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Pharmaceuticals for Developing Countries: Conference Proceedings (1979)

Chapter: STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES

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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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Suggested Citation:"STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES." Institute of Medicine. 1979. Pharmaceuticals for Developing Countries: Conference Proceedings. Washington, DC: The National Academies Press. doi: 10.17226/18441.
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STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES

PANEL PRESENTATIONS Introducing the panel discussion on policy implications of encouraging new efforts for development of pharmaceuticals, MR. JAMES L. HENRY advised the Steering Committee to focus not only on government relations with transnational organizations, but also on private initia- tives that can be undertaken by the pharmaceutical industry. MR. HENRY underscored Dr. Hamburg's comments at the opening of the Conference about the pluralistic system existing in the United States, and the recognition that the government's resources and flexibility of action are limited. He emphasized the need to think creatively and as entre- preneurs in terms of how to bring Market forces to bear on critical health needs of people in developing countries. To mobilize the forces necessary for such developments, several tasks must be undertaken simultaneously: 1. Government must turn its attention to developing real market incentives for new drug research, or establish surrogates. These might include tax or other financial incentives, industrial revenue bonds, or specialized insurance. 2. Disincentives, such as the anti-trust laws that impede collabo- ration between companies, must be removed. 3. Simultaneous pursuit of public and private strategies must be fostered to create the conditions necessary for an academic and business partnership. 4. The policy and strategies necessary to stimulate and protect new technology must be developed. In shaping these strategies, some basic realities must be appre- ciated. These include the limited resources available for improvement of health conditions in developing countries, and the lack of markets in developing countries for new drugs active against their endemic diseases. Such countries usually lack adequate health care delivery systems. There is also a serious time lag between the development of new pharmaceutical products and their readiness for application in 400

large populations. Several recent developments are encouraging, and ought to be listed on the positive side of equation. Thus, Dr. Omenn spoke of the President's interest in fostering private initiatives to overcome prob- lems in the developing world. The health arena probably offers greater resources of leadership and talent than almost any other field of human endeavor, thus leading to greater hope for scientific breakthroughs. The World Bank and other international organizations have had increas- ing interest in health investment in developing countries, with a con- comitant recognition of the potential benefits. ******** DR. IVAN BENNETT addressed the need to coordinate international health policy, given the many similar activities pursued simultaneously by various branches of the United States government. Much of DREW acti- vity in international health is barely within the bounds of its estab- lished legislative authority. Certainly, the applicable statutes might be changed. A.I.D. is the only agency specifically authorized to pro- mote health in other nations for their benefit. The Agency has not been able to enlist the best talents in health to focus their attention on the needs of developing countries, nor has it developed the capacity to manage research programs. In countries where it has invested in health services, it has been unable to raise government health budgets to reflect a higher priority accorded such activities. Considering this record in AID over the last 15 years, perhaps the proposed Insti- tute for Scientific and Technological Cooperation (ISTC) could become the new research arm of the United States assistance effort. It might be able to promote better career opportunities in international health and thus attract better talent. DR. BENNETT suggested several tactics to pursue in reorienting the present government regulation of the pharmaceutical industry to promote efforts to develop drugs for use in developing countries. The inabili- ty of companies to form consortia should be reexamined and attempts to revise legislation should be made. In addition, it would be useful to revise the tax laws and remove the disincentives for such drug develop- ments. Dr. BENNETT observed that the American pharmaceutical industry was certainly able to accomplish miracles during wartime. If a nation- al leader declared that health problems in developing countries were the "moral equivalent of war", it might be possible to mobilize govern- ment, industry, and academia into action in desired directions. Devel- oping country governments have found it possible to invest heavily in maintaining good health care for their armies. In fact, political con- siderations often result in the best medical care available for the exclusive use of the army. DR. BENNETT concluded by saying that he was nevertheless pessimistic about the possibility of developing a real 401

international health policy in the United States, because this country has not yet developed even a domestic health policy. ******** From the perspective of the research manager, DR. BARRY BLOOM proposed to suggest actions or policy initiatives that might encourage resource allocation decisions toward increasing the level of commit- ment of the pharmaceutical industry to research seeking new drugs for the treatment of tropical diseases. First, it is important to adopt a realistic perspective of what drug discovery research can accomplish. Previous speakers at this Conference have reminded of the great complexity of the challenge of upgrading health in the tropics — of the root causes of disease, such as the gross undernutrition brought about by grinding poverty; of the critical need for hygiene education to bring about behavioral change; of the vital need for improved water and waste sanitation; and of the need for vector control. Because the ultimate usefulness of pharmaceu- ticals in bringing endemic tropical diseases under control will be largely, if not entirely, determined by our ability to cope with these basic needs, those who propose and fund laboratory research need to be careful not to promise more from our research than can realistically be delivered as effective health care. Without doubt, important challenges must be met where we are limited by available technology and where investment of research and development resources by the private sector toward development of needed pharmaceuticals would be desirable. What restraints need to be removed? What incentives provided? The common wisdom holds that the major bar to more research is the necessity of the sponsoring company to earn a satisfactory return on its research investment. The implica- tion is that previous experience with the marketing of drugs for tropi- cal diseases has been largely unrewarding. But it would be wrong to assume that these economic considerations alone dictate what research will or will not be done by pharmaceutical companies. Decis'ion-making under conditions of uncertainty is never that simple. Indeed, the substantial investment in tropical disease research already being made by major firms in the United States and Western Europe could hardly be justified on the basis of projected return alone. A more accurate perception of the decision-making process would place tropical disease research among the high-risk projects that are part of the research project portfolio of every innovative firm. Investment in this kind of high-risk research can best be encouraged in two ways: by improving the climate for therapeutic innovation in 402

