Abstract
This article examines the market devices designed to address the “market failure” surrounding neglected diseases, focusing on international drug-development activities for leishmaniasis. Using public-private partnerships and the US Food and Drug Administration's Priority Review Voucher as key examples, the article explores how these initiatives have transformed drug development for neglected diseases over time. By tracing the history of two drug candidates for leishmaniasis—miltefosine and Anfoleish—the analysis reveals how the market devices initially intended to de-risk drug development have been turned into financial assets, aligning with the profit-driven imperatives of large pharmaceutical companies. This process, known as assetization, is examined through a long-term perspective that highlights the interaction between global health actors, pharmaceutical firms, and regulatory frameworks. The case of leishmaniasis offers a nuanced understanding of how commercial interests have shaped the market for neglected diseases, despite efforts to make them less neglected.
Keywords
Introduction
In the early 2000s, the disease category of Neglected (Tropical) Diseases 1 was defined by Médecins sans Frontières (MSF) as “a group of seriously disabling or life-threatening diseases that can be considered neglected when treatment options are inadequate or non-existent, and when their drug-market potential is insufficient to attract a private sector response” (Médecins Sans Frontières Access to Essential Medicines Campaign and Drugs for Neglected Diseases Working Group 2001). In other words, pharmaceutical companies had shifted their focus away from diseases affecting poor populations in the Global South, opting instead to concentrate on more profitable markets. The diseases identified as “neglected” were portrayed by MSF as “market failures,” because the affected patients and countries lacked the purchasing power necessary to incentivize research and development.
In the fields of economics and public policy, the concept of “market failure” is often used to justify government intervention in ways that further the interests of corporate actors (Browning and Browning 1992, 658; Zerbe and McCurdy 1999). The framing of neglected diseases as a market failure influenced national and international policies and led to the creation of market devices designed to boost interest in diseases that lack appropriate treatment(s). Market devices are defined as “material and/or social arrangements deployed with an intent to make the market ‘better’ or more just, in situations where public and commercial interests diverge” (Geiger and Gross 2017). However, according to Weimer and Vining (2017), policymakers are typically taught to apply the least intrusive intervention or device necessary to correct the market failure.
This research explores how two particular market devices, introduced to incentivize drug Research & Development for neglected diseases have instead been co-opted to further the interests of pharmaceutical sector actors. To illustrate this, I trace the history of some drug candidates, focusing on key market devices used to attract private sector involvement in drug development. Two main devices are scrutinized in this article: the organizational arrangements known as public-private partnerships (PPPs, or PDPs when specific to drug development), and the regulatory device introduced in 2006, the US Food and Drug Administration's Priority Review Voucher (PRV).
By analyzing how PDPs and the PRV operated as market devices over an extended timeframe, this research reveals the complex dynamics of pharmaceutical assetization. Here I adopt Birch and Muniesa's (2020) definition of an asset as “something that can be owned or controlled, traded and capitalized as a revenue stream, often involving the valuation of future expectations.” PDPs and PRVs are core components of the networks that establish drugs as assets. Moreover, they enable the assetization of other resources, particularly pharmaceutical knowledge, which emerges as one of the most critical assets in the case studies presented here. The category of “market failure” also plays a key role in facilitating assetization by clearly indicating to policymakers that a particular market requires government intervention to attract investment. The dynamics of assetization are particularly difficult to realize because dominant framings emphasized that neglected diseases were not profitable, obfuscating the ways in which value was nonetheless, generated around them.
The case studies presented in this article focus on a specific group of neglected diseases: leishmaniases. 2 Visceral and cutaneous leishmaniasis (CL) are included on the World Health Organization (WHO) list of Neglected Tropical Diseases because they primarily affect poor countries in the Global South and because the available treatments are toxic and inadequate. In most countries, the first-line treatment for all forms of leishmaniasis is meglumine antimoniate (Glucantime®) or sodium stibogluconate (Pentostam®), highly toxic antimonial compounds.
Leishmaniases are endemic in ninety-two countries, with 30,000 new cases of visceral leishmaniasis and over one million new cases of CL reported annually worldwide (World Health Organization 2022). Although leishmaniases are widespread globally, making generalizations and comparisons between regions is challenging because the disease manifests differently, particularly between the Old and the New Worlds. 3 For drug development, this variability requires that each new treatment be tested in different regions and for different Leishmania species before it is accepted by the scientific community and international guidelines can be updated.
