, visceral leismaniasis, pneumonia,
diarrhoea, meningitis, encephalitis, TB), have the potential to save many hundreds of
thousands of lives
What are the expected results?
Support to PATH will, in the long term, contribute to the impact goal of reduced
poverty through the improved prevention, diagnosis and treatment of two leading
causes of death and illness among the poor – diarrhoea and malaria. The shorter
term, specific outcome will be to take innovative and lifesaving technologies to scale
in low-resource settings.
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PATH Product Development Business Case
Expected outputs include:
 WHO prequalification of at least 2 rotavirus vaccines
 Advancement of bacterial diarrhoea vaccines to Phase 3 trials
 Industrial partnerships for diarrhoea vaccine manufacturing in emerging
economies
 New oral rehydration therapies for the management of diarrhoea approved and
launched in 3+ countries
 New drugs for treatment of 3 leading causes of childhood diarrhoea (Shigella,
Cryptosporidium, and soil-transmitted helminths) ready for clinical trials
 Field evaluation of late-stage prototype diagnostics for determining diarrhoeacausative agents (and enabling correct treatment) completed
 Performance and appropriateness of all currently available G6PD tests evaluated
in order to support correct vivax malaria treatment in populations where G6PD
deficiency is common
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PATH Product Development Business Case
1 Strategic Case
A. Context and need for a DFID intervention
Significant progress has been made in the last two decades in improving the health
and preventing deaths of people living in poverty. For instance, between 1990 and
2011, the mortality rate in children under 5 years fell from 84.1 to 52.8 deaths per
1,000 live births and amongst women in the same period, maternal deaths have
fallen from over 400,000 per year to under 275,000.1
However, this progress has not been evenly spread either geographically or between
the rich and the poor, and over 7 million women and children still die every year,
many during pregnancy and birth: the great majority from easily treatable or
preventable conditions such as diarrhoea and malaria. Inequalities persist within and
between countries and both health and life expectancy among those in the poorest
quintiles are worse almost everywhere.2 Few low income countries are expected to
achieve MDGs 4 and 5 at current rates of progress.3
In some cases we urgently need new tools, technologies and knowledge to prevent
deaths and reduce mortality and in other cases the knowledge and the tools exist to
prevent many of these deaths. New technologies and innovations are making faster
progress possible (for example, more effective vaccines, longer lasting bed-nets and
more stable and cost-effective medicines).
A strong evidence base is essential for the provision of more effective development
and humanitarian assistance to the poorest. We need new knowledge to improve the
ways in which we currently work, cease doing things that are ineffective, and make
sound decisions between competing priorities. This not only involves identifying new
drugs, devices and interventions but also new and better ways of putting them into
practice.
The Secretary of State reaffirmed DFID’s commitment to strengthening the evidence
base in her first major speech on development in 2012, stating: I want to make sure
that we invest in what works. Where we don’t know, I want to find out… [I] will make
sure we are clearer about where we should focus our resources so we know what
…. will actually work as we intend” 4
This programme will focus on developing and using new technologies for diarrhoeal
disease and malaria.
Diarrhoeal diseases
More than 800,000 children less than five years old die each year from severe,
dehydrating diarrhoea or dysentery (approximately 11% of total childhood deaths),
1
Lozano, R. et al, Progress towards Millennium Development Goals 4 and 5 on maternal and child mortality: an updated
systematic analysis, The Lancet, Volume 378, Issue 9797, Pages 1139 - 1165, 24 September 2012.
2
Gwatkin, D., Wagstaff A., &Yazbeck, D., Reaching the Poor with Health, Nutrition and Population Services: What works, what
doesn’t and Why, The World Bank, WashingtonDC, 2005
3
Just 9 out of 137 developing countries worldwide are set to achieve both Millennium Development Goals (MDGs) 4 and 5 to
improve the health of women and children. The remaining 128 developing nations will fall short. Based on current trends, 31
developing countries worldwide will achieve MDG 4 (to reduce the under-5 mortality rate by two-thirds between 1990 and 2015)
and 13 countries will reach MDG 5 (to reduce the maternal mortality ratio by three-quarters during the same period). – cite –
Lancet September 20, 2011.
4
Rt Hon Justine Greening, Speech to the Conservative Party conference, Tuesday, 9 October 2012
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PATH Product Development Business Case
and millions more are hospitalised5,6. Many more suffer from malnutrition associated
with diarrheal disease and its long-term adverse consequences on physical and
cognitive development. The leading causes of diarrhoea in infants and young
children are Cryptosporidium, cholera, rotavirus, and the bacterial infections of
Shigella and enterotoxigenic Escherichia coli (ETEC). Combined, these pathogens
are responsible for a significant portion of childhood diarrheal disease and deaths,
which mainly occur in the developing world.
In resource-poor areas many children lack access to appropriate medical care for
severe diarrhoea, sanitation and safe water sources are inadequate or non-existent,
and malnutrition increases the risk of disease. While a long-term focus on all
interventions is critical, vaccines offer the best near-term and most equitable
approach to drastically reducing the incidence and severity of diarrhoea.
Two commercial rotavirus vaccines exist, and their effectiveness and impact on
reducing deaths and hospitalisations has been demonstrated in countries where they
have been introduced, including low-resource settings like Mexico. However, these
vaccines remain expensive and the production capacity of their manufacturers
cannot meet global demand. As a result, they are not yet widely available or
affordable for low-resource populations without support from donor agencies. In
order to create and maintain a financially sustainable and healthy market, additional
manufacturers, especially those in emerging countries, must enter the marketplace.
Despite Shigella and ETEC being long-term World Health Organisation (WHO)
vaccine targets, there are no currently licensed vaccines against these pathogens.
This is due to inadequate investment and a lack of a significant commercial market in
the developed world. However, given their ongoing contribution to deaths and
nutritional deficits among children under the age of five, Shigella’s increasing
resistance to antibiotics, and the challenges to provide universal improved sanitation
and access to clean water, the need for vaccines against Shigella and ETEC is
critical.
Development of these new vaccines will lead to fewer deaths and have a broad
impact on children and families. Vaccines to prevent diarrheal diseases may reduce
malnutrition associated with severe diarrhoea in children. They can also help break
the cycle of poverty in poor communities, because, even with treatment, diarrhoea
causes a significant morbidity burden. The most direct effects are seen on physical
and cognitive development and perhaps other long-term problems such as irritable
bowel disease and autoimmune disorders. Lost time from work or school due to
frequent diarrheal illnesses has an impact on education and income, and the
prevention of disease can positively impact educational rates and local economies.
Regardless of cause, the common symptom of fluid loss in paediatric diarrhoea
means that the replenishment of lost fluids and electrolytes via Oral Rehydration
Salts (ORS) is the cornerstone of treatment. In illness due to cholera infection, the
onset of diarrhoea is rapid, and if left untreated, the mortality rate is 50% to 60%,
with death occurring within hours to days. However, with immediate appropriate
5
Fischer Walker CL, Perin J, Aryee MJ, Boschi-Pinto C, Black RE. Diarrhea incidence in low- and middle-income countries in
1990 and 2010. BMC Public Health. 2012;12(220).
6 Liu L, Johnson HL, Cousens S, et al. Global, regional, and national causes of child mortality: an updated systematic analysis
for 2010 with time trends since 2000. The Lancet. 2012;379(9832):2151–2161.
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PATH Product Development Business Case
treatment, the mortality rate can be reduced to less than 1%7. ORS consists of
electrolytes (sodium and potassium chloride) and glucose, which promote water
absorption, and costs only a few cents per treatment. ORS is actively promoted by
the World Health Organisation (WHO) and the United Nations Children’s Fund
(UNICEF) and is credited with saving millions of lives worldwide since its introduction
in the 1970s8.
A combined prevention and treatment strategy that includes vaccines, oral
rehydration solution, zinc treatment, exclusive breastfeeding, and improved hygiene,
sanitation, and nutrition, has a significant impact on diarrhoea morbidity and
mortality. However, efforts to increase their use have faced many challenges,
including limited access to and awareness of the interventions, weak country-level
systems to implement them, and complacency about diarrhoea.
ORS has been the subject of countless public health campaigns, demographic and
health surveys suggest that nearly 90% of mothers in Africa and Asia know about
ORS, but less than 30% use it9. Greater uptake and coverage of ORS can be
achieved by collaborating with private-sector partners to develop new formulations
and presentations of these relatively simple products that meet the expressed needs
of the market.
Malaria diagnostics
In many low-resource settings, access to appropriate diagnostic technologies is
severely lacking, and health care providers often resort to presumptive treatment of
many illnesses, with potentially serious consequences. Misdiagnosed patients are
exposed to unnecessary medication and associated side effects, additional financial
costs, or—even worse—higher rates of mortality. For malaria, diagnostics are an
important part of realising the full potential of current and emerging antimalarial
drugs to reduce the global burden of malaria and bring the disease closer to
elimination.
Plasmodium falciparum and P. vivax are the most common species of malaria
parasites infecting humans. P. vivax is the most widely distributed and there are 2.5
billion people at risk of infection with P. vivax and an estimated 80 to 300 million
clinical cases every year10. Only one currently available drug, primaquine, effectively
clears parasites from the human body, thus avoiding relapse. Primaquine also kills
the form of the malaria parasite that the mosquito needs to transmit infection to other
people.
There are some safety issues with the use of primaquine (and next-generation drugs
like tafenoquine), which belong to the 8-aminoquinoline class of drugs. Patients who
have a mutation in the gene for an enzyme (G6PD) can suffer from a break down of
their red blood cells (the severity depends on the degree of enzyme deficiency) if
they take medication from this class of drugs.
7
Sack DA, Sack RB, Nair GB, Siddique AK. Cholera. The Lancet. 2004;363(9404):223–233 t
Sack DA, Sack RB, Nair GB, Siddique AK. Cholera. The Lancet. 2004;363(9404):223–233
9 Forsberg BC, Petzold MG, Tomson G, Allebeck P. Diarrhoea case management in low- and middle-income countries: an
unfinished agenda. Bulletin of the World Health Organization.
8
10
Malaria: burden and interventions. DFID Evidence Paper 2010
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PATH Product Development Business Case
The G6PD deficiency affects more than 400 million people worldwide and an
appropriate diagnostic test is required to enable the safe, widespread use of
primaquine and similar drugs.
Although there is clear recognition of the need for more appropriate diagnostic tests
to determine a patient’s G6PD status, there is very little information available to
understand the market for malaria-related use of G6PD testing. There is also a lack
of operational data on how these tests can be implemented to ensure safe
administration of primaquine and related antimalarials. There is no clear guidance
about regulatory and quality standards that tests can be evaluated against to
mitigate the risk of adoption of poor-quality tests.
What will the DFID Funding support?
PATH is an international non-profit organisation with a mission to improve the health
of people around the world by advancing technologies, strengthening systems, and
encouraging healthy behaviors.
PATH programmes work in partnership with local communities and a range of
partners to take an entrepreneurial approach to developing and delivering highimpact, low-cost solutions, from lifesaving vaccines and devices to collaborative
programmes with communities. PATH works in more than 70 countries and together
with partners with the aim of empowering people to achieve their full potential.
PATH programmes take a number of approaches to move solutions from innovation
to impact: supporting new ideas through inception, development, and testing; paving
the way for introduction in low-resource countries; and working with governments
and communities to integrate and expand the most successful ideas. Solutions are
developed in collaboration with the communities who will use them, together with a
range of other partners, including community groups, non-governmental
organisations, governments, companies, and United Nations agencies.
PATH has a number of different areas of work: emerging and epidemic diseases,
new technologies, maternal and child health, reproductive health and vaccines and
immunisation. Twenty technologies worked on by PATH (for example affordable
meningitis vaccine, better systems for malaria bednet distribution, integrated
strategies for using new vaccines, uniject – technology for safe injections) are
currently sold and in distribution globally or regionally. Ten are in global use and
have had a significant impact on policy, practice, or local capacity for innovation and
production.
Senior managers within PATH oversee all programmes, to ensure that work is
coordinated across the organisation. PATH has a set of impact initiatives, including
malaria, maternal and neonatal health technologies, and diarrheal
disease/pneumonia. These impact initiatives have set clear, aligned, and aspirational
goals, with accompanying objectives and indicators to guide a significant proportion
of PATH’s work in priority health areas.
The DFID funding will cover three different PATH teams who together work across
vaccine development (diarrhoea), drug discovery (diarrhoea) and diagnostics
(malaria and diarrhoea):
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PATH Product Development Business Case



