Innovation is a critical tool in the global fight against tuberculosis (TB), an infectious disease that primarily affects the poor and vulnerable and ranks among the top 10 causes of death in the world. The Center for Global Development and the Office of Health Economics are proposing a new innovation model to bring better TB drugs to market. We call it the “Market-Driven, Value-Based Advance Commitment,” or MVAC for short.
Innovation is a critical tool in the global fight against disease—especially for tuberculosis (TB), an infectious disease that primarily affects the poor and vulnerable and ranks among the top 10 causes of death in the world. Despite years of investment in TB control, modelling suggests that global goals for TB cannot be achieved without major technological breakthroughs. The market for TB therapies reached roughly $1 billion in 2018 and is projected to grow by over one-third by 2025, suggesting a potentially large and profitable market for better TB treatment. Yet despite the clear health need and potential return, private sector actors have mostly shied away from this market.
A major reason for this underinvestment is the distribution of the TB burden. Unlike many other diseases that affect rich and poor countries alike, TB is highly concentrated within large Middle Income Countries (MICs), many of which are poised to soon transition from donor aid. Though MIC health expenditure is growing fast, industry remains sceptical that low and middle income country (LMIC) markets alone will yield sufficient revenue to justify up-front R&D investments, particularly given a history of aggressive price negotiation, compulsory licensing, and price controls. To make large-scale investments, innovator companies will thus need assurance that MIC purchasers are willing to pay a value premium for innovation—potentially far higher than the cost of less effective generic competitors, but low enough to ensure local value and affordability. The status quo therefore represents a lose-lose scenario: industry is scared off from developing products for a potentially profitable market and TB patients must make do with long, unpleasant, and increasingly ineffective treatment regimens.
Recent policy announcements by MIC governments, however, suggest they are eager to engage with global health initiatives, including the TB R&D agenda. This opens a window of opportunity for establishing a new partnership model whilst also setting up Health Technology Assessment (HTA) institutions for assessing the value for money for the healthcare spend in these countries.
Over the past year, the Center for Global Development and the Office of Health Economics have been building out a new innovation model to seize this opportunity and bring better TB drugs to market. We call it the “Market-Driven, Value-Based Advance Commitment,” or MVAC for short (though we’re open to a better name if you have suggestions!). The MVAC builds on the Advance Market Commitment (AMC) model previously used in global health, but with several important improvements. Most importantly, the MVAC is driven by MIC demand rather than donor contributions; informed by countries’ own willingness to pay rather than a single, “cost-plus” price; and allows pharmaceutical companies to reap higher revenues from a more effective product. The MVAC model is intended to serve as a bridge between the dysfunctional status quo and a more sustainable and effective R&D ecosystem—one which more closely emulates the positive characteristics of high income country (HIC) markets for healthcare products and opens up potential markets to MICs’ home-grown innovative industry.
The MVAC blueprint is a work in progress, but today we’re pleased to share a preliminary draft [PDF]. We’ve already benefitted from extensive discussions and consultations with our global health colleagues, but our release of the consultation draft is an explicit recognition that we need wider input—from country governments, funders, industry, civil society, and academia—to stress test our ideas; identify holes in our thinking; and help craft a tighter proposal that is responsive to stakeholder needs.
Over the next few months, we hope to engage with as many of you as possible, helping to strengthen this document before final publication. We welcome comments and feedback by email (to our colleague at the Center for Global Development, Rachel Silverman, rsilverman@cgdev.org) by April 15; we can make the health technology report undertaken for the blueprint available on request; and we’d also be happy to chat by phone or in person. We hope to produce a final document later this spring.
Rachel Silverman is at The Center for Global Development.
This blog post has also been published on the Center for Global Development website.
Citation
Chalkidou, K., Garau, M., Nemzoff,C., Rodes-Sanchez, M., Silverman, R., and Towse A. (2019). Blueprint for a Market-Driven Value-Based Advance Commitment (MVAC) for Tuberculosis. Draft for Consultation. Center for Global Development. Available at: https://www.cgdev.org/sites/default/files/MVAC-Blueprint-for-Consultation-2019-02-28.pdf