The Case Studies
The first major international actor involved in leishmaniasis drug development was the WHO Special Programme for Research and Training in Tropical Diseases (TDR), created in 1975. TDR represented an attempt, by the WHO, to bridge the technological gap between the First and the Third World, as described in seminal documents following its launch. The program focused not only on pharmaceutical interventions but also on capacity building. TDR was, in fact, the WHO's last breath before the rise of different actors and practices in the Global Health era (Gradmann et al. 2022). The second key actor in leishmaniasis drug development was the Drugs for Neglected Diseases initiative (DNDi), a satellite organization of MSF. DNDi and MSF emerged as new actors in the field of Global Health in the early 2000s, putting the term “access to medicines” in the spotlight. In other words, access to medicines became central to DNDi's partnerships for drug development, targeting low prices in the Global South, as well as local production.
The strategy adopted by both actors to bridge the innovation gap and address the market failure was to establish PPPs to de-risk and incentivize commercial, market-oriented drug development. The innovation gap referred to by TDR and DNDi covered the integration of different types of knowledge, capabilities, and skills required to bring a new product to market. In other words, they envisioned a particular ideal of innovation and capacity building grounded in economic outcomes, aligned with Schumpeter's definition of scientific innovation (Schumpeter 1934; McDaniel 2000).
The first international PDP for leishmaniasis started within the WHO. In the 1980s, TDR entered into legally binding agreements with pharmaceutical companies (mainly situated in countries of the Global North) to co-develop new treatments for neglected diseases. In 2003, DNDi, proposed the same strategy but with a slight difference: countries of the Global South should also be protagonists in the effort to provide a pharmaceutical response to the public health issues affecting them. Two drug candidates emerged from these initiatives: miltefosine, sponsored by TDR; and Anfoleish, sponsored by DNDi. The comparison of these two drug projects affords insight into the complex set of actors and financial dynamics involved in the globalized pharmaceutical market.
Methods
My research draws on multiple sources: TDR/WHO archives, scientific publications, media coverage, and a total of 30 interviews. The investigation into the miltefosine drug-development project was conducted retrospectively. The starting point was the Memorandum of Understanding signed between Asta Medica and TDR in 1995, and related correspondence between the company and WHO regarding the establishment of this agreement. Subsequent interviews included key stakeholders such as one of the inventors of the molecule, TDR's R&D director, the principal investigator of two clinical trials, the executive director of TDR, two directors of the WHO Leishmaniasis Program, and WHO staff involved in drafting the agreement.
I was directly involved in the Anfoleish drug development project from its early phases. I spent four years (from May 2015 to August 2019) embedded in the day-to-day activities of the DNDi Regional Office in Rio de Janeiro, where I coordinated the network of leishmaniasis experts and clinical investigators in Latin America (redeLEISH). This experience provided me with valuable insights into the projects and dynamics that informed the subsequent research on this topic. Follow-up interviews were conducted with DNDi R&D director, regional office director, executive director, the CEO of the pharmaceutical company, the principal investigator, representatives from DNDi's legal and business development departments, the Colombian funding agency, and clinical research staff from the University of Antioquia and DNDi. All interviews were instrumental in constructing narratives for each case study, offering nuanced perspectives on the motivations and goals of both TDR and DNDi.
This research is part of the project “History of Leishmaniasis (1903-2015): Meanings, Confrontation, and Challenges of a Disease of the Tropics that Became a Global Risk,” which was submitted to the Research Ethics Committee through Plataforma Brasil to ensure compliance with the recommendations of Resolution 496/2012 of the National Health Council. The project was approved under number 1.443.632 on March 9, 2016. All interviewees provided informed consent, either in writing or verbally.
Miltefosine: A TDR Drug Development Initiative to Change the Treatment Standard for Visceral Leishmaniasis in India
The first international R&D joint venture related to leishmaniasis dates back to the early 1980s, and was spearheaded by the Product Research and Development Unit (PDU) of TDR. One of the drug candidates supported by the PDU to renew the treatment of visceral leishmaniasis was miltefosine. This drug really embodied the hope of TDR and the medical community involved in leishmaniasis therapy. As one of the TDR directors put it in the 30-year program report: “The development of miltefosine was, in my view, one of the major successes of TDR in this period. It was the first oral drug for visceral leishmaniasis, it involved an excellent partnership between TDR, the Indian authorities, and the private sector. And the initiative involved capacity building with the Indian hospitals involved in the drug trials” (Carlos Morel, UNICEF/UNDP/WORLD BANK/WHO Special Programme for Research and Training in Tropical Diseases 2007, 75).
