Global Health: Fighting the Good Fight

Pharma often finds its global commitments to fighting infectious disease outbreaks and chronic health crises attacked or dismissed as inadequate-but the realities of market economics, fiduciary duty, and murky regulatory systems must be factored into the equation

Writing for The Conversation last year, Nicole Hassoun, a professor of philosophy at Binghamton University-State University of New York, and head of the Global Health Organization, cited a World Health Organization (WHO) report stating that a third of the world’s population cannot access important medicines for some of the globe’s most devastating diseases. Hassoun wrote, “I believe that [pharmaceutical] companies have a moral and legal obligation to ensure access to essential medicines.” 

When companies set high prices, lobby to extend patent protections on important medicines, and do not develop enough new drugs for neglected diseases, she went on, they fail to live up to these obligations.¹ While Hassoun expressed her arguments soberly, zealous contingents of activists prefer to use more drastic measures to make their points. In April of last year, seven naked people representing ACT UP London-a “diverse, non-partisan group of individuals united in anger and committed to creative action to end the HIV pandemic”-stormed the headquarters of Gilead Sciences in London with “#PharmaGreedKills” scrawled on their backs. One of their spokesmen railed that “more than two billion people do not have regular access to the critical medicines they need” and that, “every year, 10 million people die from diseases because drug pricing blocks access to effective treatments.”

The merits of these arguments are, of course, arguable, but they stand uneasily with statistics such as those featured in this year’s Pharmaceutical Industry and Global Health: Facts and Figures report, released by the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA). According to the report, between 2011 and 2014, drugs and vaccines against malaria saved the lives of 1.14 million African children. Between 2000 and 2014, immunization campaigns helped reduce the number of deaths from measles in Africa by 79%. And in 2014, the pharma industry was the third-largest funder of neglected disease research, investing over $534 million.

As the IFPMA report also points out, the private sector produces nearly all the medicines and vaccines on the market. But the industry is not immune to external or indeed internal pressures; pharma is dealing with rising R&D costs, more stringent testing, stricter reporting requirements, and a volatile wave of political and pricing pressures in its established markets. Similarly, there is always the need to appease stockholders and sustain growth in the face of corporate social responsibility (CSR) obligations and efforts to address health crises in low-income countries. 

To maintain its drive, IFPMA observes, the industry has had to adopt new models of innovation, such as joint ventures between pharma companies and partnerships with the public sector, collaborations that “facilitate the sharing of expertise, know-how, and technologies.”²

One example where collaboration is essential to reach a health-crisis solution is the race to find a vaccine for the Zika virus, which raised worldwide alarm following reports of an outbreak of babies born with microcephaly in Brazil in 2015. Takeda is one of several companies partnering with the US’s Biomedical Advanced Research and Development Authority (BARDA) to develop a vaccine to support the Zika response in the US and affected regions around the world. 

Rajeev Venkayya, president of Takeda’s global vaccine business unit, told Pharm Exec that such programs are not sustainable by pharma companies alone. For infectious diseases for which there is an established epidemiology and an established market, he says, companies are more likely to make investments at risk, but the Zika program “is quite different from a program with a competitive dynamic.” 

Venkayya explains: “There is inherent risk in an emerging infectious disease program that you will develop a product and the disease will not be there, or the recommendations will not fit with the profile of the vaccine that

Rajeev Venkayya

you have been developing, or there will be a lot of competition in the market. There are lots of things that make it hard for companies to justify such a program.” 

Therefore, the financial “de-risking” of the Zika program-in the form of the US government’s commitment to fund its R&D expenses-is essential for such endeavors. With BARDA taking care of much of the financial investment, it is “an easier program to take on, even if the vaccine ultimately has uncertain uptake because of changes in epidemiology or other factors,” says Venkayya. 

There have to be different mechanisms to support preparedness for unknown or low-probability, high-impact outbreaks of disease, he explains. “It is essential for governments to take on this challenge because it is not something that companies are going to be able to do on their own. That de-risking gives us the ability to go to our governance bodies and to the stockholders of Takeda and say this is a program that represents the right thing to do on behalf of public health.”

This does not mean Takeda isn’t making substantial investments itself in the program. “We’re committing our facilities, our people, our know-how, our technology platforms,” says Venkayya. And even government support does not eliminate all risk. Earlier this year, it was reported that Sanofi had pulled out of its Zika vaccine partnership with BARDA, the company citing BARDA’s decision to cut its funding. This followed months of increasing tension between Sanofi and its government partners about pricing guarantees. 