this country; and, on the incentive side, by showing, as we have yet to do, that we can muster the will, the discipline and the insight neces- sary to overcome the formidable challenges, many of them not technical, that stand in the way of delivering improved health care in meaningful quantity to areas where tropical diseases are endemic; and, more speci- ficially, to deliver health care in which chemotherapy can play a significant role. To elaborate: Concern about the climate for innovation has become an important item on the agenda of this country. The present Adminis- tration is committed to improving that climate and has already under- taken a study entitled, "The Domestic Policy Review of Industrial Inno- vation," preparatory to initiating appropriate action. The national climate within which the pharmaceutical industry seeks to innovate has deteriorated strikingly during the last fifteen years, as layer after layer of regulatory constraints has been imposed on drug research. Several bills introduced in the last Congress would effectively rewrite our drug laws. The Administration Bill clearly recognized the need to facilitate therapeutic innovation and set that as one of its goals. Unfortunately, in the view of many, the provi- sions contained in that bill had little chance of accomplishing that goal. Drug research experts from the pharmaceutical industry and from academia, in testimony before both Houses of Congress, offered specific suggestions as to how the necessary objectives of regulation could be met, without requiring drug research to bear such an onerous burden of regulation. The last Congress adjourned without taking definitive action on a drug bill. Now, everyone expects that bills of similar intent will be intro- duced in the present Congress. Our drug laws unquestionably need to be rationalized, but it is imperative that in doing so we pay due heed to the importance of fostering innovation. The direct relevance of the issue to tropical diseases research is that unless innovation is encour- aged, the research managers of the pharmaceutical industry will con- tinue to be confronted by — indeed preoccupied with — the prospect of a continuing, steep decline in return on research investment. Since the research manager's overriding concern has to be a satisfactory return on the investment he manages, he can hardly be expected, under prevailing circumstances, to increase the allocation of resources to high-risk projects. In his present frame of mind, confronted by a dif- ficult productivity challenge, he has to remain dubious about the wis- dom of increasing his commitment to tropical diseases research, despite his inclination to do so for other reasons. As regards incentive, there would be a powerful, favorable impact on research decision-makers if they were better able to see existing drug technology being applied effectively to bring endemic tropical disease under control on a substantial scale. Understandably, they harbor some very real doubts about the likelihood of that happening. 403

Do we have the necessary social will? Will the coalition of forces now developing to confront this enormous challenge identify and produce a focus of leadership to plan and carry out substantial health delivery programs? Will technical advisers provide crisp advice to those who must shoulder the burden of the political decision to proceed? Obviously, it can hardly be justified on either economic or humanitari- an grounds to fund research, if indeed the fruits of that research have no foreseeable chance of improving health. DR. BLOOM is convinced that this form of incentive is important because he has seen at first hand, in his own company, the dramatic impact it can have. DR. BLOOM then referred to the massive program currently underway in Brazil to control schistosomiasis in the vast endemic areas of that country. The Brazilian program is far larger than any previous effort to control schistosomiasis through chemotherapy, comprises elements of vector control, health education, water and waste sanitation, and drug treatment. What made this massive undertaking feasible was the discov- ery and development by Pfizer scientists, in collaboration with experts in Brazil and elswhere, of the drug oxamniquine, which is highly effect- ive against American S. mansoni in a single oral dose, and sufficiently well tolerated to be safely administered by paramedical personnel under the primitive conditions that prevail in areas where this disease is prevalent. In this truly ambitious program, more than 1.25 million Brazilians have been treated to date, and about 100,000 subjects are receiving chemotherapy every month. Indeed, the ambitious scope of the program appears to be causing problems, because the other components of the program are now said to be lagging badly behind drug treatments. Nevertheless, the fact that a nation has shown the collective will to mount a strong attack on endemic tropical disease, using modern drug technology, must be viewed as a strong sign of encouragement for the future. It has also been encouraging to hear the emphasis previous speakers in this symposium have placed upon the critical importance of developing the necessary field systems to deliver the useful technology we already have. As these efforts progress, and as other mass control programs are successfully mounted, the private sector will no doubt be stimulated to commit a larger portion of its resources to research on tropical diseases. DR. WILLIAM HUBBARD proposed several actions to be pursued promptly by government, industry, and the academic world in contribut- ing to the development of new drugs for use in underdeveloped countries. He described four major strategies that must be initiated simultane- ously, but which would come to fruition after varying time intervals. 404

The first strategy would be to improve availability and distribu- tion of existing medicinals in developing countries over the next five years. It would provide short-term market surrogates where economically effective demand does not presently exist. Such market surrogates have been developed for distribution of food supplies and military equipment for developing countries. Some communist-bloc governments have already made the political decision to absorb the cost of supplying essential drugs at low prices to underdeveloped countries. The United States should encourage industry participation in carefully planned demonstra- tion projects to assess the economic benefits to developing countries that can be achieved by expanded health investments. Finally, this immediate program should include efforts to improve appropriate utiliza- tion of pharmaceutical agents. A second strategy, which must be begun immediately and pursued to fruition over the next 5 to 20 years, is to assist developing countries to attain self-sufficiency in manufacture of basic drugs. Regionaliza- tion of such efforts will be the likely key to their success, especial- ly in fine chemical and pharmaceutical chemical production. We should examine the model of development assistance in agriculture for applica- ble lessons, because analogous kinds of capital assistance and training would be required. The third strategy is a greater investment in research and develop- ment needed to promote the discovery, development, and distribution of improved medicinals for the tropics. This research should be undertaken in the United States by industry, academia, and government, and within the developing countries. It could include cooperation with other coun- tries. More than 90 percent of discoveries will fail and, from discov- ery to distribution, ten years or more will have to elapse. Here, the government is challenged to provide better economic incentives or mar- ket surrogates for new pharmaceuticals coming from this strategy in order to make industry-funded research feasible. The fourth and the most important of these strategies is long-term commitment to institution building in developing countries. It is this effort which will allow the creation of truly cooperative linkages between industry and academia in developed and developing countries, between industry and academia, and between government and the other two communities. This strategy will require decades of consistent support in order to succeed. All these efforts require multi-year commitments, imply hard political decisions, but must be undertaken now. 405

DR. JAMES LEE presented the changing policy and activities of the World Bank with regard to the health sector. He indicated that similar trends were being seen in other development finance institutions, both bilateral and multilateral. Before 197l, the World Bank was largely concerned with the transfer of resources from developed to developing countries, principally emphasizing the provision of physical infra- structure, such as for power, transportation, or communications. Begin- ning in 197l, the Bank began to systematically address the concern being voiced in many quarters, that economic development schemes often introduce or exacerbate health problems, such as the spread of schisto- somiasis by the construction of irrigation works and hydropower pro- jects in countries where the disease is endemic. It was this concern that first propelled the Bank into assessing the health implications of the development activities it was financing, and to providing appropriate measures for the prevention or control of disease problems attributable to a project's presence and/or operation. Since 197l, for example, approximately U.S. $63 million has been pro- vided for the control of schistosomiasis — the lives of 14 million people have been touched and over 35 million hectares of land treated to control the snail vector. Similarly, it has participated along with WHO in the control of the blackfly vector of onchocerciasis in the Volta River watershed of West Africa. After long and careful study, the Bank issued a health sector policy in 1974, which stipulated that development projects could also offer opportunities for including specific health care components designed to improve the health status of the people affected by the project. Such components have been financed in 44 countries to date. In the past three years, the Bank has provided nearly U.S. $3.9 billion in health-related projects such as water supply and sanitation, nutri- tion, fertility reduction, and others. With WHO, the Bank has co- sponsored a Special Program for Research and Training in Tropical Dis- eases, a global endeavor to find improved tools for controlling six tropical diseases. In addition, it is co-sponsoring with WHO an Inter- national Program for the Control of Diarrheal Disease, an intensive research and development undertaking to develop vaccines and improved chemotherapy. At present, development finance institutions are emphasizing the provision of basic health care to reach the rural and urban poor, rather than physician-centered, hospital-based activities, as they did a decade ago. While the World Bank has become an increasingly major source of financing for health-related development, other regional banks are likewise considering increasing their efforts. It is apparent that in the provision of equitable and affordable health care to the impover- ished peoples of the world, the role of the pharmaceutical sector will become increasingly important. 406