The history of biomedical research on miltefosine can be traced back to the 1960s (Westphal 1987). The compound was originally developed and marketed as an anticancer agent (Miltex®), but in the 1980s scientists discovered its potential as an anti-leishmania agent (Croft and Engel 2006). In 1991, the molecule was patented for oral use in the treatment of visceral leishmaniasis (Engel et al. 1999). Four years later, TDR established a PPP with Asta Medica, the German pharmaceutical company which owned the molecule, for the clinical development of miltefosine. This development involved repurposing what was originally an anticancer compound for a new indication (leishmaniasis); all pre-clinical studies regarding its use in oncology had been carried out by the pharmaceutical company. The pre-clinical and clinical data for leishmaniasis, however, did not yet exist. Thus, the main objective of the partnership established by TDR was to obtain the missing pharmacological information on the molecule for its use to treat leishmaniasis. TDR was the ideal partner in this regard, since it had an extensive expertise in clinical research in tropical diseases (Barbeitas 2022). 4
As one respondent, echoed by others from TDR, said, “Asta Medica was not eager to set up clinical trials for a relatively unprofitable disease” (TDR respondents, recorded interviews July 14, 2017 and September 23, 2019). TDR shared the costs and risks of the development of miltefosine by signing a Memorandum of Understanding (MoU)—a standard type of agreement used by the WHO to reconcile public and private interests and to try to overcome market failures—with the German company. The MoU on miltefosine described the division of labor and the roles and responsibilities of each party to achieve regulatory approval. Asta Medica was responsible for the pre-clinical stage, and TDR for the clinical trials. Initial regulatory approval had to be obtained in Germany (where Asta Medica had its headquarters) and in India (the target market). The agreement also established the price of the drug for the public and private sectors, as well as the quantities to be supplied to the public sector (Gutteridge 2006).
A careful read of this MoU reveals two paragraphs of particular interest. The first relates to the price of miltefosine: “The price at which the Compound is made available to Public Sector Agencies for Distribution through the Public Sector of Developing Countries shall be (i) preferential compared to the Private Sector price, and (ii) set at the lowest possible level permitting a commercially reasonable return on combined worldwide sales of the Compound for Distribution in both Public and Private Sectors, plus a mark-up of ten (10) percent.”
The second paragraph pertains to Mergers & Acquisitions (M&A), a well-known business strategy used by pharmaceutical companies. It states that “This Memorandum of Understanding shall be binding upon the successors and assignees of the Parties.” 5
This memorandum was initially valid for a period of three years (1996-1999) and was to be renewed annually until regulatory approval was obtained in India. Additionally, a Phase 4 field study was planned and undertaken in India to assess the suitability of the product for a visceral leishmaniasis control program in that country as well as Bangladesh and Nepal (Gutteridge 2006).
In 2001, one year before obtaining regulatory approval, the R&D core of Asta Medica was spun off into a new pharmaceutical company named Zentaris GmbH, with miltefosine allocated to its R&D portfolio. Despite the terms of the MoU, this move raised concerns at TDR because miltefosine had failed as an oncological product. Without the antitumor indication, the clinical studies for leishmaniasis could be jeopardized since this disease would not normally attract commercial interest. However, Zentaris decided to allow the clinical study to continue, as TDR was offering a new market opportunity for a drug that would otherwise no longer be commercialized (Gutteridge 2006).
In 2002, miltefosine was finally registered on the Indian drug market, but a long legal battle ensued to establish a new public price, with Zentaris seeking to recover the money invested in the purchase of miltefosine. After a three-year battle, a new price-setting formula was agreed. According to the letter of agreement signed between TDR and Zentaris, this was to allow Zentaris to recuperate some R&D costs…agreed by WHO/TDR on an exceptional basis, as a gesture of goodwill, and will not in any way be construed by Zentaris as the basis for any further deviations from the terms of reference of the MoU of 10 August 1995…It is understood and agreed that except as explicitly provided herein, no deviations from the pricing are being or will be accepted by WHO/TDR…For a period of 5 years from the date of this letter (13 July 2005), the Developing Country Public Sector price for miltefosine will be set between 45–55 euros depending on order size.