Takeda’s Venkayya admits that when the decision-making on the progression of a program is shared by the partners, it adds a level of complexity. But, for his part, he adds that Takeda’s position was well understood from the outset. 

“From the time we applied to BARDA, we knew that it was an options-based contract, subject to performance against pre-specified milestones as well as the overall context,” he says. “When we entered into this agreement, we agreed on the vaccinology approach that we’d be taking and also agreed on a high-level development strategy.”

Venkayya adds: “We are basically in execution mode and we don’t really have the time or luxury of adjusting our plan based on what others are doing; the most important goal for us and for BARDA is to get a

safe and effective vaccine to people who need it as soon as possible and that is what we’re focused on.”

At the moment, the Takeda–BARDA Zika vaccine program has a US focus and is in its early stages. A major near-term milestone is the commencement of Phase I clinical trials, which are expected to begin before the end of the year. Beyond that, Takeda “has an aspiration to make a safe and effective Zika vaccine available to all populations who need it,” although Venkayya notes that this will require additional work and investment.

Striking a balance

While outbreaks such as Zika fuel emergency responses, the industry’s efforts to combat more widespread and ongoing global health crises continue apace. Despite the claims of the anti-pharma activists, the industry has played a significant part in reducing the number of worldwide AIDS-related deaths from a peak of 2.5 million in 2005 to an estimated 1.1 million in 2015. As IFPMA reports, pharma has developed more that 35 antiretroviral treatments (ARVs) for HIV/AIDS, which have been essential to control the epidemic. Also, industry programs to supply generic drugs, to provide education, and to build capacity are helping to erode the barriers that restrict access to medicines, contraceptives, and sexual health awareness among low-income populations. 

At the forefront of the fight against HIV/AIDS is Mylan, which currently supplies ARV medicines to 6.4 million people with the disease in more than 100 low-income countries. In its 2015 Social Responsibility report, Mylan nobly announced that “we refuse to allow the thin margins earned in such countries to dissuade us from fighting the good fight. In fact, we continue to invest in additional capacity to expand

Sidebar: Measuring Pharma Social Responsibility (click to enlarge)

access.” Key to building this capacity was Mylan’s 2007 acquisition of India-based Matrix Laboratories, one of the world’s largest suppliers of active pharmaceutical ingredients (APIs), including those used for HIV/AIDS drugs. Ten years on, Mylan has a 40% to 45% share of the API market for generic ARVs for the treatment of HIV/AIDS in some low-income countries. 

In September, a consortium including the governments of South Africa and Kenya, the Joint United Nations Program on HIV/AIDS (UNAIDS), the Bill & Melinda Gates Foundation, and Unitaid announced a pricing agreement to accelerate the availability of the first affordable, generic, single-pill HIV treatment regimen containing dolutegravir (DTG) to public sector purchasers in these countries. Mylan is one of the program’s two suppliers, and has made a further three-year commitment to bringing down the price of the treatment. 

“Fighting the good fight,” however, cannot be done with corporate abandon. Rajiv Malik, formerly CEO of Matrix and now president of Mylan, has significant experience in running a low-margin, high-volume business model, adept at supplying vital treatments for patients in low-income countries, while also committing to long-term company growth and sustainability. He told Pharm Exec: “Sometimes you are forced to think about how far and how deeply you can continue with these commitments. There is always a fear from a business point of view, because there is competing demand for the capital. It’s a balancing act.”

But while Mylan experienced significant challenges in the US market last year, this did not affect what the company is doing in the developing nations. In fact, it expanded. For example, through its Indian subsidiary, Mylan acquired a women’s healthcare business from Famy Care, a specialty company with global leadership in generic oral contraceptive products.

Rajiv Malik

“We are now working with partners like the J&J Foundation to continue to provide access to such products for women in Africa and are part of the UN’s Family Planning 2020 commitment,” says Malik. “And last year we launched a generic treatment for hepatitis C in India, where roughly 12 million people are infected with the virus. So, we are doubling our efforts. We continue to raise the bar and continue to invest in these critical treatment areas.” 

 India’s importance to Mylan’s activities is paramount. Mylan’s acquisition of Matrix in 2007 was the largest ever takeover in India pharma. More than half of the company’s workforce is based in India, making the country its largest product-sourcing base. India is also key to securing future long-term growth and profitability in its low-margin global health activities. 