DR. LEE concluded by expressing his hope and expectation that the results of the recent international conference on primary health care held in Alma Ata, USSR, will be translated into positive action by the developing countries, and that development finance institutions can be instrumental in furthering the provision of health care. ******** MR. MAX TIEFENBACHER began by stating that the transnational pharmaceutical industry is central to any discussion of provision of drugs to the Third World. In the supply of existing drugs, and even more so in discovery of new drugs, industry must play a leading role. Conversely, the industry's absence would leave a gap that could be bridged only at great cost and with long delay. The multinational pharmaceutical industry has an important presence and a long tradition of achievement in the developing world. It stands ready to explore new approaches for meeting health needs of developing countries. Multinational companies have the scientific talents and managerial resources to greatly increase their contribution to the well- being of the Third World. Only one essential factor is lacking — the incentive to do so. To explain, MR. TIEFENBACHER stated that the research-based phar- maceutical industry is both science-oriented and market-directed. Over the past century, it has become highly adept at inventing or discover- ing new therapeutic tools, translating laboratory events into economi- cally affordable products, and distributing the products to those who find them useful. The pharmaceutical firm is the agency that links scientific capability with economic demand. In short, it marries science to the market. The pressures and incentives that govern this process are competition and profit — the latter coming chiefly from product innovation, but also through process innovations that reduce costs and thus expand the potential market and utilization. Thus, the existence of an adequate market and economic viability are the inescapable conditions, the essential prerequisites of a deep- ened industry participation in resolving Third World health needs. But if industry involvement is to do more than scratch the surface of this intractable problem, fundamental economic and political decisions must be made to improve the health care environments of the developing countries. A foremost need will be to restructure and expand the health delivery systems in the public sectors. These are now in deplorable disarray — poorly organized, understaffed, totally inadequate to the task. Only as progress is made in building an adequate health care infrastructure — especially in rural and poverty-stricken urban areas, 407

can drugs developed by the pharmaceutical industry be properly distributed, prescribed, dispensed, and administered to patients. Poverty is a major obstacle to the launching and success of a program which strives to fulfill the credo that health is a basic human right. But poverty is not the only reason that prevents developing nations from allocating more than a pittance for health services. It is also a matter of priorities. Health expenditures as a percent of GNP in the poorest nations are often no more than a fifth or a tenth of what more advanced nations spend. The WHO has repeatedly observed that adequate financing can result only from political actions on two levels. Health care and its support- ing services must be accorded higher priorities in the allocation of resources in the budgets of the respective countries. Further, afflu- ent countries and international aid and development agencies should direct a greater share of financial and technical assistance to the critical health needs of developing countries. Health needs should be elevated from the lowest rung on the priority scale to a level approach- ing the status of urgency and importance now accorded exclusively to food aid and economic assistance. WHO Director General Halfdan Mahler has noted that improved health is a powerful engine of economic develop- ment. Only with commitment of such additional financial resources can developing nations create and/or extend medical welfare schemes to pro- vide basic care at little or no cost to the citizens who are simply too poor to pay for them. Only with such social security systems will mar- kets for drugs — specifically those to treat tropical diseases — evolve. Health authorities are the only large scale purchasers of drugs to treat tropical diseases. They must allow innovators to recoup the mas- sive expenditures of money and effort required to develop and test these compounds. This means that prices must be set at reasonable levels. With drug procurement on a competitive tender basis, and with patent protection being the exception rather than the rule in develop- ing nations, the award of a contract will go to the lowest bidder. Most likely, this will be a company that has duplicated the research achievement of an innovative firm without paying compensation, and with- out sharing in the formidable costs of development. Thus, procurement policies of international agencies and governments must provide for price levels affording innovative manufacturers a reasonable return on research investment. The absence of such policies, by contrast, will inhibit and perhaps lead to a drying up of all incentive for research into drugs for tropical diseases. MR. TIEFENBACHER emphasizes this cautionary statement because no other adequate mode of supporting such research has yet been — or is likely to be — devised. One alternative, much debated in recent years, 408

is public funding of tropical disease research programs. The WHO has offered to cooperate with industry in providing funds for screening of compounds and large-scale clinical testing of promising agents. Some governments of industrialized nations are also prepared to finance research in this area. This mode of funding can be, at best, only a method of last resort. It provides scant incentive to an industry whose energies and talents are directed to the discovery and marketing of patentable drugs at appropriate prices. Contract research will not summon the same energies or talents as a competitive search for new, wholly-owned products. Moreover, contract research will engender problems of the sharing of industrial property rights. Research into tropical disease will flourish only in a favorable economic climate. The time required to develop a pharmaceutical is now so long that nobody would even notice if all innovative research stopped today; the products now in the pipeline would still be coming to the profession for the next 10-12 years. Today's new medicines were started that long ago, and this time-1ag disguises a slowing of innovative research in general, and of tropical disease research in particular — a source of false reassurance. The WHO insists that the most valuable form of external support to the health needs of the world's poorest countries is to provide addi- tional basic drugs, and that the situation requires extremely urgent international action. WHO has appealed to the pharmaceutical industry to cooperate by providing a limited number of basic medicaments to governments of the MSAC (Most Seriously Affected Countries). These drugs would be made available at low prices — hardly above cost — and be specially packaged and labeled for primary health care in the public sector. These drugs would be selected because they could be safely and effectively used by health workers with minimal formal training. Sever- al major companies have responded positively to this appeal, and dis- cussions with WHO are under way, but two preconditions to fulfillment of this appeal must be met. First, health authorities of the home countries of these firms must recognize the extraordinary character of this project in regard to price. The low cost at which these essential drugs will be supplied to poor countries cannot be used as a yardstick for the appropriateness of drug prices within home markets. Second, it is doubtful whether the conventional method of procure- ment practiced by some developing nations and advocated by internation- al agencies will be in the best interests of the recipient country. This seemingly very simple system consists of centralized purchasing of drugs under their generic names from multiple sources of supply and on a competitive tender basis. The superficial rationality of this method cloaks its crucial defects. 409