In 2008, before the TDR-Zentaris price agreement expired, miltefosine was sold to a Canadian pharmaceutical company, Paladin, for USD$8.5 million. Following this deal, the public price of the product in endemic countries varied greatly. The cost of treatment for a single patient reached €250. In 2010, TDR requested that Paladin present adequate documentation justifying its annual global sales and revenue for miltefosine in order to re-open negotiations for a new public price setting. Paladin never provided that information, and the negotiation never went ahead.
6
One of the R&D directors of TDR spoke on this matter: During miltefosine development, WHO made some precautions, WHO and Zentaris developed and signed a MoU. But in essence I must say that this MoU was extremely well constructed and had the provisions for a price that would be paid by the public sector up until 2010 and that was, for the company, to be able to pay back some of the development costs and it also accounted of course for the investments of the public sector. From that date onward, there was a provision for price development because at that point it was assumed that the costs would be paid. We can be very critical with WHO but I must say that this agreement was extremely well constructed. What happened is that a different company called Paladin bought the product at some point for something between 8-13 million. Thirteen million that the company invested between buying the product and registering the product. The MoU was binding, not only for Zentaris, but also for anyone who had bought the product thereafter. So those criteria were applied to Paladin and we want to stick with those criteria but this won’t happen and it was a very frustrating experience … The price that we should be paying now would be a fraction of the current price for endemic countries. (Respondent from TDR, recorded interview 23 September 2019)
Challenging the Concept of Market Failure
Several actors have argued that neglected tropical diseases represent a market failure, on the grounds that the price charged for drugs for neglected diseases is not a fair return on research and productive capital invested by companies. However, the history of miltefosine demonstrates that neglected disease products can earn company shareholders staggering profits. Since 2015, Profounda, a company licensed by Knight Therapeutics, has been responsible for the sale and distribution of miltefosine in the United States. This company charges between USD$33,000 and USD$51,000 for the treatment of a single leishmaniasis patient (Sunyoto, Potet, and Boelaert 2018). In 2021, the price of miltefosine in an endemic country like Brazil was USD$280 per treatment of a single patient. The country's total spending on this drug amounted to USD$800,000 in 2021, covering only 15 percent of cutaneous leishmaniasis patients, with CL being the current indication for miltefosine in Brazil. 7 The country's expenditures may greatly increase when the use of miltefosine is extended to all CL patients.
The Drugs for Neglected Diseases Initiative: A TDR Heir Conceived by MSF
In late 1999, MSF was awarded the Nobel Peace Prize. This put the term “neglected diseases” in the limelight, and made it one of the top priorities for the NGO. At the Nobel Prize ceremony, then president of MSF James Orbinski (2019) articulated what the concept of “neglected diseases” designated: Today, in what is now a globalizing market economy, a growing injustice confronts us. More than 90 percent of all death and suffering from infectious diseases occurs in the developing world. Some of the reasons that people die from diseases like AIDS, TB, sleeping sickness and other tropical diseases are that lifesaving essential medicines are either too expensive, are not available because they are not seen as financially viable, or because there is virtually no new research and development for priority tropical diseases. This market failure is our next challenge.
The DNDi was created with a view to addressing what other R&D initiatives had overlooked: the so-called “most neglected diseases,” which included Chagas disease, sleeping sickness, and leishmaniasis. Back in 2001-02, several PDPs had been created targeting only diseases with an average to high level of market incentives, for example, tuberculosis with Global Alliance for Tuberculosis Drug Development (first GATB, then TB Alliance) and malaria with Medicines for Malaria Venture (MMV). One of the main criticisms raised by MSF regarding this PPP model was that it did not work for “the most neglected diseases.”
According to my interviews and sources, another important feature was lacking in the PPPs that prevailed at the time when DNDi was conceived: political leadership in the public sector of Global South countries. For MSF, it was crucial that DNDi activities not be perceived as another well-meaning or charity-based initiative out of Geneva with little relevance to the daily needs of countries in the Global South. These countries had to be active participants in the MSF R&D initiative, which meant that they should help set the research agenda and manufacture their own drugs. In fact, the participants of the DND working group, a think-tank that prepared the ground for the initiative, emphasized the need to create other PPP models beyond return-on-investment PPPs, which use South countries only to recruit patients for clinical trials, excluding them from the manufacturing process.