“It is a huge country from an R&D and supply chain perspective,” says Malik. “It is also the hub of our business for products we produce for many developing countries; it is where we conduct our selling and marketing operations to reach patients in these underserved areas.” 

Over the last five years, Mylan has begun to focus on India as a market itself, first with HIV drugs, then oncology (particularly breast cancer, building affordable cancer care through several CSR programs), and latterly in the hep C space. “We have tried to keep the focus on the disease states in India that need a lot of attention,” says Malik. “Financially, we just broke even, but we don’t invest in India and other rest-of-world (ROW) markets just from the perspective of returns. It is a case of building a base that is going to funnel the growth of our business. These markets may not drive your bottom line in a significant way, but they can definitely give you top-line growth and are a source of durable cash flow.”

Strengthening infrastructures 

Using the platforms established by low-margin business models and philanthropic/CSR initiatives as a base to secure further growth, reach, and stability across low-income and developing nations is also a long-term objective of Merck & Co.’s Merck for Mothers. A 10-year, $500 million program focused on improving the health and well-being of mothers during pregnancy and childbirth in the US, India, Zambia, Senegal, and Uganda, Merck for Mothers was established in 2011 to address an urgent problem: 800 women a day-one woman every two minutes-were dying from preventable causes and complications from pregnancy and childbirth. 

Since its inception, Merck for Mothers has “managed to reach over six-and-a-half-million women and improve their access to both quality maternity care services and quality modern contraception,” Dr. Mary-Ann Etiebet, Merck for Mothers’ executive director, told Pharm Exec. The program’s primary purpose, of course, is to improve the health of mothers and to save lives; in the longer term, says Etiebet, it is about “how we use this type of investment to strengthen healthcare systems” and how it “can actually benefit, more broadly, countries and other companies working in these areas.”

Mary-Ann Etiebet

In Senegal, for example, Merck has helped to establish and transition to government ownership a “transformative, well-functioning supply chain system that is already improving access to critical medicines to all people.” A major barrier to family planning in Senegal was a lack of availability of contraception. Products were procured, but sat inside central warehouses, often failing to reach the “last mile” primary care facilities where women of reproductive age sought care. 

In response, Merck for Mothers partnered with the Gates Foundation, IntraHealth International, and the government of Senegal to scale up a supply chain model adapted from the private sector, which, says Etiebet, has improved the logistics, forecasting, and delivery of contraceptives at health facilities throughout the country. 

“The Senegal supply chain project has an impact that is wider than on maternal mortality alone,” explains Etiebet. “By improving the performance of the supply chain for contraceptives in Senegal, we were able to extend that model so that the government is now using it to supply over 90 essential medicines. By working on this one issue, we have been able to strengthen the health system in the country. This is the way we like to think about Merck for Mothers-how we can make sure our investments have broader, longer-term impacts.”

The supply chain issue faced by Merck for Mothers in Senegal is symptomatic of a litany of challenges facing pharma’s activities in global health. Obstacles, ranging from underdeveloped infrastructures and disparate healthcare systems to poor transportation and lack of clean water and sanitation facilities, must be negotiated and overcome to establish effective access to medicines in low-income countries. 

Not the least of these problems are the widely varying standards for market entrance and regulation. Malik admits that some companies could do more for global health “if in this part of the world we could have a harmonized framework of sustainable regulations. That would go a long way to motivating industry to come in and make a change.”

Dueling commitments 

In global health, “fighting the good fight” cannot happen without a number of enabling conditions that involve more than reducing the price of medicines. As the IFPMA report highlights, addressing the issues of regulation, corruption, logistics, poverty, and wealth inequality is a “complex challenge that requires long-term commitment from government, civil society, and the private sector.” Added to that is a pharma company’s fiduciary duty to maximize shareholder value and secure its own long-term survival. 

The investment banker Lawrence Perkins wrote back in 2001 that “at the end of the day, the company’s future existence depends on the bottom line of the income statement. Pharmaceutical companies are no different.” While this observation may conveniently sidestep some of the more complex ethical considerations of the global health agenda, it remains an essential truth of the market-driven industry. 

Julian Upton is Pharm Exec’s European and Online Editor. He can be reached at julian.upton@ubm.com

References

1. Nicole Hassoun, “How can we get pharma companies to do more for global health?” The Conversation, September 20, 2016.

2. International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), The Pharmaceutical Industry and Global Health: Facts and Figures 2017.

3. Lawrence Perkins, “Pharmaceutical companies must make decisions based on profit,” Western Journal of Medicine, 175(6), December 2001.