Research and Development
This term is typically used to describe scientific investigation and invention. Applied research and development has a commercial objective and includes the invention and design of production systems. In the pharmaceutical sector, research and development (R&D) costs are often very high and so the industry is likely to invest only in drugs with profit potential.
The high cost of R&D in part explains why there are more drugs to treat the health problems of the world's wealthiest people than to treat conditions suffered by the world's poorest. This trend towards investment where the return is highest has made it necessary for governments, often through public-private partnerships, to fund R&D into less profitable but needed drugs. This applies particularly to neglected diseases, i.e., diseases which are seriously disabling or life-threatening but for which treatment options are inadequate or do not exist, while the drug marketing potential is insufficient to attract a ready private sector response. Of the 1 200 drugs developed between 1971 and 1996, only three were anti-malarials.
The Commission on Macroeconomics and Health (CMH) distinguishes between three types of diseases.
- Type I: incident in rich and poor countries with large vulnerable populations in both areas. These diseases attract sufficient R&D (both public and private) but poor country access to medicines may be restricted as they are often patented and expensive.
- Type II: incident in rich and poor countries, but with a much greater incidence in poor countries, such as HIV/AIDS and TB. R&D incentives exist in the rich countries, but the level of spending is very low compared to global disease burden.
- Type III: incident almost exclusively in poor countries. These are known as extremely neglected diseases, e.g. African sleeping sickness and river blindness. R&D in rich countries is almost non-existent and new treatment developments are usually fortuitous or accidental discoveries.
The 10/90 research gap refers to the finding that only 10% of the US$55 billion global spending on health research is devoted to diseases or conditions that account for 90% of the global burden of disease. For each year of potential life lost in the industrialized world, more than 200 times as much is spent on health research as is spent for each year lost in the developing world.
It is argued that the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement could be an effective stimulator of research and development into less profitable but needed drugs because it safeguards incentives for investment.
The term orphan drug is used to describe a medication developed for rare disease, where there is little hope of recovering the development costs and thus little financial incentive for industry to develop it. Orphan drugs usually have different status from other drugs under development (for example, the drug's manufacturer may enjoy tax breaks, or an extended patent period).
Public purchase funds are another example of an incentive for the research and development of products where there is little profit motive. Under such a scheme, governments would guarantee to buy vaccines for developing country markets at a fixed price from any firm that could develop an effective new product. The provision of incentives to research and develop medicines that would not normally provide a profit incentive is thought to be an intermediate global public good.