According to the DND working group, however, TDR stood out from newer PPPs. The think-tank conceded that the WHO Special Programme was the only initiative that had successfully shepherded drug-development projects for the most neglected diseases. Moreover, TDR had developed far-reaching networks of researchers and practitioners around the world, including in remote areas, keeping in contact and sharing information with them and supporting them even in the absence of specific research projects. This strategy had allowed TDR to identify a wide range of needs as well as potential projects, some of which it had pursued, while others remained beyond its reach. According to my interviews, in the late 1990s, TDR faced severe budget and structural restrictions due to its very broad mission and the number of diseases it covered. Thus unable to control and finance all of its ongoing R&D projects, TDR closed its “product research and development” arm, keeping only a few projects in the final stage of development and distributing others to newer PPPs (GATB and MMV).
DNDi had intended to continue some of the TDR activities for certain neglected diseases by involving countries of the Global South in drug development and manufacture. While none of these countries had the full range of capacities required to develop a new pharmaceutical product from start to finish, some did have the technical knowledge and capacity to ensure some of the steps of this process. DNDi's mission was to manage drug development for the most neglected diseases through coordination, collaboration, and knowledge-sharing with a wide range of partners, especially in endemic countries of the Global South. To attain this goal, DNDi worked in close collaboration with TDR, which retained a permanent seat on the DNDi board so as to continue to mobilize its partners to foster capacity-building and technology transfer to countries of the Global South.
Nevertheless, the success indicator widely used to assess the performance of Global Health PDPs is the number of products approved by the FDA or registered on the international market. There is no indicator for assessing pharmaceutical knowledge-building to promote the autonomy of developing countries. For this reason, and due to the growing dependency of Global Health on major donors, DNDi turned to the private sector. The organization opted to involve private pharmaceutical companies in new partnerships, but with the hope that private industries in endemic countries would at least be committed to solving the public health issues of their own countries.
The Colombian PPP: Anfoleish
The biomedical community investigating the leishmaniases in Latin America—also known as “leishmaniacs”—was following the activities of DNDi attentively. Several discussions, presentations, and especially the mapping of research groups and projects in the region led to the inclusion of CL in the DNDi portfolio in 2011. In fact, DNDi had already started R&D projects for leishmaniases, but it had focused on the visceral form of the disease 8 (Modabber et al. 2007). It included CL after discovering a highly interesting project: a topical formulation of amphotericin B, an old injectable compound used to treat fungus infections and leishmaniasis. Anfoleish was the name chosen for this cream. It was developed in Colombia, a CL-endemic country, through a PPP between Humax, a local pharmaceutical company, and the University of Antioquia.
Anfoleish is part of an ambitious municipal program to support the social transformation of Medellín, which was one of the most dangerous cities in the world back in the 1990s. The region experienced a real renaissance after Pablo Escobar's death in 1993, with the appeasement of the guerrillas and peace negotiations beginning in 2012. Since the late 1990s, ambitious public policies have transformed the image of Medellín, which was voted “the World's Most Innovative City” in 2013 in a competition organized by the Urban Life Institute (Moreno 2013).
In the early 2000s, the entire formulation and an experimental batch of Anfoleish was developed by the Programa de Estudios y Control de Enfermedades Tropicales (PECET, program for the study and control of tropical diseases) at the University of Antioquia. PECET then approached the Colombian pharmaceutical company Humax. Initially, the collaboration between Humax and PECET was focused on conducting pre-clinical studies to obtain a patent.