This is stated not only in the context of supplying the most basic drugs to the poorest elements of the population, but also because devel- oping nations are being urged to adopt this method of drug procurement on the widest possible basis. Under such a procurement system, re- sponsible manufacturers will very likely regard the provision of essen- tial drugs as a "hit and run" operation. They will dip into this mar- ket when excess capacity or inventories appear, making decisions to participate on a week-by-week basis. Participation will be narrowly confined, however. Unchecked, this sytem would erode and ultimately degrade basic drugs to ordinary commodities. As stated earlier, research-oriented manufacturers compete on the basis of innovation, quality, service, and price. Making price the dominant parameter of competition would reduce drug distribution to the lowest common denominator and destroy the ability of manufacturers to provide the closely integrated and interdependent complex of functions that elevate pharmaceuticals to their highest level of value to society. As with the computer industry, the pharmaceutical companies can only function to society's maximum benefit if they are allowed to deploy the full package of hardware — the drug itself, and software — innovation, documentation, information, and similar services. A tender system of procurement would also endanger the product integrity of even the most basic grouping of drugs. For products that find their markets mainly in the tender business — some antibiotics and vaccines, for example — forces of supply and demand cause prices to fluctuate sharply as manufacturers move in and out of tender agree- ments, moth-balling production capacities or putting them back to work, as the supply position swings from glut to shortage and back to surplus. An orderly supply of drugs to the public sector could not be based on such an economic see-saw, particularly if volume were to reach the anticipated dimensions. Quality would also suffer, because it would be a mistake to assume that the manufacturer's self-interest to supply con- sistently the highest possible quality product could be replaced by quality control performed by government agencies. Thus, a paramount condition for drug manufacturers to collaborate in supplying the very basic drugs and vaccines to MSACs is that tender policies be reviewed. They must be administered on a long-term basis, taking due regard of the innovative character of the industry, of the quality aspects, and the services the manufacturer is able to provide. The question now is whether the drug industry can tailor its service functions more fully to specific needs of the public sector, especially to those of the Most Seriously Affected Countries. If the afore-mentioned conditions are fulfilled, private industry may have an incentive to cooperate with national governments in several areas. For example: 410

• Quality assurance: Building up effective quality control systems within the Least Developed Countries; • Manpower development: Training in technical skills, such as quality control and good manufacturing practices; training in the management and logistics of drug supply including storage and distribution; • Development of national resources: By cooperating with developing nations in evaluating the usefulness of medicinal plants, in develop- ing standards for their identity, purity, and strength, and in devel- oping scientific criteria and methods for proof of safety and effica- cy of medicinal plant products. • Local production: Contributing to the self-reliance of developing nations by erecting plants, or assisting in the erection of plants for production of basic medicaments and vaccines destined for the public sector, supplying basic technology, training local personnel, supervising construction and start-up of production. Drug manufacturers may also be able to provide other services. Previous speakers provided examples of what companies have done in past years, for example, in the training of paramedics, and in conducting large-scale eradication programs. Drug companies taking additional initiatives in these directions could provide valuable complements to development programs. These are only a few examples of how industry could cooperate with international agencies to provide basic drugs and vaccines with con- comitant services. They must still be analyzed and assembled to form a comprehensive and coherent program. It is clear, however, that in implementing a thrust in this direction, private industry, governments of both recipient and donor countries, and international agencies such as WHO must work closely together. There will have to be a pooling of talents and resources of all parties to provide the package of goods, services, and know-how. A platform and the ground-rules must be created for dealing with the issues. But first of all, a workable concept must be designed. Consortia of companies may prove to be the only vehicles adequate to the challenge. The reason is that the commercial link between the product and the services provided by a single company would be severed. The company would find itself engaged in public service activities, financed partly or totally with public funds. Exemption from anti- trust liabilities would become an essential prerequisite. The foregoing remarks apply principally to the public sector of the market. MR. TIEFENBACHER then addressed himself to the private sector, which to this day still constitutes the major market; it serves the growing social strata of the middle income population. It is to 411

this segment that the main thrust of the multinational drug industry's activities has been directed. The problems and constraints under which the pharmaceutical indus- try operates in this market sector were described in MR. TIEFENBACHER's earlier paper. The interventionist policies and overextension of regu- latory control as advocated by political groupings, and assertive national policies may lead to the end of private enterprise in supplying pharmaceuticals to developing countries. The foundation needed by the transnational pharmaceutical companies to fulfill their role in the public interest, as described above, will thus be destroyed. In this climate of suspicion and mistrust, it is imperative that in the private sector the needs of private enterprise must also be reconciled with the political trends towards more central state plan- ning. A balance must be found between the competitive system of a free market and the spheres of manifest public concern. John Maynard Keynes once remarked that one cannot push on a string. He was referring to the illogic of exhorting businessmen to invest more in the face of sagging demand. But his remark is just as valid today in the context of this Conference. The pharmaceutical industry does not view the developing world with eager expectancy. Indeed, the busi- ness conditions in large parts of the developing world have deterior- ated so alarmingly that these countries have sunk to marginal impor- tance in the world view of the multinational pharmaceutical industry. The pharmaceutical industry has a viral role to play in resolving the formidable task of reaching acceptable standards of health care for all. It stands ready to work for this goal with new visions and new initiatives, but only if it is permitted to serve the private market responsibly and progressively. Controls that would destroy the private market will lead inevitably to a strategic withdrawal from the Third World. ******** DR. KENNETH WARREN suggests that it might seem that academe has three specific things to offer to the pharmaceutical industry: research involving discovery of possible new drugs and vaccines, drug and vaccine testing, and training of personnel. The situation, however, is far more complex and interesting. Basic research in the universi- ties, medical schools, and institutes of academe provides the underpin- ning for the organic chemistry, biochemistry, genetics, etc. of the drug industry. At more applied levels, however, academe is examining every aspect of human disease. It can therefore provide new under- standings of disease problems which will drastically alter treatment systems. Academic scientists will do clinical drug testing, be involved 412

