Not too long ago, Bill Gates faced some heavy criticisms when defending his stance that it isn’t plausible for pharma companies to drop vaccine prices to zero dollars. At the time, Gates didn’t argue from a moral point of view, but a business standpoint. His argument went something like this: If pharma companies don’t charge for vaccines, then, according to Gates “You have some pharma companies that choose to never do vaccines. So they don’t do any R&D on any product that would help poor countries,” and simply by choosing against such R&D, the companies don’t experience any pricing criticisms.
Point taken. And that point also explains why the world's biggest charitable foundation has channeled millions of dollars to pharma companies to undertake R&D projects on vaccines that may not net the company large profits, but which have the potential to save millions of lives.
Sometimes, those big bets pay off—or at the very least, they have the potential to pay off—big.
Over the years, the foundation has backed Aeras' continuing development of a tuberculosis vaccine. Initial results are promising, as the company, via Gates funding, inches ever closer to a vaccine with the potential to prevent millions of deaths each year.
But not every Gates investment in the vaccine industry pays off. In fact, sometimes they fail—big.
Take the foundation’s reported $64 million investment in Sanofi to help the company produce semi-synthetic artemisinin (SSA). While not a vaccine, artemisinin-based combination therapies are the frontline of defense in malaria treatment. SSA, Gates, Sanofi, and basically the entire global health community had hoped that SSA would become widely available at a lower price than its fully natural counterpart.
Here’s the deal. As the demand for artemisinin grew, farmers in poor countries overplanted sweet wormwood, the plant from which artemisinin is derived. Abundance of supply, of course, drives down prices. So farmers pulled back on the crop, prices rebounded, and the roller coaster cycle began all over again. The bottom line, here, is an unstable market for artemisinin. Gates and company were angling to steady the market while saving lives at the same time.
That, unfortunately, has not happened. Gates' $64 million bet seems all for naught as Sanofi failed to produce any SSA in 2015, and its manufacturing facility is reportedly up for sale.
This isn’t the first time the foundation has suffered a huge setback in its malaria funding. In 2009, the Gates Foundation put up over $200 million for the clinical development of the Mosquirix (RTS,S) malaria vaccine. Although the PATH-led project didn’t produce the positive results it projected, Gates continued to pour money into vaccine development while pulling its money from drug treatment R&D.
By 2013, the foundation awarded zero grant dollars toward malaria drug treatment development—an area in which Gates had invested heavily for years. But with a major vaccine failure, we wondered if the foundation would shift bacl to a drug-based giving strategy. Sure enough, a slight shift began in 2014, when the foundation awarded over $9 million in grants to support R&D into malaria drugs.
With another major failure on the drug front, the question of where Gates would go in its malaria funding cropped up again. And for now, it looks like the foundation is getting back to basics. We’re talking prevention programs, insecticide-treated mosquito nets, and eradication research.
Sure, the Gates is still funding vaccine research at a scaled-back level, but it's nowhere near ~$1 billion in investments the foundation made in previous years.
That said, Gates is a funder that attacks on all fronts, covers every flank, and plans for every possible contingency. Where it will go with its malaria funding next really remains to be seen.