According to my interviews, Humax employees were inspired by the mission of creating new pharmaceutical products for tropical diseases in their own region. Actually, we [Humax] work closely with the University of Antioquia, which is the university where we studied. And we have a very strong connection. In fact, the pharmaceutical chemistry faculty has a small drug factory, where they develop some products for us. So it's an interesting case of public-private partnership. It's a partnership between the private pharmaceutical industry and the public university to manufacture or formulate drugs. We manufacture some products there. We also have a relationship with many research groups. We have developed a repellent together with PECET. And that's how the idea of working on Anfoleish was born. So it's a matter of conviction, of philosophy, to say I want to contribute to something for humanity and if I’m in the pharmaceutical sector, what more could I do than to work on orphan products, on products for rare diseases, for neglected diseases. (Respondent from Humax, recorded interview 11 November 2016) Now, DNDi can’t be an industrial partner, we can’t make creams, we don’t have machinery, and so on. We’re always looking for someone to help us with that. So, if someone asks us to find an industrial partner … Well, that's a big part of the job. It's not easy … For Anfoleish, it was the beginning of the program, there were very good data supporting the evaluation of the cream, it was part of DNDi's strategy, and we decided to choose it. It wasn’t the same thing to support the whole development of the cream, it was only the clinical trials. The initial investment had already been made by PECET and Humax. (Respondent from DNDi, recorded interview 07 February 2019)
The agreement focused on Anfoleish, but the DNDi experts’ assessment and recommendations had broader ambitions: to strengthen Humax's ability to produce other drugs for other diseases. DNDi offered its expertise to the local pharmaceutical industry to build capacity and bring it up to international standards. For Humax, the partnership with DNDi fostered technological learning, exposed the company to a network of international partners, and created an opportunity to reach new markets. As stated in a DNDi press release in 2014: It is a huge step forward and we hope it will help to bring new solutions to old problems. What makes this agreement exceptional is that it is a proper Colombian resource, which puts the country in a leading position among endemic countries that are capable of solving their public health issues. (Drugs for Neglected Diseases initiative 2014) The organization seeks to sign non-exclusive royalty-free licensing agreements with patent holders. “The partner must agree to extend the license to DNDi allowing full freedom to operate if the partner withdraws from the project or is in default in delivering its own commitments (e.g., unmet demand or unaffordable pricing).” (Drugs for Neglected Diseases initiative 2019) It also takes precautions surrounding the transfer of technology: “To ensure DNDi rights can be efficiently exercised after a collaboration agreement expires or if the partner withdraws from the collaboration earlier than planned, DNDi agreements include clauses to ensure technology transfer of all necessary IP so that any related know-how is not lost and DNDi activities are minimally affected by a partner's change of business priorities” (Drugs for Neglected Diseases initiative 2019). Every agreement reached with the public or non-profit sector should be binding on any pharmaceutical company's successors.
DNDi thus obtained a non-exclusive and royalty-free license from PECET and Humax, the patent holders, to ensure the sustainable production of the cream and its distribution at the lowest possible price in endemic countries: even if Humax were to pass into the hands of another company, DNDi would be able to transfer the technology to another producer outside of Colombia.
The points outlined above, shared in DNDi communication, appear clear-cut. However, the reality is far more complex. Based on my experience and case studies in the literature (Cassier 2021), I would argue that a technology transfer is a difficult, lengthy, and very expensive process. First, it is difficult to convince an industrial partner to take over the manufacturing of a drug candidate, especially for a neglected tropical disease, as it involves a small market and low profits. Pharmaceutical companies are usually not interested, except if there is the prospect of obtaining a PPV from the FDA. Second, small local companies sometimes do not have the know-how or meet the international standards required.
Moreover, a common feature of PPP agreements, like the ones signed by TDR, is that they do not prevent the partner from changing their mind and deciding not to pursue the project, nor do they preclude M&As. Generally speaking, contracts and agreements established by PPPs or United Nations organizations are based on what is called soft law—a law that is capable of adapting to the will of others or to the requirements of the situation. Soft law is guided by pragmatism, to facilitate agreement between parties with divergent or even opposing interests. The MoU clauses are informative, without binding force. In this context, dialogue is the strongest tool in PPP agreements. These soft-law instruments enable greater collaboration between the public and private sectors, but they are also a source of disputes, especially in the post-registration stages (Mekki 2009).
M&A transactions occurred during the development of miltefosine and led to TDR losing direct control of the product and to the excessive increase of the drug's price. An M&A process also occurred with Humax during the Anfoleish clinical trials, which were sponsored by DNDi. In 2015, Humax was acquired by Valeant, a Canadian pharmaceutical company: after obtaining the GMP certification, the Colombian company had become more attractive to large multinational pharmaceutical companies. Valeant's business strategy essentially consisted of purchasing pharmaceutical companies to expand their operations, gain access to new technologies, bolster Valeant's portfolio, and, as a result, increase its product prices. For example, in February 2014, Valeant had acquired PreCision Dermatology, a company specialized in tropical skin diseases. In 2015, the Canadian company bought Humax to reach the Latin American market for dermatological products. In 2017, the company sold three skincare brands to L’Oréal for USD$1.3 billion. A scandal subsequently broke out in the United States regarding the excessive increase in Valeant's drug prices. 9 According to the New York Times, in 2018 Valeant's new CEO changed the name of the company to Bausch Health Co., to distance the company from its sullied past (Thomas 2018).