Enteric Diarrhoeal Disease group (EDD)
OneWorld Health (OWH)
Diagnostics Group (DxG)
Enteric Diarrhoeal Disease Group (EDD) – Diarrhoea Vaccines
The work of this group includes the development of low cost, field-adapted, vaccines
for two leading causes of diarrhoea – rotavirus (RV) and bacterial infections (Shigella
and E.coli) – in resource-poor settings. Working with industrial partners in both China
and India, over the next 5 years they intend to 1) Submit 2-4 RV vaccines for WHO
pre-qualification (numbers dependent on phase 3 trial results), 2) work with emerging
country manufactures to ensure low-cost vaccine production, 3) advance their
pipeline of vaccines against Shigella and E.coli through early stage development and
4) test new ways to administer vaccines (e.g oral or intradermal).
One World Health (OWH) – Diarrhoea treatments and diagnostics
OWH are the only PDP developing new treatments for paediatric diarrhoea and work
across three areas – oral rehydration, drugs and diagnostics. Over the next 5years
they hope to 1) develop new oral rehydration salt (ORS) formulations and
presentations and ensure their approval and launch in at least three countries, 2)
advance a pipeline of new drugs for 3 major causes of diarrhoea through pre-clinical
and early clinical development, and 3) complete field evaluations of late-stage
development diagnostic prototypes to enable identification of the diarrhoea-causative
agent and thus correct treatment. They will do this through three main mechanisms :
- Drug discovery partnerships and collaborations
- Efforts to strengthen local capacity to conduct high-quality, cost-effective
clinical trials in low-income countries
Engaging in strategic communications to raise awareness and adoption of diarrhoea
diagnostics and treatments in underserved populations
Diagnostics Group (DxG) – Malaria Diagnostics
The diagnostics group has a range of projects, focused on accelerating the
development of affordable and appropriate diagnostic technologies specific to a
number of disease areas, facilitating their introduction into low-resource settings and
supporting their appropriate and correct use in the field.
The funding from this programme will be used to support work to evaluate the
currently available G6PD diagnostic tests for their performance and appropriateness
to support malaria treatment and elimination.
Work will include:
1. Developing demand-side readiness to evaluate and adopt G6PD tests
2. Strengthening the market environment for the supply of G6PD tests
3. Developing G6PD test products that best align with target product profiles
4. Building the evidence base for G6PD testing through demonstration studies
Alignment with wider DFID priorities
The Coalition Government has taken a global leadership role, with major pledges of
support for the treatment and control of malaria and neglected tropical diseases. For
these disease control programmes to be effective there is an urgent need for new
diagnostics, drugs, vaccines and other technologies. DFID Ministers have also
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PATH Product Development Business Case
reaffirmed their commitment to the use of evidence and new technologies in DFID’s
work in a number of speeches11.
The research work of the PATH teams is strongly aligned with DFID’s wider strategic
priorities, contributing to the pillars for action set out in the UK’s Framework for
Results for malaria12 and reproductive, maternal and newborn health13.
Supporting the rapid development of health technology innovation is a key strand of
DFID’s Structural Reform Plan (SRP) Pillar 1 – International commitments to support
actions to achieve the MDGs relevant to health and education. The technological
innovations also support SRP Pillar 5 – The role of women, in particular to improve
maternal health and access to family planning. The development of new
technologies is one of the three pillars of DFID’s research strategy, across all areas
of work, not just health.
There is high level international political support of for the development of new health
technologies, and this is one of the UK commitments through the G814.
Fit with Research and Evidence Priorities
DFID research has three main aims: 1) Developing new technologies and
innovations that have impact on poverty or the effects of poverty; 2) Finding better
and more cost-effective ways of delivering development to those who need it,
including stopping things that do not work; and 3) Better understanding of key
development questions and background to support best policy choices.
This programme fits well with DFID’s research and evidence priorities and is about 1)
developing new technologies and 2) finding better and more cost-effective ways to
deliver development interventions.
B. Impact and Outcome that we expect to achieve
Support to PATH will, in the long term, contribute to the impact goal of reduced
poverty through the improved prevention, diagnosis and treatment of two leading
causes of death and illness among the poor – diarrhoea and malaria. The shorter
term, specific outcome will be to take innovative and lifesaving technologies to scale
in low-resource settings.
Investments in PATH will deliver high quality and cutting edge research that will
improve our understanding of the development of new technologies for prevention,
diagnosis and treatment of diarrhoeal disease and malaria diagnostics. Specific
outputs include:
 WHO prequalification of at least 2 rotavirus vaccines
 : Advancement of bacterial diarrhoea vaccines to Phase 3 trials
11
Rt Hon Justine Greening Speeches 1) to Conservative Party conference, Tuesday, 9
October 2012; 2) Open Up! Using technology to build open societies and make aid smarter Speech
13th November 2012 and 3) Development in transition Speech on 7 Feb 2013
12
13
http://www.dfid.gov.uk/malaria
http://www.dfid.gov.uk/What-we-do/Key-Issues/Health/Reproductive-maternal-and-newborn-health/
14
July 2005 the Gleneagles G8 communiqué on Africa committed to increase direct investment and
taking forward work on market incentives through public private partnerships and AMCs. This
commitment has been retained as the G8 pledges have been updated.
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PATH Product Development Business Case





