Thinking About Bioshield

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

IGCC/AAAS Wye River Biosecurity Workshop August 16, 2006

The ProblemThe Need

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

The ProblemThe NeedThe Budget

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

The ProblemThe NeedThe BudgetBeyond Analogies

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

Current Ideas:1. Boosted Demand2. Advanced Purchase Commitments3. Virtual Pharma

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

1. Boosted Demand

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

Problem: Sunk Costs

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

2. Advanced Purchase Commitments

M. Kremer & R. Glennerster,Strong Medicine (Princeton University Press 2004)

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

Problem: How Big a Prize?Accounting Cost of R&D

J. DiMasi, R. Hansen, and H.Grabowski, “The Price of Innovation:New Estimates of Drug DevelopmentCosts,” Journal of Health Economics 22:151 (2003)

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

Problem: How Big a Prize?Accounting Cost of R&DLiquidity Constraints

Berndt E. et al., “Advanced markets for a malaria vaccine: Estimating costs and effectiveness.” Working Paper 11288 (National Bureau of Economic Research 2005), available at http://www.nber.org/papers/w1128.

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

Problem: How Big a Prize?Accounting Cost of R&DLiquidity Constraints“Bare Bones” Programs

Global Alliance for TB Drug Development, Economics of TB Drug Development (2006) available at http://66.216.124.114/pdf/Economics%20Report%20Full%20(final).pdf.

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

“[A]ny plan that has a disparity of $3 billion to $10 billion is one that needs close attention. That’s a variation of 300 percent. So I will be happy to talk to you about it after I read it, but that’s a big disparity and a big controversy…”

- Rep. Nancy Pelosi

Edward Epstein, “Tearing Down Dam a Bomb In Capitol,” SF Chronicle, July 22 2006. B1, 3.

Problem

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

3. Virtual Pharma

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

Benefit: Competitive Bidding

Problem: Picking Winners

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

Problem: Picking WinnersHistory

Covert N., “Cutting edge: A history of Fort Detrick.” available at http://www.detrick.army.mil/detrick/cutting_edge/index.cfm?chapter12

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

Problem: Picking WinnersHistoryEmpirical Evidence

Moran M, Ropars AL, Guzman J, Diaz J, Garrison C. The new landscape of neglected disease drug development. London UK: Pharmaceutical R&D Policy Project: 2005.

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

Problem: Picking WinnersHistoryEmpirical EvidenceTheory

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

Some Political Advice: Return of The Dollar-a-Year Men?

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

Heck, It’s Just A Business Plan…”

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu

References

S. Maurer, "Choosing the Right Incentive Strategy for R&D in Neglected Diseases," World Health Organization Bulletin 84:376 (2006), available at http://www.who.int/bulletin/volumes/84/5/376.pdf.

S. Scotchmer, Innovation & Incentives (MIT University Press 2004).

G. Spagnolo, “Procuring Innovation,” in Handbook of Procurement (Spagnolo, Dimitri & Piga eds.), Cambridge, UK: Cambridge University Press (2006: in press).

Stephen M. MaurerInformation & Homeland Security ProjectUC Berkeley/Goldman School of Public Policysmaurer@berkeley.edu