In 2017, the efficacy results of the Anfoleish trials did not support further clinical development. The final analysis indicated low cure rates compared to other anti-leishmania drugs (López et al. 2018). DNDi, therefore, decided to definitively end the project. However, let us here imagine the inverse scenario, in which Anfoleish would have achieved a 95 percent cure rate. Considering Valeant's business model, the difficulty in transferring technology, and the global forces of pharmaceutical capitalism, we can assume that Anfoleish would not have been easily available on the market at a low or affordable price for CL patients.
Discussion
In the previous sections, I examined two case studies of pharmaceutical R&D initiatives aimed at developing and delivering new treatments for leishmaniasis. The first case involves the repurposing of a failed cancer drug, miltefosine, by the PDU of WHO's Special Programme for Research and Training in Tropical Diseases. The second case study looks at efforts made by a Colombian PPP with DNDi to develop a topical treatment called Anfoleish. In both cases, the actors deployed some devices to “redevise” or shape the market in response to a perceived market failure (Geiger and Gross 2017).
In this article, I unpack the intended or unintended consequences of market devices to fix market failures in pharmaceutical R&D for neglected diseases. In science and technology studies (STS), market devices have been described as “material and discursive assemblages that intervene in the construction of markets” (Muniesa, Millo, and Callon 2007). Following this definition, the miltefosine case study unfolds two particular devices, each with some unexpected or collateral effects (Geiger and Gross 2017). The first one is the FDA PRV.
The PRV was originally proposed in 2006 by Duke University economists (Ridley, Grabowski, and Moe (2006) and it was enacted into US legislation in September 2007 (Doshi 2014). The PRV was initially designed for neglected diseases but was expanded to include other cases of market failure such as rare pediatric conditions and medical countermeasures (Aerts et al. 2022). 10 Essentially, the rationale behind this type of market device was to create an additional economic incentive to correct or restore the market dynamics in a low-profit or non-profit field. However, several criticisms have been leveled at the PRV (Doshi 2014; Aerts et al. 2022). First, the majority of companies awarded a PRV did not invest in R&D nor in all the development stages of the drug chain. They simply identified drug candidates in a later stage of development with a view to registering it on the US market and benefiting from the PRV. 11
A further criticism of the PRV is that it does not include any mechanism to ensure that patients will have affordable and appropriate access to products for which a voucher was awarded. Companies awarded a PRV are not required to commercialize the product in the United States or in developing/endemic countries—and if they do, there is no guarantee that the product will be affordable. Koichi Mikami (2017) describes orphan drug policies were in a similar situation in the 1980s, which since 2012 have become the other main category of medical conditions eligible for PRVs. The identification of orphan diseases as cases of market failure pushed to create of a market-based approach (like the US Orphan Drug Act of 1983) offering incentives in the form of potential profits. However, the question has become whether society can afford the prices determined by the orphan or neglected diseases drug market (Mikami 2017). Orphan and neglected disease drugs ceased to be market failures and became instead attractive business opportunities.
This is one collateral effect of PRV as a device (Geiger and Gross 2017). It helped to transform miltefosine, a previously valueless chemical, into a highly valuable asset. By granting a faster FDA review to manufacturers and sponsors, a potential value was unlocked for the PRV, which reached a purchase price of USD$338 million in 2015. 12 Thus, the PRV also became an asset, pledged against the surplus revenues expected from the standard FDA review. Notably, the PRV intends to facilitate the making of other assets, while becoming an asset itself due to its interaction with market expectations and strategy. This process aligns with what several STS scholars characterize as assetization, transforming an item, service, or intangible resource into a valuable asset (Birch 2016).
