Eradicating TB in India: Its up to you Ranbaxy

In what could be an interesting example of a Public-Private Partnership in the pharmaceutical sector, India’s largest drug-maker has entered into an agreement with the Department of Biotechnology to push for discovering new drugs to treat tuberculosis. The Department of Biotechnology will provide a three-year grant to Ranbaxy as per the agreement to conduct research and develop drugs [via iGovernment]

The agreement is an important step in tackling India’s TB epidemic. As we had reported in the space before, India is home to 20% of the world’s multiple drug resistant tuberculosis (MDRTB) patients, carrying one-third of the disease burden globally.

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3 Responses

  1. This type of PPP seems natural – the government does not have the resources or capacity to do R&D, but is interested in public health; the pharmaceutical company can develop the drug and tap into a huge demand-driven market. The only real drawback I see is if Ranbaxy produces a drug and then sells it for more than what the majority can afford.

    The waste management PPP I posted about before, on the other hand, seems more complicated- why shouldn’t the government itself offer that public service? Overall, though, I do like the idea of PPPs because of the flexibility in the various shapes they can take and the different degrees/methods by which each sector can get involved.

  2. Pharmaceutical drugs, along with any other area where intellectual property is a large aspect of the undertaking, is a very interesting area of PPP because it can very easily be established in a way where the government takes upon a disproportional amount of the research risk while the private actor subsequently benefits from the profit resulting from sale of the drugs afterwards.

    In a situation like this, it would seem that an ideal scenario would be to establish almost a prize based system with multiple pharma companies where the winner is compensated some fixed value that is determined through an estimation of research costs and future social value. The government would then ‘purchase’ the IP rights from the company at this price and then have the ability to either distribute the drugs firsthand or more effectively then contract out the manufacturing and distribution of the drug with stipulations within the contract for pricing schemes.

    Without establishing some safeguards to how the IP will be utilized after its development, there is always a risk that the government will simply become a research arm of profit maximizing pharma firms.

  3. Shital & Vinay,

    Both of you raise some valid arguments. In terms of Ranbaxy selling the drugs for un-affordable prices – its a valid concern. But I guess the company needs an incentive to invest its precious R&D resources.

    One piece of reading that I would strongly recommend is Michael Krermer’s paper on “Creating Markets of New Vaccines”. You can find it here:
    http://www.nber.org/papers/w7716

    Vaccines especially offer an interesting perspective on the intersection of markets and policy. Vaccine makers are entirely unwilling to invest in R&D, especially for diseases that are predominant in the developing world (Malaria, TB). This creates a need to Govt. Subsidy – and Kremer proposes a purchase promise from the government – and even a competition, in the lines of what Vinay is proposing. The Indian’s governments move can be seen as a similar effort.

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