Industrial partnerships for diarrhoea vaccine manufacturing in emerging
economies
New oral rehydration therapies for the management of diarrhoea approved and
launched in 3+ countries
New drugs for treatment of 3 leading causes of childhood diarrhoea (Shigella,
Cryptosporidium, and soil-transmitted helminths) ready for clinical trials
Field evaluation of late-stage prototype diagnostics for determining diarrhoeacausative agents (and enabling correct treatment) completed
Performance and appropriateness of all currently available G6PD tests evaluated
in order to support correct malaria treatment in populations where G6PD
deficiency is common
2 Appraisal Case
A. What are the feasible options that address the need set out in the Strategic
case?
A recent RED review of research models15 identified six basic models in common
use across DFID that aim to deliver a complementary mix of high quality relevant
research, facilitate research-into-use and strengthen capacity to undertake and use
research:
1. Provision of core funds to international research organisations
2. Product Development Partnerships (PDPs) awarded following open
competition
3. Research Programme Consortia (RPCs)16 awarded following open
competition
4. Direct funding for defined areas of research (other than to RPCs), awarded
following open competition
5. Funding relationships with UK Research Councils (UKRCs)
6. Collaboration with other bilateral donors, for programmes with shared
objectives
The work described in this business case falls under the second mode, Product
Development Partnerships (PDPs). A number of options were explored to secure
the development of new products for neglected diseases of poverty. Four funding
options, including the do-nothing counterfactual, are considered below.
Within the wider health portfolio other work is supported using some of the other
models of research funding listed above.
Option 1: The “do nothing” counterfactual
Under this option DFID would not invest in product development research leaving the
development of new health technologies, for diseases that affect the poorest, to the
private sector and/or other research funding bodies.
15
J. Piper, Working Paper, Research and Evidence Division, March 2010
RPCs are centres of specialisation with partners from high and low income countries working
together to explore a set of research questions around a common theme e.g nutrition, health systems,
reproductive health
16
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PATH Product Development Business Case
Option 2: Direct funding to stimulate the pharmaceutical industry
Under this option DFID would seek to provide direct support to industry to attempt to
stimulate them to develop and ensure access to health products for diseases of
poverty.
Option 3: Direct funding to academic R&D institutions
Under this option DFID would seek to provide direct support to academic R&D labs
to develop and ensure access to health products for diseases of poverty.
Option 4: Invest in a portfolio of health product candidates through the PDPs
housed at PATH (the preferred option)
Under this option DFID would invest in the three PDPs housed in PATH to develop
new diagnostics, drugs and vaccines for malaria and diarrhoeal disease, which,
through open competition, have already been identified as a market leader in this
field.
Product Development Partnerships (PDPs) are non-profit entities that act as virtual
pharmaceutical companies, coordinating the development of new health
technologies and drawing upon the respective strengths of academia, large and
small industry at different stages of the R&D and commercialisation process
Options appraisal
Option 1: the do-nothing counterfactual
This was the default position until the inception of Product Development Partnerships
(PDPs) in the late 1990s and early 2000s. As indicated in the strategic case, prior to
the formation of PDPs and significant public investments in global health product
R&D, few new treatments for neglected diseases of poverty were coming on stream.
There was a lack of incentives for the private pharmaceutical industry, due to the
high costs of new drug development and the extremely limited profit margins
associated with making them available to patients in need. In the years between
1975 and 2000, only 13 new drugs were registered for use for diseases of poverty
(~1% of the total new drugs)17.
The argument for investing in drug development is based on the lack of viable
markets for the product of that research (i.e. new medicines, diagnostics and
technologies) as well as acknowledged market failures around the commercial
investment for R&D related to NTDs.
The main factor explaining the lack of supply of research in general is the global
public good nature of knowledge and research18. Research and development is a
17
Moran M. et al London School of Economics and Political Science, The New Landscape of Neglected Disease
Drug Development Wellcome Trust 2006
18
A public good is a good that is both non excludable and non-rival, in that individuals cannot be
effectively excluded from use and where use by one individual does not reduce availability to others.
Global public goods are public goods which are non-rival and non-excludable throughout the whole
world, as opposed to a public good which exists in just one national area. Knowledge and research is
the classic example of a global public good.
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PATH Product Development Business Case
public good and some of the products of that research may also have public good
characteristics (e.g. vaccines). Traditionally, Intellectual Property (IP) rights have
been used to provide incentives for the private sector to invest in risky and expensive
R&D programs by enabling monopoly pricing of pharmaceutical products. The
biotechnology and pharmaceutical industries rely heavily on IP portfolios to protect
their investments, provide signals to the investment community which encourage
future investment, provide incentives to enter a market (rather than wait) and to
justify prolonged expenditures in view of regulatory risk and market uncertainty.
Research funded by private pharmaceutical companies is done with the principal aim
of developing commercial products that can be protected by patents and licensing
arrangements and sold at a profit. However, the ability of industry to exploit IP with
respect to neglected diseases is severely limited in large part because the effective
demand for those products will be limited, without government intervention. This is
because those suffering from these diseases are poor meaning they will be prepared
to pay only a low price for treatment. When the cost of R&D is high and there is
insufficient potential for profit to justify the necessary investment, then there is no
incentive for the private sector to invest, which is especially the case for late stage
clinical trial research.
Moreover, all treatments and other products for diseases – regardless of whether the
sufferer is poor or not - display the classic attributes of a ‘merit good’19 meaning that
individuals often underestimate their benefits and don’t consume enough. Theory
predicts that although markets may emerge to supply some merit goods, it will be
insufficient to achieve a socially efficient level of consumption.
While a number of factors explain the lack of demand for NTD products in general
(i.e. presence of externalities, information inequities and the divergence between
private and social benefits), the most relevant for diseases of the poor is the fact that
those suffering from these diseases are not able to pay the full market price and will
under consume. This lack of commercial return is a critical stumbling block that stops
industry from undertaking research for new products for neglected disease singlehandedly. The challenge can only be overcome by sharing costs and risks with
research partners.
With increased investment by Governments, Donors, Philanthropic Foundations and
others, there have been 43 new products registered in the last 10 years with a
further 350 in development. These products have the potential to save many
hundreds of thousands of lives20. In 2000, a report21 identified that only 10% of
global funding for health research was devoted to the conditions that represent 90%
of the global disease burden (the so called “10-90 gap”).
The PDPs housed in PATH are an example of a global public good. They are
developing new health technologies, for those that are too poor to be able to pay
enough for them to make it worthwhile for pharmaceutical companies to invest the
19
A merit good is is a commodity which is judged that an individual or society should have on the
basis of some concept of need, rather than ability and willingness to pay.
20 Saving lives and creating impact: EU investment in poverty related neglected diseases. Policy
Cures/DSW 2012
21 Global Forum for Health Research Report 2000. The 10/90 report on health research. Geneva.
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PATH Product Development Business Case
huge amounts required in the R&D process to develop and produce them. This is
particularly the case given the steep rises in costs and complexity of developing
pharmaceutical products seen over the years. Estimated out-of-pocket expenditure
now ranges between US$403 – US873 million for drug development22 and as costs
have increased the number of products in development has fallen. While R&D
spending by large pharmaceutical companies doubled between 2000 and 2010
approvals of new drugs (mainly for high income country application) fell
significantly23. There is a clear market failure and it is readily accepted that public
investment is required to incentivise activity in neglected disease drug research and
development. In 2007 it was estimated that R&D on new drugs for neglected
diseases of the poorest countries required an additional US$6-10 billion over the
next ten years24.
Data from the 5th annual G-FINDER Report (for product development research
spending in 2011) showed that while the public sector currently provides nearly
$2billion (two thirds of all funding), for neglected diseases R&D, at the global level
government funding has continued to move away from product development and
towards more traditional, earlier stage, basic research, while industry or philanthropic
investments in this area have become either smaller and/or more focussed on only a
narrow range of diseases and products. If this trend continues it may mean that the
public sector funds only basic research, leaving product development to industry or
philanthropy and resulting in a subsequent lack of new medicines, vaccines or
diagnostics for neglected diseases reaching the market25.
This analysis suggests that the do-nothing counterfactual is not a viable
option. There are a number of International goals, to deliver new technologies for
diseases of poverty by 2018 and the associated higher level impact goal of ensuring
the achievement of global eradication and elimination targets. The ‘do-nothing’
counterfactual has therefore been rejected and is not considered further.
The three remaining options all seek, in different ways, to stimulate R&D for new
products for neglected diseases of the poor.
Option 2: Direct funding to stimulate the pharmaceutical industry
One way to drive product development for neglected diseases R&D is to try to
address the market failure by trying to stimulate the private sector to invest in this
area. In recent years an increasing number of push and pull mechanisms have been
proposed in order to incentivise the pharmaceutical industry to develop more health
technologies (e.g. drugs, vaccines and diagnostics). Push mechanisms such as
subsidies for research, tax credits for R&D, expedited regulatory review are outside
the scope of DFID’s work. Subsidies for research and tax credits have been
implemented in some countries but have not made an appreciable difference to
stimulating private sector activity in this area specifically. Funding through PDPs,
Paul SM et al (2011) How to improve R&D productivity: the pharmaceutical industry’s grand
challenge. In Nature Reviews: Drug Discovery iv10:328-329
23 David E et al (2010) New frontiers in pharma R&D investment. In McKinsey Quarterly.
24 Dalberg Global Development Advisors (2007) Initiative for Sustainable Financing for R&D for
Neglected Diseases. Available at: www.ifpma.org
25 Policy Cures (2012) Neglected Disease R&D: A Five-Year Review: The Fifth Annual G-Finder
Report.
22
13
PATH Product Development Business Case
another push mechanism, is discussed under Option 4. Pull mechanisms include
Advanced Market Commitments and Prize Funds. These ‘pull’ mechanisms can be
used to bring-in private sector investment and risk bearing, at different points in the
development, manufacturing and delivery value chain.
Advanced Market Commitments (AMCs)
AMCs are designed to use existing incentive structures within the pharmaceutical
R&D model. An AMC works by providing industry with financial incentives to
develop new technologies for neglected diseases, as would be the case for high
prevalence conditions in high income countries, reproducing the expected economic
returns for a new product as viewed at the start of the R&D process (the time when
the investment decision is made) as opposed to at the time of sale. The financial
incentives are market guarantees, where the investors (likely donors, philanthropists
or governments) legally agree to buy a minimum quantity of the product to be
developed at a set price, thus assuring a minimum market size and profit margin to
industry.
The first AMC, developed for pneumococcal vaccines (worth US$1.7billion), was
launched in February 2009, with investors (including DFID and a number of other
donors) promising to buy (and supply through GAVI) 2 billion doses of vaccine in
low- and middle-income countries by 203026. When the AMC was introduced there
were already two pneumococcal vaccines in late stages of development, and a
recent report by GAVI27 highlights that the AMC acts primarily as an incentive to
scaling up production capacity and as a procurement mechanism for nearly
developed products rather than a R&D incentive.
There have been no AMCs for early stage product development and their application
is limited. They are unlikely to be applicable in the case of diseases such as sleeping
sickness where the remaining global disease burden is relatively small (limiting the
potential market) and often associated with fragile states (potentially limiting market
reach) but where the need for new drugs and diagnostics is pronounced.
Prize Funds
An alternative model to stimulate private sector R&D for health technologies for
neglected diseases is prize funds. Examples include the Health Impact Fund and
the Medical Innovation Prize Fund, where cash rewards are offered either for the
development of new health technologies or for achieving measurable health impacts
occurring as a result of the availability of new technologies. This approach changes
the existing incentive structure for R&D, shifting the R&D driver towards patient
impact (and thus the health products that will have the largest health impact per
pound invested) rather than economic return on investment, and may result in
increased efficiencies in the R&D process, competitors seeking to lower their
operating costs in order to maximise potential profit. Unlike AMCs, prize funds could
26
Lahte J (2012) Is the pneumococacal vaccine advance market commitment motivating innovation
and increasing manufacturing capacity? Some preliminary answers. In Vaccine v30(14): 2462-6
27 Cernuschi, T et. al. “Pneumococcal Advanced Market Commitment: Lessons Learnt on Disease
and Design Choices.” GAVI White Paper. Sep, 2011. www.gavialliance.org/library/gavidocuments/amc/monitoring-and-evaluation/pneumococcal-advance-market-commitment--lessonslearnt-on-disease-and-design-choices-and-processes
14
PATH Product Development Business Case