in the planning and execution of more treatment campaigns, devel- op and utilize statistical techniques for evaluating results, examine the genetics of host and parasite responses, and even work at the top governmental levels to provide advice on developing rational cost-effec- tive pharmacopoeias. Antagonism and lack of understanding existing between industry and academe can cause much unnecessary harm by raising the specters of toxicity and carcinogenesis where the problems are not significant, by advising governmemts in an unrealistic manner, etc. Because this is a Conference on "Pharmaceuticals for Developing Countries," DR. WARREN selected examples of these problems from one of the major tropical diseases, schistosomiasis. Thus, only recently has understanding of the unique host parasite relationship between schisto- somes and their mammalian hosts been emphasized; to wit, that schisto- somes do not multiply, that disease is related to intensity of infec- tion, and that a high proportion of infected individuals have low worm burdens and negligible morbidity. Furthermore, the highest intensity of infection occurs in children. Thus, it is not necessary to treat everyone and, just as important, the objective of drug therapy can be shifted from cure to drastic reduction of worm burden. This means that low doses can be used. Drug toxicity and side effects can therefore be drastically reduced, and the cost of mass treatment campaigns signifi- cantly lowered. Academe is engaged in field projects which are now demonstrating that mass chemotherapy is the most cost-effective way of controlling schistosomiasis. Academe is also developing new, rapid, inexpensive parasitological and immunological means for diagnosis. Recently, it has been shown that S. mansoni in Africa is much more resistant to treatment with an excellent new drug than S. mansoni in South America. The cause of this phenomenon is being studied, as is the whole question of the development of resistance following mass treatment. Again, knowledge of the unique host-parasite relation will drastically affect our conceptions in this area. Recently, the develop- ment of disease in schistosomiasis has been shown to be related to the HLA histocompatability response system. An organized research group is now planning to study hepatic drug metabolism in patients with hepato- splenic disease. A derivative of an important antischistosomal drug with similar efficacy but decreased toxicity has been developed in academe. Furthermore, a major "spin-off" has been the finding of a unique and powerful immunosuppressive agent as a metabolite of another antischistosome drug. The relationship and communication between academe and industry is of great importance. On the basis of inadequate evidence, a major anti- schistosomal drug has been branded mutagenic, carcinogenic, hepatotoxic, and a rapid inducer of drug resistance. This information, which now appears largely untrue and irrelevant, has been strongly presented to both scientific and political forums to the marked detriment of the utilization of an excellent drug. 413

In another recent development, academe is being consulted by a country where schistosomiasis is endemic to aid in the establishment of a nationwide control system. Judgments about the the role of chemo- therapy and the choice of drugs will be involved. Another area of great interest to the pharmaceutical industry is the intense focus by academic researchers on the immunology of resis- tance to schistosomiasis, and on its pathogenesis. The mechanisms of these systems are being worked out, specific vaccines are being sought, and nonspecific means of preventing them are being pursued. A vaccine involving frozen schistosomula is being tested in animals. DR. WARREN closed with a plea for greater understanding between industry and academe. Academe is a source of particularly strong scien- tific capability. Probably most of the best young scientists would opt for academe at the crucial formative and most productive stages of their careers. This source of talent should be available to industry. This involves a mutual sensitivity to the problems of patent protection. Enlightened means whereby industry provides more support to academe could be worked out so that academic scientists would cooperate to help solve industry's problems, and industry would give scientists the free- dom they need and expedite the handling of information to minimize publication delays. ******** DR. W. CLARKE WESCOE stated that he believed the so-called schism between the academic world and the industrial world, which had been mentioned, was not as large today as it seemed to be in the 1950s. He suggested that we often use it today as a "straw-person," or as an ex- cuse for inaction. In fact, relations are quite good between industry and academia, as illustrated by the continuous exchange of personnel between them — and meetings like this one. A possible threat to ever- improving relations lies in the federal "conflict of interest" legisla- tion not yet implemented. It is a fact that the pharmaceutical industry, unlike any other, must turn to the academic community for the final stages of all its testing of medicines. The ultimate clinical research is conducted by professors who act as consultants. He suggested continuing the dialogue between members of government, the academic and industrial communities, and the foundation world in order to develop an initiative for continued cooperation so that tech- nical assistance and pharmaceutical products may be supplied to develop- ing countries. The initiative would address the following points: • To ascertain where and how the academic and industrial communities can work together. 414

• To develop procedures to supply technical assistance such as train- ing and education to developing countries. • To work with government leaders in order better to remove those constraints and frustrations which continue to act as barriers to cooperation. • To define strategies to increase pharmaceutical industry involvement in developing countries. In conclusion, Dr. WESCOE stated that it was imperative that all parties at the Conference continue the relationship that has been forged to serve as the basis of action programs. In the past, such a coalescence of interests was represented in the Pharmaceutical Manufac- turers Association Foundation, which utilized committees with both aca- demic and industrial membership. Still in existence, the Foundation this year granted over $1 million to universities for the support of scientists. Each party must participate in defining its special contribution, in developing complementary strategies, and in enabling their implemen- tation. The World Bank should also be involved in any such delibera- tions. DR. WESCOE challenged the diverse interest groups represented at the Conference to create and develop ar. appropriate initiative. ******** 415

GENERAL DISCUSSION: STRENGTHENING INCENTIVES AND OVERCOMING DISINCENTIVES: A CALL TO ACTION DR. FRANKLIN NEVA (National Institutes of Health) asked whether the schistosomiasis control programs in Brazil, in which the Pfizer Company is collaborating, was truly a good example (l) of effective cooperation between the academic and industrial communities and the government, and (2) of a successful schistosomiasis control program. A few months ago, some Brazilian scientists expressed their disappoint- ment that there had been very little opportunity for Brazilian academi- cians to cooperate in this program. They also indicated that it would be difficult to evaluate the effectiveness of the treatment program, since inadequate baseline data had been obtained. However, DR. NEVA noted that these criticisms were based on opinions of the people with whom he had spoken, and not on first hand observations. DR. JOSEPH PISANI (The Proprietory Association), representing nonprescription pharmaceutical products, presented his views on the importance of recognizing that appropriate use of self-medication, pro- perly labelled and packaged, could play a significant role in contain- ing costs of pharmaceutical programs. DR. ALEJANDRO ZAFFARONI (ALZA Corporation) presented his perspec- tive on the incentives and disincentives faced by private industry in developing pharmaceutical products for the public sector. He illus- trated his remarks by referring to experiences of ALZA with WHO and NIH in a cooperative program for the development of injectable contra- ceptives. In this development process, the acceptance of injectables by Latin Americans acted as a significant incentive to continuing research and development efforts. The many years of research and development invested in improving contraceptive technology represent an important example of knowledge broadened even at the expense of a low level of profit. An opportunity for collaboration might be development of a con- tractual relationship between one or more pharmaceutical companies and WHO in a specific program area for public sector drug development. In this case, the major obstacles might be encountered at the transition from research to development. Misunderstandings between members of the university community and the industrial world are common at this junc- ture, since results in the developmental stages are often slower to come about than those in the research stages. A long-term investment would be required. 416

