Setting up the world’s first non-profit pharmaceutical company hasn’t been easy, says Victoria Hale, founder and CEO of the Institute of OneWorld Health (IOWH).


“When we first circulated our business plan to a few recently-retired CEOs of big pharmaceutical companies, there was some concern that OneWorld Health was trying to begin a non-profit industry in the U.S.,” she notes. “But while we are based in San Francisco, the markets we address are outside the U.S. And we don’t intend to compete in the for-profit market in the West. That is now well understood.”


In addition, when Hale tried to fundraise for her group in Silicon Valley last year, “we were told, ‘It’s a great idea but you are a few years too late. The bubble has burst.’” That was unfortunate, she says, because the Bay Area in general – and Indian Americans in particular – “could have been a great source of donations, especially for our black fever program in Bihar, the poorest state of India.”


But things have a way of turning around when the goal is to develop drugs to combat deadly parasitic illnesses that afflict millions of people every year in some of the world’s poorest regions.


The genius of OneWorld Health, which was officially incorporated in 2000, is that it offers an economic model under which everyone benefits. Big pharmaceuticals are encouraged to donate existing research – ranging from chemical compounds to fully developed drugs – on diseases that primarily affect destitute areas within Africa, Latin America and Asia. The pharmaceuticals have no economic incentives to continue the drugs’ development since the potential market is primarily people who can’t pay for even the simplest medicines. On the other hand, by donating their research to OneWorld Health, the companies receive tax write-offs and favorable publicity.


OneWorld Health then uses funds from foundations and government agencies to get these drugs through clinical trials and eventually into the hands of the desperately ill. The organization focuses only on drugs that hold out the promise of being both effective and affordable, and don’t come with the toxic side effects that plague other treatments.


Far from alienating drug companies, OneWorld Health is now working to set up partnerships with pharmaceuticals and biotechnology firms. Last year, despite a struggling economy, it received $4.7 million in grants from the Bill and Melinda Gates Foundation, and signed multimillion-dollar partnership commitments with the World Health Organization and National Institutes of Health.


Zeroing in on Black Fever

Here is what they have done with the money so far.


“We went out and found black fever and Chagas early on,” says Hale, a pharmaceutical scientist. Black fever, also known as kala azar or visceral leishmaniasis, infects 500,000 people and kills up to 200,000 each year in India, Bangladesh, Nepal, Sudan and Brazil. Transmitted by the bite of a tiny sandfly, black fever attacks the internal organs and is fatal if untreated. Chagas is a parasitic infection that strikes between 16 and 18 million people in Central and South American and kills about 50,000 annually. The disease, spread by insects and through blood transfusions, weakens the heart and can eventually cause heart failure.


In the case of black fever, an early version of a drug to treat this illness belonged to Pharmacia & Upjohn (acquired in 2000 by Monsanto and acquired again in 2003 by Pfizer). Back in the 1980s, Pharmacia & Upjohn decided not to pursue development of the drug, called paromomycin, and allowed the World Health Organization to begin exploring its effectiveness against black fever.


Last year IOWH decided to partner with the WHO to develop paraomomycin for regulatory approval in India, which has the highest incidence of black fever. “Black fever is the right size for us,” says Hale. “We can study the drug in India and cover 60% of all the patients with the disease. The alternative is to begin with a disease like malaria where we would have to do a [clinical] trial in 20 countries. It is hard for a small organization like us to take on a big disease early.


“In addition, we were attracted to [the idea of working in India] where English is spoken and where a high-quality regulatory agency already exists. Finally, the fact that the drug had already completed phase II of clinical trials was wonderful. So it all came together.” IOWH recently contracted with a company in India to market the drug. For the company, it’s an opportunity to participate in a global health project and to engender good will among the Indian people, Hale says.


Chagas is a different story. Celera Genomics Group – the company that was in a race with the U.S. government to map the human genome – inherited a drug that could be a treatment for Chagas when it acquired Axys Pharmaceuticals, the company that patented the compound. In November 2001, Celera then granted IOWH an exclusive license and all development rights to the drug, known as CRA-3316. “There is not a lot of commercial opportunity” for Celera with this drug, a company spokesman noted in a news report at that time. “However, it’s clearly a therapy that [has the] potential to provide a lot of benefit [to] the human condition.”


The National Institutes of Health will collaborate to complete pre-clinical animal testing on the drug as a prelude to animal testing. OneWorld Health plans to be involved with the Phase I clinical trial (with human volunteers) and to seek international partners to develop the drug for Phase II and III clinical trials in South America, assuming the earlier trials go well.


