Vaccines for preventable diseases save millions of lives every year, yet as an industry, the vaccine business suffers a host of ailments, the CEO of Merck & Co. contends.
Speaking at a Harvard Business School forum recently, Raymond V. Gilmartin (HBS MBA '68) said the vaccine industry needs to overcome hurdles that include a feeble distribution infrastructure, a thin pipeline of competition to inspire more innovation, and a poor diet of incentives for the development of vaccines for which there is no natural market such as vaccinations against anthrax or ricin.
In his talk, Gilmartin, who is Merck's chairman, president, and CEO, offered several prescriptions for making the vaccine industry more competitive and effective. His talk, "The Significance of Vaccines in Global Health," came at the invitation of the School's Health Industry Alumni Association and the Harvard Health Caucus at Harvard Medical School.
Issues related to vaccines need to receive "dramatically greater" attention from policy makers concerned about global public health, he said. Echoing a statement by the World Health Organization, Gilmartin said the discovery, development, and distribution of vaccines has been one of history's two greatest public health successes; the second is clean water.
And while thousands of lives around the world are saved by vaccines for such ailments as polio, measles, yellow fever, chicken pox, and hepatitis A and B, as many as three million children die every year from diseases that are preventable from available vaccines. Measles remains one of the biggest killers even though a measles vaccine was developed forty years ago, said Gilmartin.
But developing a new vaccine is not a straightforward engineering project "like contracting for a submarine," he said. "We need a lot of people doing this innovation."
| When scientists know that the results of the work they do will actually get to the people who need it, they will be more inclined to undertake that work in the first place. |
The pool of vaccine manufacturers in decreasing, not increasing. Until the 1970s, twenty-five companies manufactured vaccines, he said, citing statistics from an August 2003 report by the Institute of Medicine. Today only five companies make vaccines; Merck is one of them.
The business community and policy makers should work together to find ways to improve access to available vaccines, he told the group. They also need to create an environment that would stimulate further research into new vaccines, particularly for diseases that are endemic in the developing world such as malaria, tuberculosis, and HIV.
Diagnosing the problems
According to Gilmartin, three recent developments may offer an answer to these challenges: scientific advancements, globalization of health issues, and new kinds of public-private partnerships.
Advance of science. Thanks to the advent of molecular biology, people have a far better and deeper understanding of the biology of both the organisms they need to protect against and the human body's means to fight back.
"This is enabling us to develop vaccines that elicit the most effective immune response in the body, potentially thoroughly transforming the way vaccines are developed," he said.
Merck is using new molecular techniques to develop a vaccine against five strains of rotavirus, which is the leading cause of infant diarrhea, causes the hospitalization every year of more than 55,000 American children under the age of five, and kills as many as half a million children around the world. Most vaccines today only attack one strain of rotavirus, he said.
Merck is also working on an HIV vaccine, he said. "Based on our experience as a major supplier and discoverer of antiretrovirals, I believe that vaccines will be the only answer to bring the pandemic under control."
Globalization of health issues and disease. International organizations as well as national governments and the private sector are increasingly recognizing the need for international cooperation, according to Gilmartin.
| We need to promote policies that will expand the incentives for vaccine research. |
"Everyone now recognizes the increased speed with which disease can spread around the world. As we saw with SARS, diseases that once might have taken weeks and months to spread beyond their point of origin can now travel across the globe in just hours. ... This reality has helped bring the need for global health policy coordination into focus."
Public-private partnerships for global health. National governments, particularly in the developing world, recognize that they can't tackle public health challenges alone. They are seeking partnerships with the private sector and foundations and they realize this could pay big dividends, Gilmartin said.
"When scientists know that the results of the work they do will actually get to the people who need it, they will be more inclined to undertake that work in the first place," he added.
In its report, the Institute of Medicine highlighted the environment in which vaccine producers have had to operate over the past three decades, and called that environment the main cause for industry contraction, he said. In the U.S., manufacturers are particularly concerned about liability. "Every time a false alarm is raised about a proven, safe, effective vaccine and public health officials don't forcefully respond, the environment becomes that much less hospitable," said Gilmartin.
The U.S. government's role in purchasing and price-setting for vaccines has steadily increased, he said. According to the August report, the government now purchases 55 percent of all childhood vaccines at forced discount prices, up from 35 percent ten years ago. This has led to declining financial incentives to support the development and production of vaccines.
| We all agree that no child should be denied immunization because his or her parents cannot afford it. |
"As good as we think we are [at Merck], no one company or a handful of companies can do it all-can undertake all the research needed to address the enormous global public health challenges for which vaccines can provide effective and cost-effective answers," said Gilmartin. "We need to promote policies that will expand the incentives for vaccine research so that others will find reasons to dedicate their efforts and risk their capital to discover vaccines."
Prescription for reform
He suggested three remedies:
1. Improve the state of global private sector vaccine enterprise. Remove some of the barriers that stand in the way of competitive market profitability for those who risk capital to find vaccines the world needs. "In the U.S., we need to address the Institute of Medicine's call to reverse some of the consequences of the large government role in vaccine purchasing. We all agree that no child should be denied immunization because his or her parents cannot afford it." But people in the industry also have to analyze whether arbitrary price caps are the best way. Gilmartin said that government-supported research institutions could help shape an academic research agenda to enhance vaccine research.
2. Improve the infrastructure for delivering vaccines in the developing world. Merck has tiered pricing in order to offer products at lower prices to the developing world, he said, "yet it doesn't matter how inexpensive the vaccines are if the infrastructure to deliver them just isn't there. From problems of transportation to the lack of trained people to administer vaccines, the challenges are considerable but not insurmountable."
3. Create new incentives for the development of vaccines for which there is little or no natural market. "Few people today would likely rush out to be immunized against anthrax or ricin," he said. "But should they be used as weapons, the need for vaccines would be swift and enormous."
The U.S. government has taken a first step in creating mechanisms to encourage the development of vaccines against bioterror agents, he said, including seed funding for basic research at small and large companies. The government is also looking at ways to encourage cooperation between the public and private sectors. Most importantly to Gilmartin, these mechanisms authorize the government to make binding purchase commitments for vaccines.
"These purchase commitments serve the role normally played by a market by creating the incentives for risky vaccine research," he said.
Companies that want to be part of a revolution in health care will continue to invest in research, he said.
"If, however, we can accomplish all these things, the result ... would certainly contribute to what may very well be the most dramatic improvement in global public health in history."
Gilmartin spoke at HBS on February 11.