DR. ZAFFARONI emphasized the need for greater representation by industry in the joint consultative group of WHO and NIH — to increase the number of people who understand the frustrations of product develop- ment. WHO could easily work out a contractual relationship with pharma- ceutical companies for specific research and development programs. The size of the World Bank investment in health, and the commit- ment of WHO to supporting research in tropical diseases, are impressive. He hoped that a recommendation might be made to increase the amounts of World Bank resources available for tropical disease research, and that some of them could be applied to programs involving participation by pharmaceutical companies. 417

UNITED STATES INTERNATIONAL HEALTH POLICY: ROOM FOR PUBLIC AND PRIVATE INITIATIVE United States Senator Richard S. Schweiker This Conference has served a valuable function by bringing together representatives of private industry, academic experts, and government health policy officials to outline the political, scientific, and economic issues that surround development and use of pharmaceutical products in the developing world. The discussions are almost at an end, and now we must begin to chart a course for the future. In doing so we must consider the problem of pharmaceuticals in the broader context of international health. As the ranking Republican on both the Senate Health and Scientific Research Subcommittee and the Labor-HEW Appropriations Subcommittee, I am well acquainted with the needs of our own country. I know many of my colleagues look askance at programs to help foreign countries while so many of our own health problems are far from solved. This is espe- cially true now, at a time when government and the private sector are beginnning to realize that our resources are limited, and the Carter Administration is proposing to cut the budget for some of our efforts to improve health care in this country. The timing could hardly be less auspicious. Why should we undertake expanded international health obligations now? I support our nation's role in international health, quite frankly, both because I believe it is a moral and humanitarian obligation and because I see our contribution as a measure of enlightened self-inter- est. As President Kennedy said almost 18 years ago, "The health of a nation is the key to its future, to its economic vitality, to the morale and efficiency of its citizens, to its success in achieving its goals." By promoting and improving health in developing countries, we will be helping them to build stronger, more stable societies, which in the long-run can only be to the advantage of our nation and our nation- al goals of world peace and stability. The international health problems we face are immense. More than half the world's population lives in developing countries, and more than half lives in absolute poverty. Rapid population growth exacer- bates existing problems of malnutrition and unsanitary environments. 419

For example, it is estimated that in Central America the population is increasing at a rate of about 3.4 percent a year. If this rate con- tinues, it means the population will double in 20 years, creating tre- mendous pressure on resources. Lacking proper diet, clean water, and waste disposal systems, the people of these countries are, in overwhelming numbers, susceptible to a whole host of infectious diseases. Infant mortality is high, and more than 15 million children under the age of five die each year. More than 7 million of these childhood deaths are caused by diseases that are amenable to prevention — pneumonia and diarrhea, which strike children who suffer from protein and calorie-deficient diets. Preventable infectious diseases also account for a great number of deaths, as evidenced by an Agency for International Development study of an African village which found that more than a quarter of all deaths were due to measles, tuberculosis, smallpox, and whooping cough. The health status of adults is poor, making them vulnerable to parasi- tic and infectious diseases. These problems are not readily correct- able since because less than 20 percent of the people in these coun- tries have access to any kind of modern health services. In the face of these tremendous needs, the World Health Organiza- tion has set an ambitious goal: health for all by the year 2000. The resources that poor countries themselves are able to devote to attain- ing that goal are extremely limited. At the present time, governments of developing countries spend only 1 to 2 percent of GNP on health. In the United States, it is predicted that health will soon account for 9.2 percent of our much larger GNP. In absolute terms, developing nations are spending between fifty cents and $2.50 per person on health, and that amount is not evenly distributed according to need. Clearly, outside help is required if the WHO goal of health for all is to be reached, and it will be a long-term effort. I would like to emphasize two basic considerations for United States involvement in world health issues. First, we must accept the simple fact that allocation of resources in any country is essentially a political decision that must be made by that country's leaders. Developing countries themselves must make the initial political deci- sion that they want to improve the health and quality of life of their citizens. These are continuing goals in democratic societies, but we all realize that some developing countries are governed by elites who are not always sensitive to human needs and may not place a high pri- ority on improving the health of their people. In that situation our role, and the role of the international community, will be limited. Secondly, in deciding what we in the United States can do to help those countries that have made a commitment to improving the health of their people, we must carefully assess our strengths and weaknesses. We must share our expertise, and not export our mistakes. 420

There are some areas where our ability to help is limited. For example, it is obvious that when a developing country decides to devel- op or revamp its health care system, thorough health planning should come first. If the recent history of health planning in this country is any guide, we should admit that we have not yet been successful in the field of health planning and do not have an excess of health plan- ners in government. Similarly, many of the population and nutrition problems facing less developed countries require a deep understanding of social customs and lifestyle factors, and the ability to change atti- tudes and behaviors. I believe it would be fair to conclude that a nation that has traded the health problems of infectious diseases for those of environmental degradation and such unhealthy behavior patterns as overeating, over-drinking, and stress, may not be in the best posi- tion to offer solutions to complex social and environmental problems in other countries. We have not been able to master these problems in our own society. Developing countries must take care to avoid making the same mistakes that affluent nations have. By the same token, a health care delivery system that serves a highly developed, industrialized society may not be at all appropriate for developing countries. There is no question, however, that we have a great deal to offer in terms of health technology and scientific expertise. Our research establishment, both academic and commercial, is second to none and has led to development of a wide variety of methods and products to improve health and prevent illness. This is an area where we have much to share both now and in terms of future benefits we can expect from research. The private sector, the academic community, and government must all be involved. Many of the tools needed to control diseases affecting developing countries already exist, developed by our scientists and marketed by our private companies. What makes some of the tragic statistics I cited earlier so shocking is the fact that we know the problems are preventable. We have a responsibility to try to see that vital drugs and vaccines get to those in need, through bilateral aid programs, private voluntary efforts, and international assistance programs. This is why I authored legislation during the last Congress to provide for treatment of yaws, a debilitating and disfiguring illness prevalent in certain African countries, and for expanded childhood immunization activities through a joint effort by the Agency for International Development and the Center for Disease Control. I hope this type of technology transfer will continue in bilateral and multilateral aid efforts. Private industry can help by lending its expertise in marketing new ideas and educating the public on health matters. There can be no doubt that the private sector can effectively promote good health prac- tices and significantly aid in the education process. Anyone who doubts this needs only to look at margarine commercials on United 421

