COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model

A Proposal for a Preferred Supplier Model

An ISGlobal Discussion Paper

Adrián Alonso

Marina Espriu, Joan Bigorra, Rafael Vilasanjuan and Gonzalo Fanjul.

The authors would like to thank Elena Villanueva for her valuable contributions to this document.

JUNE 2021

#ISGlobal_debate

COVID-19 and the Reform of the Biomedical R&D System:

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CONTENTS

EXECUTIVE SUMMARY......................................................................................................... 3 SECTION 1. Why do we need a reformed pharmaceutical R&D system?.......................... 4 SECTION 2. The fight against COVID-19: Analysis of R&D investments......................... 6 SECTION 3. Governing the COVID-19 R&D response: Existing proposals to enable access to COVID-19 pharmaceutical innovations ......................................... 10 Governing Push and Pull incentives during COVID-19 pandemic.

COVAX Facility...................................................................................................... 11 Governing Pool mechanisms during COVID-19 pandemic.

Covid-19 Technology Access Pool (C-TAP)........................................................... 12 SECTION 4. The Preferred Supplier Model, an alternative based on the public sector’s leverage............................................................................................. 14 A Preferred Supplier model to redirect public and private interactions............. 15 Could the implementation of a Preferred Supplier model during the COVID-19 pandemic, have helped redirect R&D outcomes?............. 19 SECTION 5. Conclusions and recommendations............................................................ 20 ANNEX. Comparison of the Four Pillars of ISGlobal’s Preferred Supplier Model and CEPI’s Policies.............................................................................. 22 REFERENCES...................................................................................................................... 25 *The information and data contained in this document was updated until April 2021.

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

An ISGlobal discussion paper.

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EXECUTIVE SUMMARY

If there is a single word that describes the course of the COVID-19 pandemic, it is speed. Over the course of ten months, millions of positive cases and over one million deaths have disrupted the world’s health systems and economies. But if the spread of the virus has been fast, the efforts to find new tools to fight COVID-19 have not lagged behind. Since the beginning of 2020, no less than USD 9 billion have been invested in the research and development of treatments diagnostics and vaccines. As a result, there are around 200 vaccine candidates, over 400 diagnostic tests and more than 300 potential treatments in the pipeline, all targeting a pathogen that was unknown just one year ago.1 However, as vaccines are starting to get market authorisation, the technical and scientific barriers have started to look less challenging than the political and economic obstacles, which threaten global equitable access not only to COVID-19 vaccines, but also to therapies and diagnostic tests.

The overall lack of a public health orientation and the strong profit-driven governance of the biomedical R&D system have had negative consequences on the efficiency of the system and on the health of the population, since many people still have no access to essential innovations.2 The collective shock of COVID-19 and the challenge of responding to the pandemic offers an opportunity to reform and strengthen the pharmaceutical R&D system and to redesign it to meet the needs of the 21st century.

This paper discusses the limitations of the current pharmaceutical R&D system in the context of the COVID-19 pandemic, analysing the investments made in the development of COVID 19 health related technologies and describing the international governance mechanisms proposed to improve global equitable and affordable access to those innovations.

Critically, it explores the possibility of a new biomedical R&D incentives model based on conditional public investments and procurement practices that would remodel the governance and would change the direction of the system. It would do so by prioritising engagement with companies which fulfil criteria that ensure that health and social needs are met and by redefining the relationships between stakeholders in both the public and private sectors. The development of a Preferred Supplier Model (4S) is consistent with the debates around the public sector’s capacity to shape markets through not only its procurement power, but also through its power as an investor in order to improve health, social and environmental outcomes. In addition, it is fully aligned with the mandate of the Sustainable Development Goals.

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

An ISGlobal discussion paper.

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SECTION 1:

Why Do We Need to Reform the Pharmaceutical R&D System?

One of the first steps to understanding the outcomes and challenges of the current health and R&D systems, and assessing its potential for reform, is by recognising the complex and non-linear relationships that determine its performance.3–5 In the current pharmaceutical R&D system, the way the different actors interact, and in particular the relationship between public institutions and pharmaceutical companies, may be undermining the system’s primary objective: to meet public health needs and ensure equitable access to safe, effective and quality health related technologies. 4,6,7

“From the point of view of public health, patent-based systems disincentivise investment in unprofitable areas”

The poor outcomes being achieved with the current system could be explained as a consequence of the complex interactions between the incentives inherent in the model, the distribution of roles, risks and rewards across the system’s stakeholders, and the links between the R&D system and other sectors, such as international trade and financial markets:

01. Unequal distribution of risks and rewards.8,9 The failure to recognise the

public sector’s role as a risk-taker and as a first-hand investor in biomedical R&D has led to an unequal distribution of risks and benefits in the innovation process.9 As a result, the rewards are reaped primarily by the Intellectual Property (IP) holders, while the value generated by the cumulative and multistakeholder nature of innovation and research is overlooked.

02. Patents as the main driver of innovation.10–13 Whenever the IP protection system is misused or abused, patents have been widely studied as an incentive to innovation but also as barriers to access.8 From the point of view of access, patent-granted monopolies can lead to unaffordable prices for health systems in countries of all income levels. From the point of view of research and innovation, patents favour secrecy and competition to be first, the very opposite of the cumulative and collective development of science and innovation. Finally, from the point of view of public health, patent-based systems disincentivise investment in unprofitable areas which however, should be a priority from the public health point of view, such as epidemic preparedness, antimicrobial resistance and neglected tropical diseases.

03. Lack of a public health-oriented vision.6,14,15 Reliance on patent-based

incentive mechanisms has led to a shift in the pharmaceutical industry away from a public health-oriented vision and towards a financialised structure.

