Early access to innovative antivirals could save trillions, new report says

The economic costs of global epidemics would largely be mitigated if governments could find new ways to fund innovative antivirals, according to research by Germany’s innovation agency Sprind and economists at the University of Chicago.

Academic research shows that during the COVID-19 pandemic in 2020, gross domestic product in Europe fell by an average of 7.4%. Other studies show the cost of quarantines imposed during the pandemic exceeded 9% of the global GDP.

The Sprind research released this week indicates early availability of antiviral therapeutics could prevent $28.2 trillion of global losses in the event of a pandemic similar to COVID-19.

But the economists involved in the research warn that current R&D funding models do not offer sufficient incentives for the private sector to take up urgent challenges with high societal value because they pose a significant financial risk.

Rachel Glennerster, faculty director at the Market Shaping Accelerator at the University of Chicago, says governments should work up new ways of funding R&D for pandemic preparedness, so that companies have sufficient incentives to take the risk and develop innovative drugs for which there is no established market.

“The solution is to reward people enough to cover the research costs, enough to cover the scaling up costs, enough to cover the risk, but tie that to producing a large quantity and selling it at a reasonable price,” Glennerster told Science|Business. 

The research is part of Sprind’s attempt to come up with new financing models for the development of broad-spectrum antivirals that can rapidly be deployed in future pandemics. The innovation agency is currently working on a business case for advance market commitments – a promise to companies that if they create effective broad-spectrum antivirals, the drugs will be bought at a set price.

Shaping such advanced market commitments is part of a push by Sprind to shake up the market for broad-spectrum antivirals and generate new technologies to counter infectious diseases and future pandemics. The launch of the initiative comes as the 5th anniversary of the start of the COVID-19 pandemic looms into view.

Glennerster said governments typically disburse R&D money to really good researchers, but often these researchers do not have the incentives or the interest to scale up ideas. Funders receive optimistic proposals from a wde range of people which means it is very difficult to pick the best group. “If you structure the incentive so that you only get the money if you succeed, the best firms will self-select into going for it,” she said.

That’s where advance market commitments come in. In the face of pandemics, governments want to be able to ramp up production of innovative drugs very quickly. “A lot of the modeling that we've been doing with Sprind is to make sure that the total amount that a company would get, would be enough to make it worth the risk of doing this,” said Glennerster. “But, on the other side, they have to produce enough of a stockpile and be ready to produce a lot more in a pandemic.”

Jano Costard, head of challenges at Sprind, noted there are agencies that are funding R&D for healthcare, such as EU’s HERA programme or BARDA in the US. But this funding does not always lead to approved products. “Research and development for therapeutics is so expensive that, by [solely] providing push funding from public sources, we are not able to generate all the funds necessary to go to market,” Costard told Science|Business.

Costard said the German government has not made a clear financial commitment to backing Sprind’s advance market commitment approach, but the agency is funding preclinical projects that are focused on developing new broad-spectrum antivirals. He hopes government-backed advance market commitments would enable that research to progress and reward the ideas that prove to be most promising.

The model could also be applied to other fields, such as CO2 removal from the atmosphere, biomanufacturing or long-duration energy storage, which are big problems that require investments in new technologies for which the societal value is very high but returns on private investments are low.

“It has a big public value, but no private value, so it's very hard for investors to go into that and make a profit out of that, which is what they need to justify these investments,” said Costard.

Sprind is not the first government agency to suggest such a model. A similar scheme was used for COVAX, a global progamme aimed at delivering COVID-19 vaccines to underdeveloped countries. And earlier in August, the UK government introduced a subscription system, under which it will pay a fixed annual amount for innovative antimicrobials, regardless of the level of use, guaranteeing companies a known return on investment.