States television and then note the decline in butter consumption over the last several years. Industrialized countries, and the United States in particular, also have a great deal to offer in terms of research expertise and training. Here again, public and private sectors both have a role to play. Unfortunately, far from encouraging academic and commercial contributions, some of our government's policies have actually worked against achievement of international health goals, particularly in areas of new drug development. I would like to outline some of the ways I believe this situation can be remedied, so that government, universities, and private companies together can apply our strengths to the problems of developing countries. I believe the academic community has neglected the international health field. I plan to sponsor a bill that will call for development of international health expertise in United States academic health science centers. To be successful, these programs must be based both in the United States and abroad. Much of the training of health care personnel can and should be done in foreign settings to be truly effec- tive. I envision development of a multidisciplinary cadre of health professionals who will become international health specialists, trained in health sciences and health services appropriate for the problems of developing countries. This international health service would then provide research, teaching, and health policy advice to aid developing nations in building the needed health infrastructure and in training their own health care providers. The United States government also must improve its efforts to provide assistance to developing nations who seek to improve health status and health care for their citizens. Currently, international health problems are addressed by more than 20 agencies of the federal government. Frequently, agencies with technical expertise are unable to work effectively with the agencies responsible for dealing with the problem. Hopefully, creation of an Office of International Health within HEW will bring order to that department's efforts, and Congress may be able to provide HEW with an expanded mandate to engage in inter- national health activities. Continuing and effective participation in joint efforts, like those sponsored by WHO, and sharing information through internnational organizations should be a priority. Another important initiative that we in Congress can take to encourage development of new pharmaceutical therapies and stimulate research involves amending our drug laws, which now prohibit export of any drug not approved by FDA for use in the United States. AID regula- tions ban purchase of such unapproved drugs for use in our assistance programs. 422

The risk-benefit equation in the United States may be very differ- ent from the equation for a developing country. Delivery systems vary widely, and some diseases, as you well know, plague developing nations almost exclusively. There is no incentive for companies to develop and secure approval for drugs to treat these diseases, because the risk inherent in any drug could never outweigh a "benefit" which consists of treatment for a nonexistent disease. Obstacles to conducting the clini- cal tests necessary for FDA approval would be insurmountable. So, when drug companies consider whether or not to develop new drugs for these diseases, they must weigh the heavy financial burden involved in estab- lishing overseas facilities — all the while keeping in mind that even if the research is successful, the inability of poor nations to pay for the drug makes a fair return on investment unlikely. Pharmaceutical manufacturers are responsible to their stockholders, and must keep their business on a sound financial basis. Last session, my Health Subcommittee worked on legislation to relax the law and allow export of unapproved drugs. We found both FDA and the drug companies concerned about this issue, and I fully expect to deal with this issue during the present Congress. Many of the government-oriented proposals I have detailed are designed to bring resources of the private sector to bear on problems of developing countries. But there clearly are some things which the private sector can do on its own. I have in mind privately-sponsored exchanges of information and training personnel. Also, there are pro- mising opportunities for research aimed at adapting existing therapies, such as drugs and vaccines requiring refrigeration, to conditions pre- vailing in developing countries. The effort of one United States com- pany (Smith Kline and French) to produce measles vaccine with less demanding storage requirements is an example of private initiative in this area. I am pleased by the quantity and quality of participation by representatives of private industry in this Conference, as testimony to the industry's interest and commitment to providing needed therapies to less developed countries. I hope your efforts will continue and expand. In summary, I would note that while this Conference has focused on problems in the development and use of pharmaceuticals, we must always keep the bigger picture in mind. We are all aware of the criticisms that have been leveled at the developed world, and the pharmaceutical industry in particular. All of us would agree with the need for more research, but the facts require us to acknowledge that drug research and development alone will not solve the health problems of the developing world. Data presented at this Conference make it clear that there exist a number of excellent therapies appropriate for treatment and prevention of disease in developing countries. However, these treatments are often not used for two major reasons. 423

1. Much of the developing world lacks even a rudimentary health care infrastructure. Control of disease requires not only the ability to delivery therapeutic agents but also the ability to upgrade sanita- tion and living conditions, develop vector controls, and educate people about disease prevention. 2. The underlying problem of malnutrition constitutes a major impediment to improvement in health status, and accounts for many deaths among the very young. Infectious diseases are an important health problem in developing nations; but it is clear that malnutrition is a far more serious problem and leads in turn to susceptibility to disease. I suggest that a major effort of government and of concerned individuals and groups gathered here should be directed at finding ways to improve or develop health infrastructures in developing countries and more effectively address the problem of malnutrition. \ We realize that health for all will not be easy to achieve. Our health officials will no doubt continue to give the health problems of our own people first priority, as is appropriate. Our private firms will continue to concentrate on domestic markets and research opportuni- ties. It would be unrealistic to expect anything else. It would also be unrealistic to expect a major new influx of federal funds while inflation and controlling federal spending is our number one domestic goal. But if you as leaders of the scientific community and pharmaceuti- cal industry will join with us in government both here and abroad, we have a powerful coalition. Together, we appear to have eliminated smallpox throughout the world, and we may now be on the threshold of controlling measles. Important progress can be made along the lines explored at this Conference, and if we can learn to work more effec- tively together, I am confident that it will be made. 424

CLOSING REMARKS Leighton E. Cluff, Chairman DR. CLUFF described the Conference as a remarkable achievement, a landmark in the struggle to improve the health of developing nations. The Conference represents an unusual gathering with participation from foreign countries, foundations, international agencies, the United States government, and the pharmaceutical industry. The major issues that will have to be addressed by the Steering Committee in preparing the final policy statement include the following: • The underdeveloped countries are not all alike in their health problems: They differ economically, politically, and geographically. However, some problems do remain constant and are characteristic of impoverished conditions, such as diarrheas and the pneumonia complex in young children. These countries also differ in the development of their health infrastructure, and in their ability to deliver health care. Effective agents exist against many diseases. The impact would be enormous if there were means to deliver those agents to the people in need. • In some cases, no effective interventions are available. But the evidence presented during the Conference by research scientists actively working on such problems does suggest that there is a funda- mental research base for planning the research and development of active pharmaceutical agents. • There is a tremendous need for manpower and strengthened institu- tions for training in developing countries. The World Health Organ- ization, industry, and private foundations are assisting in the task of building these resources. • We have recognized, but not yet effectively addressed the need to assist developing countries to develop their own health care deli- very systems. This need is just as crucial as the need to develop more effective pharmaceuticals against diseases endemic to tropical countries. 425