theoretically target the development of multiple drugs for multiple diseases through a
single channel.
While theoretically promising (and supported by a number of prominent economists)
prize funds are currently untested and there are a number of practical reasons why
they are unlikely to be an effective investment mechanism for developing drugs for
neglected diseases at this point in time:
a) The proposals suggest that prize fund payments would be tied to measures
based upon available data relating to reported use of medicines, outcomes
and approval processes while currently little such data exists creating real
challenges to determining payment models;
b) To be effective the prize funds need to be large (suggestions range from a
minimum of US$6 billion per year to a high of US$ 240 per year) and currently
there appears to be little political will amongst potential donors to invest in an
internationally managed funder over which they would have little control. This
is evidenced by the widespread lack of support (from either donors or
industry) for either the Health Impact Fund or the Medical Innovation Prize
Fund in their current form28;
c) In common with AMCs, while not yet proven, it is likely that prize funds would
disproportionately skew R&D towards later stage development.
Whichever pull mechanism is used to attempt to stimulate industry to work on
technologies for neglected diseases, one of their key advantages is that they shift
the risk from the funder to the R&D partner who only receives payment once the
technology has been successfully developed. However, as indicated by the
pneumococcal vaccine AMC investment pot and the proposed necessary budgets for
effective prize funds, the financial ‘pull’ incentive may need to be very large,
particularly for those technologies that are earlier in the R&D cycle, scientifically
more complex to develop or associated with other substantial hurdles to industry
engagement (e.g. lack of expertise in conducting trials in developing countries). It is
difficult to judge, in advance, the optimal size of pull incentive required – creating a
real danger of either overpaying, in which case there is an element of unnecessary
subsidy to industry, or underpaying in which case the incentive will be ineffective.
Where a major pharmaceutical company is involved in developing products for
diseases of poverty, it is typically driven by corporate social responsibility (CSR)
objectives and, in some cases, because developing countries may be major markets
and important sources of revenue in the future. The CSR programmes of major
pharmaceutical companies usually revolve around their expertise and existing
products, currently aimed at the developing world. Often these projects rely on
single champions, with no corporate urgency to accelerate the project through the
development process, and focused on developing single candidates29. This focus,
instead of a building a portfolio of compounds or searching for new compounds,
increases the overall risk of failure and also has the impact of decreasing efficiency
and increasing costs.
Gold RG & Marin J-F (2012) Ibid
http://www.forbes.com/sites/sarikabansal/2011/11/22/top-five-ways-big-pharma-neglecteddiseases/
28
29
15
PATH Product Development Business Case
Option 3: Direct funding to academic R&D institutions
While direct funding to industry might be one way to stimulate pharmaceutical activity
in later stage R&D for neglected diseases much of the more basic research required
takes place in academic laboratories where more of the global scientific expertise in
tropical medicine is situated. One of the key strengths of academics working in
global health drug development is their early innovation and demonstrated capability
and productivity in early stage discovery (new disease targets and chemical
compounds), a strength coupled with a strong scientific reputation (gained largely
through publication in peer-reviewed journals) which allows them to effectively
engage with the regulatory authorities and influence later-stage development by
other stakeholders.
While often highly successful at leveraging both public and private sector funding
and managing R&D costs within their grant parameters, academic institutions tend to
take a very project-based approach, working on extremely narrow product
development activities rather than taking a larger pipeline or portfolio approach. This
can both increase risks of failure (the costs of failure being borne by the funder) and
limit their ability to utilise promising early-stage chemical entities for other potential
uses. They can also lack the ‘translational’ capabilities to ensure that promising new
chemical entities and/or drug (or other technology) candidates can be turned into
appropriate formats to address patient need and/or manufacture and distribute
these. R&D that takes place in academic institutions is often slower and more
fragmented (with activities being conducted in an interrupted fashion alongside other
priority activities) than in either the pharmaceutical industry or efforts led by Product
Development Partnerships (PDPs)30
To enable combinations of drugs to be developed (to avoid resistance to new drugs
by the pathogens) there would still need to be direct oversight by some organisation
over the disease portfolio as a whole. This could be problematic, where academic
research groups typically oversee work on one or a small number of potential
candidates and could be met with reluctance by investigators who value their
autonomy. Opportunities to integrate the clinical and basic programs could be lost
and there may be duplication of investment to develop facilities that a more
coordinated approach could share.
Option 4: Invest in a portfolio of product development R&D through support to
PDPs (preferred option)
Jointly created and funded by governments, private foundations and industry, PDPs
work like “virtual” pharmaceutical companies with a small, central group of core staff
coordinating the development of a portfolio of new health products (e.g. vaccines,
drugs, diagnostics) by drawing on the respective strengths of academia, large
pharma and smaller biotech companies at various stages of the product
development cycle. While academic R&D is driven by the potential for high profile,
peer reviewed publication, and industrial R&D by profit, as non-for-profit entities,
PDPs are primarily driven by patient need.
30
Moran M. et al London School of Economics and Political Science, The New Landscape of Neglected Disease
Drug Development Wellcome Trust 2006
16
PATH Product Development Business Case
The portfolio approach diversifies risk, increases the likelihood of developing
combination therapies, decreases overall risk of failure and can reduce costs through
such factors as platform approaches, the screening of compound libraries for
applicability against multiple diseases, selection of only the most promising
candidates for later stage development, and the leveraging of not only finance but
technical expertise and infrastructure from a range of different partners. Careful
financial oversight within PDPs allows funding to be redistributed, when individual
projects are stopped, if they do not meet their milestones.
They work on all stages of the product development cycle from basic research
through to registration, faster and at lower cost than either the academic or private
sectors31.
Over the past 10 years PDPs have been successful in the development of a wide
range of new health products for use in developing countries. During this time there
have been 43 new products registered with another 350 in development, PDPs being
responsible for approximately half of this 32. The pharmaceutical industry has been a
particularly active and willing partner and in recent years (2007-11) the proportion of
funding for neglected disease R&D from the pharmaceutical industry has been rising.
The private sector currently contributes 13% of the total spending33.
Representatives from the pharmaceutical industry have highlighted that PDPs play
an instrumental role in breaking down the institutional barriers between partners who
otherwise would not work together and allowing for R&D developments that would
not previously have been possible. In addition in areas where there is little or no
commercial return, the private sector view the role of the PDP as critical to avoid
duplication and to focus on the most promising candidates, wherever they originated
from.
Acting as neutral, coordinating bodies, in many ways the funding of a PDP to deliver
new drugs for neglected disease represents a combination of options 2 (funding to
industry) and 3 (funding to academia), allowing DFID to capitalise on the strengths of
each partner. Funding PDPs enables DFID to support a wide portfolio of R&D
activities via a single organisation (rather than via a number of smaller contracts for
individual activities with different partners). The neutrality of PDPs (and lack of profit
drive) enables them to develop strong relationships with developing country
governments and the appropriate (global and national) regulatory agencies which
increases their ability to conduct clinical trials in disease endemic environments and
to ensure the timely certification, registration and use of new drugs.
Product Development Partnerships have a range of different IP agreements with
their pharmaceutical, and other, partners, using the guiding principle of developing
global public goods34, i.e. that access to treatments should be equitable and
31
Moran M (2005) A Breakthrough in R&D for Neglected Diseases: New Ways to Get the Drugs We
Need. In PLoS Medicine v6
32 Policy Cures (2012) Saving Lives and Creating Impact: EU Investment in Poverty-related Neglected
Diseases.
33 Policy Cures (2012) Neglected Disease R&D: A Five-Year Review: The Fifth Annual G-Finder
Report.
34 Changing with the times – doing the right things in the right places in the right way – presentation to
DFID EMC May 2013
17
PATH Product Development Business Case
treatments should be affordable to those who need them. Where the PDPs do not
control the IP related to each of their products they negotiate appropriate licensing
rights (e.g. non-exclusive and sub-licensing rights) to enable them to deliver products
to patients at cost in low income countries. In some cases the private sector partner
may be able to commercialise in high income countries, if a market exists. The
private sector has a history of sharing IP with PDPs, and acknowledges that they will
not commercial returns in this area of their work.
For some products (e.g. vaccines for TB and HIV) modelling studies have identified a
potential commercial market, once products are available. These studies highlight
the need for push funding in the near future, with the potential for differential pricing
at later stages, and the funds realised can then be used to support future
developments35.
PDPs collaborate with the public and private sectors in developing countries to
improve capacity building for research into product discovery, development and
manufacture. The technology transfer can lead to sustainable production of new
technologies and result in new jobs being created in developing countries.
The main identified risk associated with funding PDPs relates to the issue of funding
sustainability. Drug, vaccine and diagnostic development is lengthy and uncertain
leading to a need for stable long-term financing. However, PDPs are largely funded
by the public and philanthropic sectors whose funding tends to be short-term (five
years and under) and unpredictable. In addition some funding can be earmarked,
that is provided for specific projects This lack of flexibility can prevent PDPs from
being able to use and move funds strategically across their portfolios to the most
promising projects36. However, the PDPs do have safeguards in place to protect
against these risks through ensuing they have diversified funding sources and
maintain a balance of core versus earmarked funding.
Concluding rationale for preferred option: funding the three PDPs based at
PATH
The below table presents a quantitative comparison of the three options discussed
against a series of 5 critical success criteria. Building on the options appraisal
above, each option is scored between 1 (low/poor) and 5 (high/good) for each of
these criteria and then summed to give an overall score. Beneath the table we
present a succinct narrative to explain why, on the basis of these criteria, funding to
the PDPs at PATH is the preferred option
Compared to either industry or academia alone, PDPs have very strong recent
history of delivering effective, safe, affordable and, critically, appropriate
technologies (including vaccines and diagnostics) for diseases of the poor. They
have a strong pipeline of new potential products, pointing to the likelihood of
continued high performance through to 2018.
35
Aeras and TBVI: TB Vaccine Research and Development: A Business Case for Investment: 2013
Hecht R, Wilson P & Palriwala A (2009) Improving Health R&D Financing for Developing Countries:
A Menu of Innovative Policy Options. In Health Affairs v28(4): 974-985
36
18
PATH Product Development Business Case
Critical Success
Criteria
Able to deliver effective,
safe, affordable and
appropriate neglected
diseases to those
populations that need
them most
Ability to bring together
the right partners
Costs are proportionate
and manageable
Ability to manage risk of
failure
Leveraging of wider
resources
Total Score
Option 2 (fund
pharma) score
4
Option 3 (fund
academia)
3
Option 4 (fund
PATH PDPs)
5
3
3
5
2
3
4
3
2
4
1
2
4
13
13
22
PATH's PDPs have the ability to broker partnerships across the full range of players
necessary to ensure successful product development (from basic science through to
delivery and post implementation surveillance), which is demonstrated through their
strategically chosen partners (including industry and academia as well as other
PDPs). The partnership model allows them to limit core costs and approach product
development in a flexible and cost-effective manner which results in significantly
lower costs for development than seen in the private sector, and faster lead times
than seen in either industry or academia.
By adopting a portfolio of activities across a range of diseases and ensuring a
balance between core and earmarked funding, PATH PDPs are also well-placed to
minimise the risk of failure. In order to support this strategic approach to portfolio
management, DFID proposes to continue to core fund the PATH PDPs. The strong
decision-gates mean that only the most promising candidates move from earlier to
later stage development, both reducing risks of failure and increasing operating
efficiencies and value for money.
B. Assessing the strength of the evidence base for each feasible option
In contrast to many development interventions, there is limited published evidence
comparing the effectiveness of different funding models for delivering new products.
Therefore it is not possible to present formal evidence ratings for each option using
the DFID standard criteria. Instead, the decision on which funding model to use is
based largely on qualitative assessments and critiques of different models for
stimulating global health product development37, external evaluations of the various
PDPs operating in the global health space, the personal viewpoints of other
stakeholders (including other R&D funders and pharmaceutical partners), and
DFID’s own judgement and expertise in managing research. This is in line with
recent guidance from the Quality Assurance Unit38.
37
38
Gold RE & Morin J-F (2012) Promising Trends in Access to Medicines. In Global Policy v3(2): 231-237
QAU Report Violence against Women and Girls’ Research and Innovation Fund. See p.28
19
PATH Product Development Business Case
Previous research39 suggests four reasons why PDPs are particularly effective in
securing increased industry engagement to accelerate product development:

PDPs have skills and resources, such as infectious disease expertise and
access to developing country clinical trial sites, that companies may lack
PDP funding is crucial to the development of a ‘no profit no loss’ model for big
pharma, particularly at the stage of large scale clinical trials, making ‘public
good’ activities more acceptable in board rooms and to shareholders. PDPs
act as a ‘push incentive’ as they significantly reduce R&D costs for industry
because of sharing costs with the PDP;
PDPs can provide an important source of revenue for smaller industry
partners, either as a commercial contractor of services or as a grant funder for
technology research (often without diluting equity as venture capitalists
would). PDPs can also help broker partnerships with larger companies that
may be needed to undertake large clinical trials or scale up manufacturing
processes. This may include technology transfer to and partnerships with
developing country pharmaceutical companies; and
PDPs have been successful in raising the issue of future access to new
products by developing countries with donors and potential recipient
countries. Addressing access issues may be difficult and politically sensitive
for companies to take on by themselves (as they are seen as having vested
commercial interests). However, it is essential for industry engagement that
mechanisms are in place for any successful new product to be used.



Evidence ratings for the options discussed in the business case
Option
Evidence rating
1
2
3
4
Do nothing
Weak
Weak
Medium
C. For Each Feasible Option, What is the Assessment of Local Capacity? Is the
Intervention Likely to Strengthen Capacity in a Durable Manner?
The development of products for neglected diseases necessitates the conduct of
clinical trials in disease-endemic countries where research capacity is often weak.
The pharmaceutical industry can find it particularly challenging to enter and work in
these contexts, where governments can be wary of large pharmaceutical companies
and where poor in-country infrastructure can make accessing research sites and
conducting trials particularly difficult. While academics may find it easier to enter
these countries to conduct research they often lack access to pre-established clinical
trial sites and associated laboratory facilities. PATH programmes have a presence
in a number of developing countries, and have, over the years, invested heavily in
the development of local R&D capacity (both in terms of infrastructure and staffing).
39
Moran M. et al London School of Economics and Political Science, The New Landscape of Neglected Disease
Drug Development Wellcome Trust 2006
20
PATH Product Development Business Case
Where possible they leverage previous investments in capacity-building through the
conduct of multiple trials at single sites.
D. What is the likely impact (positive and negative) on climate change and
environment for each feasible option?
Categorise as A, high potential risk/opportunity; B, medium/manageable potential
risk/opportunity; C, low/no risk/opportunity; or D, core contribution to a multilateral
organisation
The climate change and environmental impacts are likely to be similar for all three
feasible options (though it is possible that negative impacts will be slightly reduced
via the PDP option due to enhanced operating efficiencies associated with the
collaborative way of working with partners). A single climate and environment
assessment (CEA) is presented here.
Option
Climate change and
environment risks and
impacts, Category (A,
B, C, D)
Climate change and environment
opportunities, Category (A, B, C,
D)
1 Do nothing
2 Support
commercial
research group
3 Develop new
partnerships
4 Support PDPs
C
B
C
B
B
B
B
B
The activities that will be implemented/funded as part of this intervention are unlikely
to have any major environmental impact or involve any serious/substantial risks to
environmental and human health. However there are still a number of issues
associated with all kinds of medical research that need some level of consideration
and adequate management. The disposal of medical and/or bio-hazardous waste is
one of them as improper disposal can have very serious impacts on the
environment, ecosystems and human health40,41,42.
Responsible environmental management is included in various international and
regional standards and regulatory requirements such as those set by the
International Conference on Harmonisation of Technical Requirements for the
Regulation of Pharmaceuticals for Human Use43 and in the WHO Good Laboratory
and Good Manufacturing guidelines44. Such guidelines further lay strict standards for
the use of animal and human subjects in research as initially laid out in the World
Hossain MS et al (2011) Clinical solid waste management practices and its impact on human health and environment--A
review. In Waste Management v.31(4):754-66.
41 Johannessen LM et al (2000) Health Care Waste Management Guidance Note. World Bank. Washington.
42 Prüss A et al (2000) Safe management of wastes from health-care activities. WHO. Geneva.
43 See www.ich.org for further information
44 See http://www.who.int/medicines/areas/quality_safety/quality_assurance/production/en/ for
documentation
40
21
PATH Product Development Business Case
Medical Association’s 1964 Helsinki Declaration. PDPs and their partners reflect
these strict international safety standards, as well as national environmental
standards and regulations, in their own Standard Operating Procedures (SOPs)
which include environmental impact reduction (in particularly associated with waste
disposal). Where disease endemic country partners do not have existing SOPs,
DNDi and other PDPs provide technical support to develop these. New drugs and
associated medical products will not pass through the WHO or national regulatory
process without demonstrating strong adherence to international, regional and
national standards, and the European Medicines Evaluation Agency (EMEA) in
particular now requires a full environmental risk assessment for all new medical
devises.
Additionally, all vaccine, drug and diagnostics trials must obtain ethical approval both
from their host institutions and within the countries within which they are conducted;
such approval will include adherence to national environmental and safety
legislation. To this end all PDPs have or are developing environmental policies and
safety guidelines in place. Over the funding period covered by this business case
DNDi will be collating some of these in the form of an Environmental Charter which
will apply to themselves and all their partners.
From an operational perspective, PDP operations are likely to have significant
carbon footprints, particularly associated with international travel for meetings,
workshops, conferences and field activities. As business class flights are about
three times more carbon intensive per flight than for economy seats45, DFID will also
recommend that as much travel (associated with this funding) as possible is
economy, irrespective of staff seniority, unless there are specific reasons to the
contrary.
Of the work supported by this business case, the diarrhoea portfolio needs the most
extensive considerations:
Most diarrhoeal pathogens, including rotavirus, Shigella, E.coli, and ETEC are
transmitted via the faecal-oral route and can be spread through the environment and
drinking water supplies. In many developing country contexts rates of access to
improved sanitation and safe drinking water are low, increasing the risk of
environmental faecal contamination (through open defaecation) and exposure. The
development of diarrhoeal vaccines will act to reduce the risk of infection, while new
diagnostics and drugs will allow for timely and effective treatment; together advances
across these three areas will contribute to reduced risk of environmental
contamination through the prevention and effective management of infection. This
will become increasingly important in areas likely to experience increased
temperatures and rainfall (including more intensive rainfall events), as a result of
climate change, these two climatic factors (especially when coupled with increasing
housing density in the urban sector) resulting in conditions more favourable for the
spread of diarrhoeal pathogens46.
45
46
UK Department for Forestry and Rural Affairs (2009)
WHO (2009) Protecting health for climate change: connecting science, policy and people.
22
PATH Product Development Business Case
The main potential environmental risks associated with this portfolio relate to the use
of attenuated live vaccines and associated pathogen shedding in the environment.
However, there are already two live rotavirus vaccines licensed and in use in many
countries, with no demonstrated environmental risks detected47. In the case of the
live Shigella and ETEC vaccines under development, PATH are ensuring that they
are developed in such a manner that they do not compete well in the environment
(soil, sewage or surface waters) and will not pose an environmental risk in terms of
pathogen shedding. PATH will continue to monitor potential environmental risks
associated with the development and use of live diarrhoeal disease vaccines but the
current evidence suggests minimal threat.
While this funding envelope is restricted to supporting vaccine, diagnostics and
drugs, PATH also houses a ‘Technology Solutions Global Programme’ which is
exploring innovative ways to improve access to safe water through water storage
and treatment technologies. All teams working on diarrhoeal diseases across the
organisation are represented on and work together via a cross-team working group
to ensure a fully comprehensive approach to diarrhoea prevention, management and
control, including environmental interventions (water and sanitation). PATH have
established the www.defeatdd.org website to provide a full range of diarrhoeal
disease control tools for advocates, documents and guides for programme officers
and links to further information on interventions to control diarrhoea, and they
continue to work with governments across the globe to develop integrated diarrhoeal
disease control programmes that include both medical and environmental
interventions.
E. If Any, What are the Likely Major Impacts on Social Development?
Neglected infectious diseases (NIDs), including diarrhoea and malaria, affect the
poorest, hardest to reach people, who often live in remote or conflict-affect areas
with minimal access to health services. Part of the rationale for eliminating these
disease is to help break the poverty cycle and improve economic prospects for the
poor. Preventing morbidity from NIDs will reduce out-of-pocket expenditures on
treatment, reduce time caring for sick children and other family members and
contribute to increased school attendance and productivity. The development of new
products to tackle NIDs will have a disproportionate impact on the health and
economic productivity of the poorest, most marginalised peoples across the globe.
F. For Fragile and Conflict Affected Countries, What are the Likely Major
Impacts on Conflict and Fragility, if Any?
N/A
G. What are the Likely Costs and Benefits of Each Feasible Option? Identify
the preferred option.
DFID Business Cases require a cost-benefit analysis to be conducted for each
feasible delivery option. This requires the identification and quantification of
47
Anderson EJ (2008) Rotavirus vaccines: viral shedding and risk of transmission. In The Lancet
v8(10): 642-649
23
PATH Product Development Business Case
monetary value to costs and benefits. Applying a formal cost-benefit analysis to
research and development investments is difficult. Whilst a description of the
required characteristics (target product profiles) are developed for each desired new
product a) it is difficult to predict early in the product development what the precise
final drug efficacy and/or costs will be and b) it is beyond the scope of the product
developer to ensure that drugs produced reach all patients in need of treatment.
There is limited publically-available evidence on the relative cost-effectiveness of
PDPs versus industry models. This is driven in part by the commercially-sensitive
nature of industry data, but even more so by the reality that most of the commercial
pharmaceutical industry now conducts the majority of their neglected disease R&D
activity through partnerships with PDPs, rather than alone in-house.
Given the data challenges is not possible to perform a full cost-benefit analysis of the
options discussed in this business case. Such analysis would be based on many
assumptions and lack credibility. There is some evidence that suggests the PDP
model is a cost-effective mechanism for neglected diseases product R&D, especially
when compared with standard commercial product development48. The study
reviewed the work of drug development PDPs, which together had a combined
portfolio of 40+ projects, representing 75% of all identified on-going product
development (at the time of the study). The researchers identified that R&D was
more fragmented and slower in the academic sector than the private sector and
through PDPs and also estimated that the cost of bringing a new drug to market via
a PDP at that time was US$150 million compared to US$800 million via an industrial
pharmaceutical company working alone. This discrepancy in costs reflects a
combination of factors including the ability of PDPs to leverage substantial in-kind
inputs from a large range of partners (an unpublished analysis by one of the PDPs
suggests that for each $1 of public investment they are able to leverage $1.5-$2.5
from the private sector). The same analysis suggests that R&D is slower and more
fragmented in the academic sector than in the private sector or when coordinated by
PDPs49.
Given the analysis and the associated risks outlined above, the judgement is that
Option 4 DFID provides funding for the PDPs housed at PATH is the preferred
option.
Comparing core cost components across different delivery mechanisms
Commissioning and managing a programme of product development entails four
broad cost categories:



Core Costs - including central management, monitoring and research and
dissemination of information and overhead costs.
Implementation Costs - including resource materials, equipment costs,
experimental research and development activity, travel expenses and
consultants fees.
DFID staff time – the costs of DFID oversight and on-going management
48
Moran M. et al London School of Economics and Political Science, The New Landscape of Neglected Disease
Drug Development Wellcome Trust 2006
49
Moran M et al (2006) The New Landscape of Neglected Diseases Drug Development. Wellcome Trust.
24
PATH Product Development Business Case

External evaluation – including costs of assessing the impact of the
programme
The table below briefly and quantitatively compares these different cost categories
across the three options considered in this business case (not including the
counter-factual).
Core Costs
Option 2: Direct
support to pharma
research
High: costs include
support to facilities
and resources and
complex
management
structures
Implementation Costs
High: done to
international
regulatory approval
standards, based in
developed countries
DFID staff
time
Medium: likely to be
high in first years,
including commercial
expertise from
corporate
departments and
technical expertise
from across DFID.
Likely to be high level
of staff input to
ensure coordination
of activities with other
partners
External
evaluation
High: Could be very
sensitive when
dealing with
Option 3: Direct
support academic
research
Medium: includes
basic science lab
costs, project based
with facility and
resource costs
included. UK
Universities claim full
economic costings
and others are often
>20%
Medium: but may not
be done to regulatory
approval standard
High: likely to be high
in first years,
including commercial
expertise from
corporate
departments and
technical expertise
from across DFID. In
addition further staff
time required to set
up robust M&E and
other systems to
capture baselines,
outputs and
outcomes. Likely to
be high level of staff
input to ensure
coordination of
activities with other
partners
Medium: likely to
include a number of
different partners if
Option 4: Support to
PATH PDPs
Low: largely virtual
organisations leveraging
in support using other’s
facilities and resources
with small staff and
simple management
structures. Overheads
charged at 13%
High: done to
international regulatory
standards, but often in
partnership with
developing country
partners where costs
may be slightly lower
Low: building on existing
structures within PDPs
that have been set up
explicitly to manage
technical and access
partnerships and M&E
systems.
Low: PDPs activities are
more transparent
although some
25
PATH Product Development Business Case
Option 2: Direct
support to pharma
research
commercial
information
Option 3: Direct
support academic
research
each individual
academic group is
working on specific
projects
Option 4: Support to
PATH PDPs
commercial in
confidence sensitivities.
Opportunities to do (and
demand for) joint
evaluations with other
donors.
Expected benefits
The broad benefits of the programme components are set out in the Strategic Case.
The benefits in terms of research are new and improved health technologies for
diseases of poverty, leading to a range of health, social and economic benefits for
women, girls, men and boys.
The benefits from investing in the PATH programmes to develop new products for
malaria and diarrhoeal diseases are best considered in terms of:
1. Creating and maintaining a long-term, financially sustainable supply of
rotavirus vaccine
The development and introduction of new, affordable vaccines against the leading
causes of severe diarrhoea in low-resource settings could lead to drastic reductions
in the rates of disease, death, and long-term negative impacts on children and their
families.
For rotavirus vaccines, demand in the developing world is outpacing supply. This
gap is expected to reach 20 million doses by 2015 and will expand as additional
countries seek to introduce the vaccines. By filling the gap between supply and
demand, with low cost vaccines, there could be another 60 million vaccine courses
added to the global supply by 2020, with an estimated lowering of vaccine prices to
less than US$1 per dose. It is estimated that this will avert 700,000 to 1 million
deaths among infants and children under five years50.
2. Developing treatments for diarrhoea
Developing novel treatments targeted to work against specific pathogens will reduce
the duration of infection and limit the spread of diarrhoeal diseases in the population.
Affordable and accessible new treatments for diarrheal disease have the potential to
directly reduce poverty among the world’s poorest people by increasing economic
productivity as well as reducing deaths and illness among children.
Improving the formulation, packaging, and presentation of ORS will increase and
expand its use. ORS is credited with saving millions of lives since its introduction in
the 1970s by reducing mortality associated with acute secretory diarrhoea. Yet
research shows that it is only used in an estimated 34% of cases of paediatric
diarrhoea in developing countries51.
50
Atherly DE, Lewis KD, Tate J, Parashar UD, Rheingans RD. Projected health and economic impact
of rotavirus vaccination in GAVI-eligible countries: 2011-2030. Vaccine 2012; 30(1 Suppl): A7-14.
51 Gupta GR. Tackling pneumonia and diarrhoea: the deadliest diseases for the world's poorest
children. The Lancet 2012; 379(9832): 2123-4
26
PATH Product Development Business Case
3. Safe and widespread adoption of treatment options for malaria (in particular
P. vivax)
Approximately 8% of the population in malaria-endemic countries have G6PD
deficiency, (some studies have recorded local prevalence as high as 28%). This
corresponds to an estimated 220 million males and 133 million females prone to
adverse events resulting from primaquine and tafenoquine treatment. The safe and
wide-scale adoption of these antimalarial treatments to accelerate progress toward
malaria elimination relies on the availability of low-cost, point-of-care diagnostic tests
for G6PD deficiency. Several tests are commercially available, but few have been
rigorously evaluated, and most are not practical for use at the point of care for
malaria case management.
Quantifying the benefits of research
Although it is not possible to quantify the full societal and economic benefits arising
from funding global health research, there is strong suggestive evidence from the UK
that it is likely to be high.
In 2008, the Medical Research Council, the Wellcome Trust and the Academy of
Medical Sciences commissioned a study to develop methodology and calculate the
economic benefits of public and charitably funded medical research in the UK52. The
report, Medical Research: what's it worth?, demonstrated that the return on
investment for public and charitable funding of medical research was
substantial. The estimate for cardiovascular disease research for instance was that
for every £1 invested once, a stream of benefits worth 39p every year over the long
term was generated. The health gains in the period 1985 - 2005 from clinical
interventions relevant to cardiovascular disease were worth £53bn to the
economy. The proportion attributable to UK public and charitable cardiovascular
disease research was estimated at around 20%, and the time taken for research to
be translated into practice averaged 17 years. The internal rate of return from public
and charitable investments in cardiovascular disease research was therefore about
9%, a further 30% was contributed from spill-over effects to and from the private
sector. In the UK the net value to the UK of health gains and ‘spill over’ benefits
arising from medical research has been shown to wield a significant impact on the
UK economy53.
There are as yet no equivalent estimates for the economic return on investment for
global health research.
H. Theory of change for the preferred option
52
Medical
Research:
what
is
worth?
science/WTX052113.htm
53
Impact of MRC research: October 2010
http://www.wellcome.ac.uk/About-us/Publications/Reports/
Biomedical-
27
PATH Product Development Business Case
As previously stated, DFID’s investment in the PDPs based at PATH will allow them
to continue to contribute to reducing the global burden of neglected diseases and
improving the quality of life for patients and populations at risk. PATH’s theory of
change for product development partnerships is shown above.
Product development partnerships are an effective model that leverage the strengths
of partners—commercial, academic, government, research, and/or nonprofit—to
develop global public health goods that are appropriate, available, accessible, and
affordable. A PATH document, Maximising the benefits of public-private
partnerships, has been developed to describe the framework and case studies.
The work of the PATH PDPS leads to the following high-level outputs:
1. Improved product development pipeline: through the use of best practices in
portfolio/project/quality management, resources are efficiently applied toward
development of products with the most promise to make global health impact. This
leads to:
2. Increased supply of safe and effective products: the outputs of a robust
product development pipeline are proven products that meet the global public health
requirements (e.g., appropriate, affordable). Products are manufactured in adequate
supply to meet needs.
3. Improved enabling environment at global and national levels: the enabling
environment consists of supportive health policy and guidelines; defined regulatory
pathways; adequate financing/market incentive for product development, introduction
and scale-up; and development of capacity to validate, introduce, and deliver new
products. This leads to:
4. Improved support from global and national stakeholders: products pass
public health and regulatory review. Sustainable financing and delivery plans are
developed. Stakeholders approve and support product introduction and scale-up.
28
PATH Product Development Business Case
5. Improved product adoption environment: the targeted health issue is a high
priority among the target beneficiaries. Products are appropriate for target
populations and designed for use in low-resource settings. This leads to:
6. Increased consumer and market demand for products: consumers and health
workers are aware of and demand new products. Mechanisms and support for
procurement and distribution are established.
These outputs lead to the outcome of increased uptake of lifesaving products.
Effective and safe global health products demanded and implemented at large scale
will contribute to a reduction of morbidity and mortality in low-resource settings.
I. What measures can be used to assess Value for Money for the intervention?
PATH take a patient-needs approach to R&D and work with a diverse range of
partners to ensure the most appropriate and cost-effective approach to the
development of new health technologies. ICAI (2011)54 suggests that to represent
value for money, programmes receiving support from DFID should:
 Ensure they have realistic and appropriate objectives and a clear plan for
achieving their intended impact,
 Have robust delivery arrangements to support the desired objectives and
demonstrate good, transparent governance and management through the
delivery chain,
 Demonstrate a transformational, positive and lasting impact on the lives of the
intended beneficiaries,
 Incorporate learning to improve future aid delivery.
PATH’s PDPs have an ambitious set of objectives and their past performance and
proven pathways to impact suggest these targets remain realistic. Their patientneeds driven approach to portfolio development ensures they remain focussed on
the development of the most appropriate health technologies to have maximal
transformational impact on the lives of the poorest. They have strong and
transparent governance structures in place, including clear stop/start gates for
decision-making about which products to take forward in the product development
pipeline, to support the delivery of their objectives. Their role as facilitator, with the
objective of empowering local partners with contributions such as needs
assessments, seed or core funding, knowledge transfer, administrative and business
development support also acts to both keep costs down and maximise transparency
and accountability to intended beneficiaries in disease endemic countries. Their
partnership model approach allows them to keep down core costs while ensuring
robust delivery through a network of appropriate partners along different stages of
the R&D process. This same model allows them to operate as neutral brokers, giving
them strong legitimacy among all partners including disease-endemic country
governments. They continue to explore different partnership and business models to
assess their feasibility and impact.
In order to ensure investments in PATH’s PDPs continue to represent good value for
money for DFID there are a core set of indicators to be reported annually. These are
54
ICAI (2011) ICAI’s Approach to Effectiveness and Value for Money.
29
PATH Product Development Business Case
presented in the table below, categorised according to the core VfM indicators of
economy, efficiency, effectiveness and cost-effectiveness.
Criteria
Economy –
getting the best
value from
inputs
Assessed Attributes
 Increased
technical
capacity among
PATH’s partners
in low- and
middle-income
regions




