Governments and nonprofit aid organizations need to create a market for drugs, build better healthcare delivery systems, and keep trained medical personnel from leaving the developing world if they are to improve health in the world’s poorest countries, according to panelists who spoke at a Wharton Social Impact Management conference in January.

Non-government organizations (NGOs) are considering a new approach to healthcare delivery that is based on human resources rather than on building physical infrastructure, said Steve Sammut, a Wharton lecturer and venture partner with Burrill & Co., who moderated the panel on international public health. “This thinking goes back 30 or 40 years, but it has only recently grabbed the attention of NGOs through the tragedy of AIDS and its economic impact not only on the developing world but across its borders.”

Drugs for the Rich

A grim set of statistics frames the issues. Seven million infants die each year, mostly in the developing world, and half those deaths could be prevented with vaccines that exist in rich nations, according to Gargee Ghosh, a program officer in global health advocacy with the Bill & Melinda Gates Foundation. The foundation, created by the Microsoft founder, supports healthcare programs in the developing world.

On January 25, 2005, Melinda Gates announced that the foundation would double the amount of money it spends on childhood vaccinations in the poorest parts of the world — from $750,000 to $1.5 billion — because of the results the program has achieved. In 1999, the first $750,000 went toward establishing a global alliance for vaccinations and immunizations. In a New York Times article announcing the grant, Melinda Gates noted it was clear that “vaccines are the best investment the world can make in children’s health.”

Meanwhile, Ghosh said, current financing for global health initiatives is failing in two main areas: product development and product delivery. Product development failures result because people in the developing world have far less money to pay for drugs than people in rich countries. Consequently, the pharmaceutical industry focuses on the diseases of those who are able to pay.

More than $100 billion is spent each year on medical research, but just 10% of that goes to diseases that account for 90% of the world’s illnesses, noted Ghosh. Of 1,400 drugs approved by the U.S. Food and Drug Administration, only 25 are targeted to diseases of the developing world. “Why does this happen? We think it’s driven by the lack of a market. The developing market is high-risk scientifically, and low-return economically.” The entire vaccine market, she added, has $6 billion in sales, representing about 1% of global pharmaceutical sales.

One possible solution to the product development problem is the idea of providing guarantees for companies that invest in finding cures for diseases of underdeveloped societies, she said. For example, UNICEF, the United Nations agency that aids children, is the largest distributor of vaccines in the world, but tends to make short-term procurement contracts of only four to six weeks. If UNICEF were to commit to a long-term contract with drug suppliers, these suppliers may be more inclined to invest in research that would result in new vaccines to sell to UNICEF, Ghosh suggested.

On the product-delivery side, healthcare in the developing world is limited by a lack of resources and government support. “Governments are discouraged by the perception of failure,” noted Ghosh. Perhaps the greatest challenge for the foundation, or any charitable organization, she said, is determining whether its work is sustainable. “Our role is like a building with scaffolding around it. Would the building still stand if the scaffolding were pulled away?” she asked. Indeed, part of the message from the Gates Foundation in its announcement this week was that the grant, which is clearly a sign of a “long-term commitment,” should help reassure potential donors. Drug companies, for example, “want to know that the distribution systems being put in place in impoverished countries are supported so that their investments in manufacturing vaccines will pay off,” the New York Times article said.

Preceptor Programs

The primary role of drug companies is to develop new medicines and vaccines, explained panelist Samir Khalil, Merck & Co.’s executive director of HIV/AIDS policy and external affairs in Europe, the Middle East and Africa.

Several years ago Merck was focused on improving access to its drugs in Africa and other poverty-stricken regions by offering drugs at cheaper prices than in the United States and the rest of the developed world. “However, we believe our role should not stop there,” Khalil said. The HIV/AIDS crisis has convinced the company that it also needs to take a role in building infrastructure to deliver its medicines, he added. “Just getting the medicine was not the issue … You need to build the capacity by training healthcare workers and building clinics.”

In Botswana, where 38% of the population has HIV/AIDS, Merck has partnered with the government, the Gates Foundation and other non-government organizations since 2000 to develop a comprehensive approach to healthcare delivery. The program is viewed as a test, with the idea of learning lessons that could be applied to other countries.

As of December, the partnership had completed the construction of 32 sites where patients can receive antiretroviral therapy for HIV/AIDS. In excess of 28,000 patients are receiving therapy, more than in South Africa, or India, which are much larger countries, noted Khalil. The experience has already yielded some ideas. “We learned you really need a collective approach of people working together. You need to find your way, to know how things are done at the local level.” One partner — government, charity, or industry — cannot create a sustainable healthcare solution on its own.

The partnership in Botswana — a small country in southern Africa with a population of close to two million — is working with schools to build capacity to train more than 2,000 healthcare workers and has succeeded in developing a successful model — known as a “preceptor program” — for this purpose. Teams of doctors from universities in the United States, the United Kingdom, Germany, Scandinavia and elsewhere have come to this country for short stints of about six months to train healthcare workers, one-on-one, in rural settings. “They micromanage it until the local doctor understands what to do. They work on everything in the clinics for six months. Then they leave, and it is maintained by the local doctor,” said Khalil, adding that some of the Western doctors stay. “They don’t want to leave because they see the impact they have on the people there.” Neighboring South Africa is now interested in starting a preceptor program similar to the one in Botswana, said Khalil.

Making Viagra Instead of Vaccines

Thomas Tighe, president and chief executive officer of Direct Relief International, a nonprofit medical charity operating around the world since 1948, said the most important healthcare asset in developing nations is the people in the country who are already trained to provide medical services.

For 30 years, he said, countries struggling to build their economies have been investing what little resources they have in training healthcare workers. However, those who have received the training are often the people with the skills and knowledge of English to immigrate to countries with more opportunity.

One way to keep healthcare workers in their home countries is to provide the equipment and supplies necessary for them to feel they are able to accomplish something, Tighe argued. Direct Relief provides supplies through donations from healthcare companies, including pharmaceutical firms, from around the world. The group is able to provide therapy for 14 million patients a year on a budget of $3 million because it receives donations that would have a wholesale value of $100 million.

In addition to money and supplies, he said, healthcare workers in poor nations should be encouraged to stay put through programs that heap respect onto them and offer respect and recognition in professional circles. The same goes for drug companies. “We try to work with the industry and encourage them to do what they do really well — make drugs that save lives — and turn the power that exists in the corporate structure for non-commercial purposes. They won’t make any money out of giving drugs to our clinics, but there’s enormously high social importance,” he said. “We ride on the backbone of industry to get them to steer attention from the commercial market to the market of needs.”

To make an additional pill — or thousands of additional pills — costs very little, he explained. The bulk of the cost of a pharmaceutical product is in the research and development process. Tighe, too, noted the failure of drug companies to develop new products for people in the developing world. “The market will give you Viagra,” he said, “but it won’t give you vaccines for poor kids.”

He acknowledged that his organization’s model, based largely on donations, may not be sustainable. But he pointed out that the United States does not have a true, sustainable business model for healthcare delivery and relies heavily on government financing. “Sustainability is a bugaboo in development. We want people in these countries to do what we ourselves don’t … Sustainability is a great idea, but we have not been able to do it in our country which is the richest in the world. So take that and look at the poorest countries in the world. It’s an enormous challenge.”