• Developing countries have limited resources to purchase pharmaceuti- cal products, both those currently available, and those not yet dis- covered. This limitation will be a major consideration in future development of products for the public sector in those countries. • Constraints and disincentives act upon the pharmaceutical industry to slow the development of new products for developing countries, and there also are limitations on the academic community for conduct- ing basic research. • The capabilities and interests of the World Health Organization are evolving in an exciting way. Any future effort to develop new phar- maceuticals ought to involve the cooperation and coordination of the World Health Organization. In summarizing the task ahead, the health problems of developing countries are of concern to all peoples, to scientists, to industry, and to governments. The world might well declare the moral equivalent of war in mounting cooperative efforts to control diseases in develop- ing countries. These efforts can be achieved with clear and well- defined objectives. The Steering Committee now faces the task of examining the issues brought out at the Conference and formulating policy directions for future actions. 426

INVITED CONTRIBUTORS IVAN L. BENNETT, JR., M.D. Provost New York University Medical Center New York, New York BARRY M. BLOOM, Ph.D. President Central Research Pfizer, Inc. Groton, Connecticut ANTHONY CERAMI, Ph.D. Director Laboratory for Medical Biochemistry The Rockefeller University New York, New York LEIGHTON E. CLUFF, M.D. Vice President The Robert Wood Johnson Foundation Princeton, New Jersey SEYMOUR COHEN, Ph.D. Distinguished Professor Department of Pharmacological Sciences School of Basic Health Sciences State University of New York, Stony Brook PEDRO CUATRECASAS, M.D. Vice President for Research and Development — Medical Wellcome Research Laboratories Burroughs Wellcome Co. Research Triangle Park, North Carolina JOHN R. DAVID, M.D. Professor of Medicine Harvard Medical School Boston, Massachusetts 427

EDMUND de MAAR, M.D. Senior Program Officer Special Program for Research and Training in Tropical Diseases, and Division of Prophylactic, Diagnostic, and Therapeutic Substances World Health Organization Geneva, Switzerland JEAN DiRADDO, Ph.D. Associate in Pharmacology and Toxicology University of Rochester School of Medicine and Dentistry Rochester, New York J. M. KOFI EKUE, M.D. Clinical Pharmacology WHO Tropical Diseases Research Center Ndola, Zambia VITTORIO FATTORUSSO, M.D. Director Division of Prophylactic, Diagnostic, and Therapeutic Substances World Health Organization Geneva, Switzerland ALVAN FEINSTEIN, M.D. Professor of Medicine and Epidemiology Yale University School of Medicine New Haven, Connecticut WILLIAM H. FOEGE, M.D. Director Center for Disease Control Atlanta, Georgia DAVID A. HAMBURG, M.D. President Institute of Medicine Washington, D.C. JAMES F. HENRY, J.D. President Center for Public Resources, Inc. New York, New York 428

WILLIAM N. HUBBARD, JR., M.D. President The Upjohn Company Kalamazoo, Michigan PAUL A. J. JANSSEN, M.D. President and Director of Research Janssen Pharmaceutica Beerse, Belgium HON. JACOB K. JAVITS U.S. Senator BARRIE R. JONES, M.D. Professor Moorfields Eye Hospital London, England WILLIAM S. JORDAN, JR., M.D. Deputy Director National Institute of Allergy and Infectious Diseases National Institutes of Health Bethesda, Maryland DONALD KENNEDY, Ph.D. Commissioner Food and Drug Administration Rockville, Maryland HON. EDWARD M. KENNEDY U.S. Senator RICHARD M. KRAUSE, M.D. Director National Institute of Allergy and Infectious Diseases National Institutes of Health Bethesda, Maryland SANJAYA LALL, Ph.D. Institute of Economics and Statistics Oxford University Oxford, England 429

JOSHUA LEDERBERG, Ph.D. President The Rockefeller University New York, New York JAMES LEE, Ph.D. Director Environmental and Health Affairs The World Bank Washington, D.C. ADETOKUNBO 0. LUCAS, M.D. Director Special Program for Research and Training in Tropical Diseases World Health Organization Geneva, Switzerland TAG MANSOUR, Ph.D. Chairman Department of Pharmacology Stanford University School of Medicine Stanford, California WALSH McDERMOTT, M.D. Special Advisor to the President The Robert Wood Johnson Foundation Princeton, New Jersey RUDI OBERHOLZER, Ph.D. CIBA-GEIGY, Ltd. Basle, Switzerland GILBERT S. OMENN, M.D. Associate Director Human Resources and Social and Economic Services Office of Science and Technology Policy Executive Office of the President Washington, D.C. FRANK T. PERKINS, M.D. Director, Biologicals World Health Organization Geneva, Switzerland 430

WALLACE PETERS, M.D., D.Sc. Professor Liverpool School of Tropical Medicine Liverpool, England ABDOU M. SALLAM, M.D. Chairman Arab Company for Drug Industries and Medical Appliances (ACDIMA) Cairo, Egypt LEWIS H. SARETT, Ph.D. Senior Vice President Science and Technology Merck & Company, Inc. Rahway, New Jersey HON. RICHARD S. SCHWEIKER U.S. Senator HAROLD J. SIMON, M.D., Ph.D. Senior Visiting Scholar Institute of Medicine Washington, D.C. C. E. GORDON SMITH, M.D. Dean London School of Hygiene and Tropical Medicine London, England DENIS THIENPONT, D.V.M. Director, Department of Chemotherapy Janssen Pharmaceutica Beerse, Belgium MAX P. TIEFENBACHER, Esq. Director Farbwerke Hoechst A.G. Frankfurt/Main, Germany JOHN URQUHART, M.D. Chief Scientist ALZA Corporation Palo Alto, California 431

ERNST VISCHER, Ph.D. Director CIBA-GEIGY, Ltd. Basle, Switzerland WILLIAM M. WARDELL, M.D., Ph.D. Associate Professor Department of Pharmacology and Toxicology, and Medicine University of Rochester School of Medicine and Dentistry Rochester, New York KENNETH WARREN, M.D. Director of Health Science Programs The Rockefeller Foundation New York, New York W. CLARKE WESCOE, M.D. Chairman of the Board Sterling Drug, Inc. New York, New York 432

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