Efficiency –
maximising the
outputs for a
given level of
inputs


Increased
capacity and
conduct of
clinical trials for
new products

Increased
evaluation and
registration of
new products





Effectiveness ‒
ensuring that the
outputs deliver
the desired
outcome

PDP-driven
outcomes


Specific Measures
Number of partners in lowand middle-income regions
able to manufacture vaccines
according to international
standards (ARVAC)
Number of partners in lowand middle-income regions
able to conduct preclinical
work to international
standards (DxG)
Number of new vaccines and
mucosal adjuvants, using
cGMP manufacturing
processes, developed and
ready for transfer to partners
in low- and middle-income
regions (EVI)
Number of manufacturers
engaged in diagnostic product
development (DxG)
Number of clinical trial sites
ready to conduct international
standard trials (DxG)
Number of clinical trials
implemented, number of
patients included in studies,
number of patients treated
outside of the studies (EVI,
ARVAC, DxG)
Number of INDs filed with
USFDA (DxG)
Number of in-country
evaluations of diagnostic
products (DxG)
Number of new treatments
registered
Number of new chemical
entities registered (DxG)
Progress towards WHO
prequalification of vaccine
candidates (ARVAC)
Number of vaccines studied
in target population in
expanded Phase 2 studies
30
PATH Product Development Business Case
Criteria
Assessed Attributes


Costeffectiveness

Expansion of
funders and
leveraging of
donated funds by
PDPs


Specific Measures
with final vaccine formulation
made to commercial scale
(EVI)
Number of countries
expanding radical cure of
P. vivax. (DxG)
Progress towards Millennium
Development Goal #4 (DxG)
Number and diversity of
partners and funders (EVI,
ARVAC, DxG)
Leverage of donated funds
against inputs/activities by
other organisations toward
same outcome.)
PATH’s measures to assess value for money are applied at different stages of the
PDP development and implementation process. Initially, in the consideration of any
new product development, a target product profile (TPP) is developed. All potential
candidate technologies are then assessed against this for their scientific and health
potential. PATH-led PDPs seek the opinion of independent, international expert
reviewers as well as internal scientific opinion, using the following criteria:

Scientific potential: What are the prospects for good scientific progress? Is
the concept scientifically sound? What is the background to the scientific
basis of the work; is there supportive evidence from previous work to indicate
that the project is headed in the right direction? What are the experience and
qualifications of partners, particularly in developing countries; is the collective
expertise adequate to ensure all technical areas are covered? Are there any
regulatory obstacles that would likely prevent this product from becoming
licensed?

Fit with the TPP: Will the candidate be able to fulfil the profile described? Is
the technology agile enough to adjust to potential minor changes in the TPP?
Is the cost of the product within an acceptable window for end-users?

Potential to increase local capacity: Can the PDP be used as an effective
and efficient mechanism to increase local capacity to evaluate, manufacture,
and/or use the technology in low- and lower-middle-income countries?

Justification for resources: Can PATH and the PDP justify the funds
requested as essential for the work and it is supported by the scientific
potential on the scale requested? Does the PDP-specific product proposal
represent good value for money?
Once the determination is made to move forward with a technology or product,
PATH and its individual PDPs monitor spending and value for money throughout the
lifetime of the individual research projects and have a robust process if further
31
PATH Product Development Business Case
resources are required. Down-selection criteria are clear and predefined to prevent
the use of additional resources on a product that is unlikely to become a licensed
product. Subcontractor performance is routinely evaluated and technical assistance
provided as needed to ensure regulatory and performance standards are met.
PATH PDPs utilise TPPs to guide decision-making at significant points in their
programs. Also critical to PATH’s success is the reliance on a lean virtual model to
leverage appropriate expertise without onerous overhead. Each of PATH’s PDPs
use risk-adjusted development strategies to build and manage their portfolios of
early-stage projects (based on new development leads) and late-development-stage
projects (e.g., re-purposing candidates within the Drug Development Group). The
specific PDP portfolios and TPPs are used to determine project-specific prioritisation
and execution.
Once project-specific activities reach the phases for clinical evaluation or
implementation, PATH executes the programs through their well-established network
of clinical trial and program implementation sites. PATH’s network of partners and
sites ensures that they conduct high quality research using good clinical practices.
They use their country presence and close partnerships with governments,
international agencies, and/or nongovernmental partners to maximise scale up of the
technologies for public health impact.
J. Summary Value for Money Statement for the preferred option
Criteria
Economy – getting
the best value from
inputs
Funding the PATH PDPs
Management costs are included in the funding from DFID.
The PDP works with and manages a wide range of partners
across all stages of the pipeline, runs open competitions for
innovations to include in the pipeline, All projects in the
portfolio are subject to a detailed cost assessment by the
PDP and its governance structures (scientific and technical
advisory committees, Boards) at different milestoned stages
along the development chain. Can leverage funding from
private sector partners, work with developing country
industrial partners and negotiate favourable costs and
conditions to keep costs low.
Efficiency maximising the
outputs for a given
level of inputs
The PDPs are able to develop portfolios using the best
candidates developed anywhere in the world. They make
strong, rigorous decisions at predefined go/no go stages in
the development chain and only progress candidates with a
high degree of efficacy at each stage, thus decreasing risk
of failure at each stage.
Effectiveness ensuring that the
outputs deliver the
desired outcome
PDPs act as neutral brokers, bringing together a wide range
of partners, to work together. Some commercial partners
would not be able to work together under other
circumstances. Able to leverage in a wide range of in-kind
support from different partners and have access to private
sector and in-country development partners. Able to reach
32
PATH Product Development Business Case
researchers, policy makers and regulatory authorities in
developed and developing countries.
Cost-effectiveness
Acting as ‘virtual’ organisations PDPs use resources and
knowledge from a wide range of partners. They are able to
develop new technologies without the high overhead costs
of maintaining complex infrastructure or a large workforce.
3 Commercial Case
Delivery through a third party (multilateral organisation; civil society
organisation)
What assurance has been obtained on the organisation’s capability and
capacity to deliver?
Selection of the PDPs based at PATH was made following a global open
competition. 47 organisations (including academic, industrial and public-private
partnerships) submitted expressions of interest, 17 of which were invited to submit
full proposals which all went through a formal process of scientific, technical,
commercial, financial and policy peer review, discussions with other funders, private
sector stakeholders, community stakeholders and researchers.
A substantial number of staff employed by the PDP are from the private sector,
including pharmaceutical and biotechnology industries and bring with them good
knowledge and practices in the field.
Core competences of organisation to deliver in country
The PATH PDPs have a track record of working efficiently with numerous partners in
many countries. Stringent portfolio management systems are employed which
ensure that only the most promising leads are pursued. There are strict go/no-go
decision points in the management of their portfolio of products which means that
they are able to close out projects quickly that are unlikely to produce the desired
outcome. The PDP has partnerships with organisations involved in the delivery of
new technologies; to ensure that once developed they can be made available to
those who need them.
Procurement capability
The organisation has demonstrated robust procurement systems and has a proven
record in supply chain management and attaining economies of scale. Robust due
diligence assessment has provided further assurance that procurement practices are
undertaken professionally and in line with recognised best practice.
PATH’s procurement processes and risk are regularly assessed by their own boards,
and by funders, as part of the due diligence for providing support, by independent
reviews of the organisation and members of the Multi Donor PDP Funders Group.
Is there an opportunity to negotiate on the organisation’s anticipated costs?
33
PATH Product Development Business Case
PDPs have been shown to deliver new products faster, and at lower cost, than the
public or private sectors alone. They are able to leverage in resources, knowledge
and expertise, from a range of different partners. The organisation will be constantly
looking for potential savings that can be made during the term of the programme.
The portfolio management enables the organisation to focus closely on products
where there is a higher chance of success. The level of funding from DFID is less
than that proposed in the organisation’s tender. Based on an analysis of the
workplan, objectives and following discussions with other technical funders, our
assessment is that there is an opportunity to invest up to £16 million in PATHs PDPs
with increasing returns.
DFID Relationship
DFID has been a supporter of PDPs for some time, and based on previous
experience and long term relationships with PDPs is viewed as a global leader in this
area. DFID has worked with other funders, and PDPs themselves, to leverage
support from other donors. The donor group (PDP Funders Group), currently chaired
by DFID, has played a major role in influencing PDP governance, structure and
financial planning. Donor input is welcomed by PDPs and donor harmonisation on
reporting has created efficiencies.
4 Financial Case
What are the costs, how are they profiled and how will you ensure accurate
forecasting?
The proposed budget for the PATH PDPs is £16,050,000 over 5 years (2013 –2018).
The anticipated breakdown of core funding by DFID financial year is as follows but
will be subject to negotiation with PATH based on need and avoiding payment in
advance of need.
Programme level costs
Cost Categories
Research costs
 Diarrhoeal disease drugs
 Diarrhoeal disease
vaccines
 Malaria diagnostics
Evaluation costs
Total
Research
costs
Overhead
Total
5,220,000
5,220,000
780,000
780,000
6,000,000
6,000,000
3,480,000
50,000
520,000
4,000,000
50,000
13,970,000
2,080,000
16,050,000
34
PATH Product Development Business Case
Amounts are £m except for the evaluation costs (exact timing of the evaluation to be
agreed)
Year
1
13/14
2
14/15
3
15/16
4
16/17
EDD
OWH
DxG
1.3
1.6
0.8
1.5
1.5
1.3
1.5
1.0
1.0
1.0
1.1
0.5
0.7
0.8
0.4
6
6
4
Total
3.7
4.3
3.5
2.6
1.9
16
Evaluation
5 Total
17/18
50,000
How will it be funded: capital /programme/admin?
Funding will be made available from programme funds through a Memorandum of
Understanding from the Human Development Team in Research and Evidence
Division.
How will funds be paid out?
Support will be through a Memorandum of Understanding with PATH. Payments will
be provided in June and November each year on production of appropriate claim
forms.
What is the assessment of financial risk and fraud?
PATH will administer and account for DFID, and other funders’ contributions in
accordance with its financial regulations and other applicable rules and procedures
and practices.
PATH has a proven record of strong financial management and probity employing
international standards of financial management and accountability. The risk has
been assessed as Low. Conditions will be included in the MOU to ensure that PATH
have appropriate fraud and conflict of interest policies in place.
How will expenditure be monitored, reported and accounted for?
PATH will be required to submit Annual Audited Accounts for each of the years
covered by the DFID grant. Harmonised annual reporting to donors will include
detailed information on finances, in addition to technical, organisational and
governance issues.
5 Management Case
What are the management arrangements for implementing the intervention?
The MOU will be managed by the Human Development Team in DFID’s Research
and Evidence Division. They will have oversight through routine financial and
performance reporting and review, including at regular donor meetings, when all
donors will discuss the organisations scientific, technical, governance,
organisational, operational and financial management.
35
PATH Product Development Business Case
Within DFID a Health Adviser and Research Manager in the Human Development
Team will provide the lead technical and project management roles, overseeing the
relationship with PATH. A Deputy Programme Manager will be responsible for the
day to day administration of the grant including financial tracking, compliance and
other administrative functions.
PATH is overseen by a Governing Management Board and there are Scientific
Boards of experts for each individual PDP, all of which meet on a regular basis.
What are the risks and how these will be managed?
Overall the risk for this business case is HIGH.
PATH and the individual PDPs undertake regular risk assessments, the Board has a
role in the detailed scrutiny of risk. The following table provides a view of the major
risks, technical, organisational and financial risks for the organisation which is
reviewed internally throughout the year and will be reviewed annually by DFID at the
time of the annual review.
No
Risk
Technical risks
Probability
Impact
Mitigation Measures
1
Generic Risk:
PDP-associated
risks are not
adequately
anticipated or
managed.
Medium
High