IOWH will license the drug to local manufacturers and “monitor both the quality and price [of the product]. If we aren’t satisfied with either, then we have the ability to pull back the license,” says Hale. “The key is to choose carefully early on and figure out how much of a profit these companies need to keep them in the game. We will separate the markets into the public sector market – about 90% of the patients – and the private sector. We allow our corporate manufacturing partners to do whatever they want in the private markets, but the public sector price has to stay very, very low.”


What about people who can’t afford even a very low price? “This is where governments must step in,” states Hale. “When you enter a heavily diseased area you have to assume that people can’t pay anything. In the case of black fever, the government of India is devoted to eradicating this disease.”


Getting in the Front Door

The IOWH office in San Francisco houses four full-time employees, eight part-time and about 20 volunteers. “We would have 200 volunteers but we don’t have enough staff to manage them,” Hale notes.


The group’s lean office, however, doesn’t take into account the many alliances and relationships IOWA has with other organizations. “We are opportunistic,” Hale says. “We dust off products that were sitting on the shelf, put them on a path to move forward and take advantage of what has already been done. There is so much already out there.” Its economic model means IOWH does not have to support laboratories, factories or a sales and marketing function. (So new is their structure that “it took us three rounds to get through the IRS,” Hale notes. “They had never seen a non-profit pharmaceutical company before. We were the first.”)


In addition to the WHO and NIH, OneWorld Health receives offers of help from biotechs, university tech transfer offices and individual scientists. “Some ask if we would be willing to partner with them and perhaps help fund them. Other companies just want to donate the intellectual property (IP) to us, and not be affiliated with the project if it moves forward,” Hale says.


“But we believe a second partnership is better. We want to inspire the industry to remain involved in these diseases. If we can partner with them to keep working on their anti-infective agents, and if we in turn can bring some money to the table from NIH, the United Nations, the World Bank, USAID or foundations – as well as our expertise and knowledge of the developing world – then both sides benefit.”


Groups that fund OneWorld Health “tell us it’s good that we are small and nimble, and ask us to keep it that way because it allows us to make things happen,” says Hale. “So we work with organizations that are enormous and bureaucratic, but we take the position of being extremely flexible. Every drug, every program, every license is different. If we were to create a bureaucracy within OneWorld Health we could never move forward.”


Hale and her group have learned along the way exactly what big players are good at and what they aren’t. For example, despite its huge bureaucracy, “the WHO is fantastic with regard to stepping through the front door and getting right to the minister of health in any country in the world. So if we are planning to study a disease in a rural poor state of India, we need the WHO to take us” to the appropriate people … Without them, we could never [have undertaken] the black fever project.”


Images of Illness

Hale brings to OneWorld Health a diverse background in the drug industry. She worked as a pharmacist at John Hopkins University Hospital in Baltimore, earned her PhD in pharmacology at the University of California at San Francisco, reviewed drug research applications at the FDA, served as a senior scientist at Genentech and as an adviser to the World Health Organization, and co-founded a drug development consulting firm called Axiom Biomedical Inc. 


By the time she was 40, she says, “I had done everything I wanted to do in my life. I had accomplished all my goals. But because of my work in the drug industry I realized there was a large number of great products out there that were not being used. I could see that so many people could be helped if only there were a way to do it.”


Members of the global health community, she says, were discouraged by the lack of funds and inability to make any progress, in part because some of the worst but most preventable diseases simply were not important to the West. “I brought to the field of parasitology a sense of optimism” that things could be done, says Hale, “that we could begin by saying, let’s try this new approach. We don’t know that it can’t work.”


It was especially important to get to know other scientists in other cultures, she says. “They are extremely compassionate and talented but just aren’t given opportunities [to make progress against these diseases]. We are trying to create paths for that to happen.”


Hale travels frequently to Southeast Asia to visit clinical sites and see the patients who have parasitic diseases. “Once I do that, once anyone does that, we are hooked. You can’t get these people out of your mind. Parasitic diseases are extremely compelling. You see how people with these diseases live and you understand that much of their [suffering] could be avoided.


“I hope I am involved with these projects for the rest of my life.”


A New Model

Despite donations from foundations and government agencies, Hale recognizes the need for what is called a “self-sustaining non-profit model.” “When you are working with projects that are the size of ours – multimillion dollar ones – it’s important to understand that philanthropists may not always be there.” The idea then is to choose a disease – and a product to treat it – that are large enough so that “for fractions of a penny per treatment we could potentially fund our next program.”


Along those lines, OneWorld Health is in the early stages of launching a massive global program to develop new treatments and vaccines for diarrheal diseases, the second leading killer worldwide of children under five. “We have identified a drug that finished phase II testing a few years ago and was sitting idle,” says Hale. “It is the type of treatment that could be used by millions of people around the world.”


With their first two funded programs – for black fever and Chagas – “there is no profit,” Hale adds. “These programs are for the poorest of the poor. People have these diseases as a consequence of their extreme poverty.”