Creating Incentives for Pharmaceutical Research on Neglected Diseases
Michael Kremer & Rachel Glennerster
Millions of people in the third world die from diseases that are rare in the first world--diseases like malaria, tuberculosis, and schistosomiasis. AIDS, which is now usually treated in rich countries, still ravages the world's poor. Vaccines offer the best hope for controlling these diseases and could dramatically improve health in poor countries. But developers have little incentive to undertake the costly and risky research needed to develop vaccines. This is partly because the potential consumers are poor, but also because governments drive down prices.
In Strong Medicine, Michael Kremer and Rachel Glennerster offer an innovative yet simple solution to this worldwide problem: "Pull" programs to stimulate research. Here's how such programs would work. Funding agencies would commit to purchase viable vaccines if and when they were developed. This would create the incentives for vaccine developers to produce usable products for these neglected diseases. Private firms, rather than funding agencies, would pick which research strategies to pursue. After purchasing the vaccine, funders could distribute it at little or no cost to the afflicted countries.
Strong Medicine details just how these legally binding commitments would work. Ultimately, if no vaccines were developed, such a commitment would cost nothing. But if vaccines were developed, the program would save millions of lives and would be among the world's most cost-effective health interventions.
Michael Kremer is Gates Professor of Developing Societies at Harvard University, Senior Fellow at the Brookings Institution, and NonResident Fellow at the Center for Global Development. He founded and was the first executive director of WorldTeach, a nonprofit organization that places two hundred volunteer teachers annually in developing countries (1986-1989). He previously served as a teacher in Kenya. Rachel Glennerster is Director of the Poverty Action Lab at the Massachusetts Institute of Technology, a center devoted to evaluating the effectiveness of anti-poverty programs. She has worked on health and development policy at the UK Treasury, the Harvard Institute of International Development, and the International Monetary Fund.