The second market device was the business model chosen by TDR and DNDi to address the market failure in the field of neglected diseases: PPPs for product development (PDP). Indeed, according to Doganova and Muniesa (2015), PDPs operate as valuation devices targeting capitalization, which enable commoditization and profit-making. Thus, PDPs operate as a channel for the process of financialization and capitalization of companies involved with pharmaceutical development for neglected tropical diseases. Within the scope of PDP agreements, the public sector, represented in this case by TDR and DNDi, supported small private laboratories by providing expertise, data, and financial resources to develop new drugs for neglected diseases. These small laboratories—Humax and Asta Medica—became an investment opportunity for venture capital and for larger pharmaceutical companies, which were looking to either develop new products in-house or procure products developed externally to replenish their pipelines (Andersson et al. 2010). The companies that acquired the two laboratories featured in the case studies through M&A transactions (Valeant and Paladin/Knight Therapeutics) accrued the highest return on the investment made by DNDi and TDR. Paladin/Knight acquired miltefosine, which became a major asset after the PRV was invented, while Valeant absorbed Humax in order to consolidate the dermatological portfolio it had developed through earlier acquisitions. In other words, Humax was used to “add value” to Valeant's established portfolio (Hopkins et al. 2013).
Finally, the most important asset in both case studies is the pharmaceutical knowledge that the public partner brings to such partnerships. In the case of miltefosine, TDR contributed its expertise on tropical diseases and clinical trials to support the creation of a new market for a molecule that would otherwise have been shelved as it was no longer used to treat cancer. In the case of Anfoleish, DNDi supported Humax in the process of acquiring pharmaceutical knowledge and practices (GMP certificate), which increased the value of the company on the international market until it was ultimately purchased by Valeant. Thus, in both cases, we can observe how pharmaceutical knowledge became a powerful asset.
Since pharmaceutical knowledge is intangible and very difficult to bind within PDP agreements, global pharmaceutical companies have become highly adept at controlling it. The reason for this is that the knowledge flow must be concentrated in their hands to enable the production of a new drug. As DNDi and TDR lacked laboratories and manufacturing infrastructure, pharmaceutical companies retained full control over the knowledge and means of production. This reinforces the argument for establishing local public pharmaceutical production to reduce dependency and prevent the loss of valuable pharmaceutical knowledge—knowledge that could be leveraged to benefit neglected patients in Global South countries rather than being treated as mere assets for the global pharmaceutical industry.
In additional to the difficulty of retaining pharmaceutical knowledge locally, and binding it within PDP agreements, some STS scholars highlight other capitalization practices or claims embedded in these agreements. Lezaun and Montgomery (2014) shared examples of PPP agreements designed to legitimize private-sector profits. The profits expected by the pharmaceutical industry are not explicit or delimited by the terms and conditions of the agreements. These profits are often deferred and typically arise from the commercialization of the drug in other markets, the acquisition of pharmaceutical knowledge, and/or benefits derived from regulatory incentives, such as the PRV.
The case studies in this article trace drug development over several decades, which allows us to observe the intricate process that enable assets to emerge as companies make strategic use of market devices. The delineation of “market failure,” combined with the creation and deployment of related instruments, has definitely facilitated the assetization of drugs and pharmaceutical knowledge.
Conclusion
The examination of the pharmaceutical R&D initiatives for leishmaniasis, specifically the repurposing of miltefosine and the development of Anfoleish, reveals the complexities and unintended consequences of market devices designed to address market failures in neglected diseases. These initiatives illustrate how market incentives—such as the US FDA PRV and drug-development PPPs—can transform a range of goods, including pharmaceutical products as well as knowledge, into valuable financial assets.
The PRV, originally intended to create economic incentives for developing drugs in low-profit fields, has faced criticism for allowing companies to benefit without necessarily investing in the full R&D process, and for failing to ensure affordable access to treatments. Similarly, PDPs which, while supporting the development of new drugs, have facilitated the capitalization and financialization of small laboratories, turning pharmaceutical knowledge into a significant asset for larger companies.
Ultimately, these market devices, though aimed at correcting market failures, contribute to the financialization of the pharmaceutical innovation system. This results in potentially marketable products becoming financial assets, with prices driven up to maintain asset value, thus undermining the original goal of making treatments for neglected diseases more accessible and affordable. The case studies also highlight the ineffectiveness of PDP agreements, as soft law instruments, in preventing assetization when pharmaceutical innovation succeeds.
Footnotes
Acknowledgments
This article is based on my PhD dissertation. Many thanks to Cermes3 members, specially my supervisor, Maurice Cassier, for his unwavering encouragement and support. I am also grateful to Jean-Paul Gaudillière, Jaime Benchimol, and the participants of the workshop “Il y a des alternatives” held in Bordeaux in 2024 for their reading and feedback on early drafts of this work. A special thanks goes to Willem Halffman and the RQT team at Radboud University in Nijmegen for their insightful contributions to the final stage of writing.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.