2
Generic Risk:
PATH-led PDPs
may commit to
advancing
products that are
not the most
impactful and
effective.
Medium
Medium
PATH conducts formal risk assessment
analyses for programs annually and prior to
the start of new projects or partnership
agreements.
 Risk assessments are carried out by product
development teams with reviews by program
and institutional leadership and are linked to
the institutional review process for
institutional strategic priorities, clinical trials
and human subjects (when appropriate),
financial benefits and impacts, and
intellectual property.
 Risk avoidance, management, and
mitigation strategies are included as core
components of project planning and
management activities and project/program
reporting procedures.
PATH has developed standard practices for
active portfolio management both within and
across its PDPs that include:
 Assessing target product profiles both
internally and through external expert
reviews.
 Establishing formal decision gates and
go/no-go points throughout the product
development process.
 Conducting evaluations before and after
proof of concept as an essential components
of the PDP decision-making process as well
as a core element of evidence generation
and dissemination of evidence to the
broader scientific and public health
communities.
 Conducting evaluations of global access as
36
PATH Product Development Business Case
No
Risk
Probability
3
Generic Risk: The
regulatory
landscapes in
targeted
developing
countries are not
conducive for
introduction or
scale up of
developed
products.
4
Risk for G6PD
High
DxG:
The quality of
point-of-care
G6PD tests will
be unregulated
and poor.
Risk for G6PD
Medium
DxG:
The companies
developing
products for target
market may not
have the
commercial and
technical capacity
to deliver highquality products.
Risk for vaccines
Medium
for diarrhea,
ARVAC, EVI:
Tropical gut
enteropathy will
reduce protective
response for oral
vaccines.
Risk for vaccines
Low
for diarrhea,
ARVAC, EVI:
Inadequate funds
and/or timelines for
vaccine portfolio
development.
Risk for treatment
Medium
of pediatric
diarrhea, DRG:
Weak
Pharmacovigilance
infrastructure in
many developing
countries will limit
the testing and risk
5
6
7
8
High
Impact
Medium
Medium
Medium
Medium
High
High
Mitigation Measures
a core evidentiary base for PATH’s activities
to facilitate scale-up and access to lifesaving
technologies.

PATH’s PDP target product profiles and
go/no-go decisions include explicit
consideration of introduction and regulatory
contexts.

PATH PDP and commercialization teams
work with regulatory consultants early in
the product development pipeline to
identify strategies for registration.

PATH partners with in-country ministries of
health and academic institutions on clinical
research to leverage partners’ existing
relationships and experiences with
regulatory approvals.
The PATH-led PDP is working to establish
evaluation guidelines and standards, as well as
initiate discussion of viable and sustainable
regulatory processes for the G6PD test.
 The PATH-led PDP has developed a
series of tools for in-depth evaluation of
the financial robustness of companies and
the capacity of companies to take a
product to market.
 The PATH-led PDP has also developed
tools to verify the product development
status and performance claims of
companies.
The PATH-led PDP has been investigating
mucosal adjuvants, formulation and dose
scheduling strategies, and parenteral
vaccination.
The PATH-led PDP has continued to seek
funding from multiple sources and has
developed contingency strategies for seeking
out alternative developers and transferring IP,
data, and regulatory responsibility.
 The PATH-led PDP continues to conduct
training around pharmacovigilance in
countries and regions in which we work.
 The PATH-led PDP integrates
pharmacovigilance best practices into all
clinical research as appropriate.
37
PATH Product Development Business Case
No
9
1
1
2
Risk
management
associated with
new products.
Risk for treatment
of pediatric
diarrhea, DRG:
Limited clinical trial
resources in
particular countries
or regions (e.g.,
diarrhea research
in Bangladesh) will
limit ability of the
PDP to test and
introduce new
products.
Organizational
risks
PATH’s multiple
and diverse
partnerships may
create the potential
for conflicts of
interest.
Probability
Impact
Medium
Medium
Low
High
Financial risks
Donor funds are not
managed to high
standards and
levels of
accountability.
Donors’ funds are
dispersed over
multiple activities
diluting impact.
Low
High
Mitigation Measures
 The PATH-led PDP conducts training in
Good Clinical Practice (GCP) for sites and
administrators to raise the standard and
understanding around clinical research
principals and best practices.
 PATH works with partners to identify
appropriate recruitment and enrollment
strategies.
 PATH actively engages in technical
capacity-building with in-country partners
and sites.
PATH maintains high institutional standards and
clear strategies for creating and managing
partnerships, described in the institutional
publication Bringing New Health Technologies
Within Reach for Everyone. PATH standards
address issues of supply, intellectual property,
and affordability of products and include clear
procedures and standards for defining and
managing potential conflicts of interest.
PATH has adopted policies to be good stewards
of funds we receive. We abide by institutional
funders’ rules, regulations, and guidelines and we
strive for the best stewardship of individual
donors’ valued donations. We uphold applicable
financial standards and principles in all aspects of
our work. These include generally accepted
accounting principles and standards defined by
the Financial Accounting Standards Board, the
International Accounting Standards Board, and
the Governmental Accounting Standards Board.
PATH maintains an internal audit team and
undergoes annual external audits as core
components of its financial management systems.
 PATH’s corporate and financial
management systems have been designed
with the flexibility to effectively and
appropriately manage diverse sizes and
scopes of donor funds.
 PATH uses active portfolio management
strategies to allocate internal resources
across technologies or projects, leverage
contributions and available resources, and
manage progress on product and
institutional milestones.
 PATH’s management strategies are
supported by project-specific financial and
administrative managers and an institutional
measurement system that tracks product
development pipelines; project
38
PATH Product Development Business Case
No
Risk
Probability
Impact
Mitigation Measures
implementation milestones; and resource
allocation across products, diseases, and
institutional activities.
What conditions apply (for financial aid only)?
Not applicable
How will progress and results be monitored, measured and evaluated?
PATH has a detailed performance framework, which is used to manage performance
internally and to demonstrate progress to the Board, Scientific Advisory Board and
other funders. Internally all projects are monitored using strict go/no-go decisions
and those that are not making their milestones are stopped.
Evaluation
DFID have allocated £50,000 for evaluation purposes. External reviews and/or
evaluations are likely to be undertaken jointly with other donors. In addition it worth
mentioning that the overall Board of Governors and the Science Advisory Board
have a constant overview of the technical work being undertaken.
Logframe
Quest no. for draft logframe for PATH PDPs: 4025117. The programmes each
have very detailed performance frameworks which they manage their performance
internally and with their other donors. The Logframe is specific to DFID and will be
discussed and agreed with the programme after DFID funding is agreed.
39