In this scenario, the business model is more focused on managing intangible assets, such as IP rights (patents), and increasing prices in therapeutic areas that can be highly profitable (maximising shareholder value through payouts and share buybacks) than on increasing the effectiveness and impact of biomedical R&D in public health terms.

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

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04. Lack of transparency. The allocation of risks and rewards in the R&D

process is also hindered by the difficulty of obtaining data on the real R&D investments i made by both, public and private institutions, on the actual cost of developing and manufacturing biomedical products and even on the real final price This lack of transparency can also hinder the ability of public institutions to consider attaching conditions to public funding, or to have have a say to regulate and negotiate prices.12,13

These four aspects of the system and some of the outcomes of their interaction are summarised in Table 1. This analysis shows that, rather than being isolated blocks, they constitute a set of interconnected factors that influence each other, creating a number of barriers to access and preventing the creation of a sustainable biomedical R&D ecosystem.

TABLE 1. The interactions between different aspects of the biomedical R&D system give rise to potential inefficiencies and barriers to access

PATENT-BASED INCENTIVES

DISTRIBUTION OF RISKS AND REWARDS

DISTRIBUTION OF RISKS AND REWARDS

LACK OF TRANSPARENCY

NARROW, MARKETORIENTED VISION

Rewards concentrate on IP holders, neglecting the value generated by other stakeholders, who are not being rewarded accordingly.

The race to be first to patent an innovation discourages collaboration between researchers.

The system focuses on the development of me-too drugs and incremental advances rather than on meeting public health needs.

Patent-granted monopolies may lead to unaffordable prices and the misuse and abuse of IP strategies blocking generic competition.

Lack of transparency about R&D investments from public and private sources obscures the risks taken by each of the stakeholder in the R&D process.

Lack of transparency about real costs of R&D and manufacturing process reduces the leverage of governments to negotiate prices.

LACK OF TRANSPARENCY

Funding provided by publicsector organisations is not reflected in the final prices of biomedical products.

Large companies that focus on final stages of development and marketing may harm the technical capabilities of innovation system.

Assetization of IP rights and increases in share buybacks syphons out the value generated throughout the innovation chain to maximise shareholder value, to the expense of other players.

Lack of collaboration and transparency increases costs and reduces efficiency in the R&D process.

COVID-19 has become a stress test for the system, highlighting many of the vulnerabilities described above. The following sections will show the outcomes of these weaknesses: the allocation of risks and benefits is unlikely to reflect current R&D funding flows; the lack of transparency limits accountability of COVID-19-related investments and obscures how much funding is coming from the private sector; and global access is not ensured despite the governance mechanisms proposed to address some of these vulnerabilities.

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

An ISGlobal discussion paper.

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SECTION 2:

The Fight Against COVID-19: Analysis of R&D Investments This section describes the role of public and private investment in the development of COVID-19-related vaccines, therapeutics and diagnostics. Although the importance of public investments in biomedical R&D has been studied before,8,16 the case of COVID-19 offers a unique perspective due to the higher transparency of the public R&D investments compared to the investments in other diseases process due urgency for governments to find successful vaccine and therapeutic candidates. We performed a descriptive analysis of global R&D investments as tracked by the Policy Cures Research tool “COVID-19 R&D Tracker” to show the role of public and private actors in funding and using these resources. The analysis only covers investment in R&D and does not, therefore, include investments made to increase manufacturing and supply chain capacities or agreements to purchase vaccines in advance. All universities were defined as “Public” regardless of whether they were state-owned or private. Finally, “Other” sources of funding encompass public-private organisations (e.g., Innovative Medicines Initiative) and other types of donor organisations in which public or private ownership is not clear (e.g., funding for the development of a vaccine candidate in Nigeria).

FIGURE 1. Investments by funder (public/private/other) and product type.

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INVESTMENTS (BILLION USD)

8 7 6 VACCINES 5

UNSPECIFIED THERAPEUTICS

4

PLATFORM TECHNOLOGIES

3

DIAGNOSTICS BASIC RESEARCH

2 1 0 Other

Private

Public

Source: Data from Policy Cures Research, own analysis. Data accessed 5/2/2021. Policy Cures is expected to update its numbers at the beginning of 2021, but the new information was not out when this paper was closed.

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

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“There is a lack of transparency surrounding public sector investment: 36.78% of the final recipients of public funds are not disclosed”

COVID-19 has disproved the established paradigm, which holds that the private sector carries out all the processes inherent in biomedical R&D and that market interventions or R&D investments on the part of the public sector would crowd out private investors.6,17 In fact, COVID-19 has probably led to the largest biomedical R&D mission performed by the international community in global health history, and public institutions have been key in directing and co-creating viable markets for a public health emergency.

TABLE 2. Public and private investments and funding from Other Sources, by research area (million USD).

BASIC DIAGNOS- PLATFORM THERAPEU- UNSPECIRESEARCH TICS TECHNOLOGIES TICS FIED

VACCINES TOTAL

OTHER

0.0

30.4

0.0

47.7

1.8

10.0

89.9

PRIVATE

10.4

31.4

0.0

227.6

336.6

59.2

665.1

PUBLIC

187.4

690.4

70.6

982.2

978.4

5,365.4

8,274.5

TOTAL

212,608

804,047

78,124

1,316

1,135

5,451

9,177.1

Source: Policy Cures Research. Accessed 5/2/2021.

The strong financial and technical response from national and supranational entities to boost a viable COVID-19 R&D ecosystem is unprecedented: ● By October 1st 2020, at least USD 9.18 billion had been invested in R&D aimed at developing COVID-19 innovations. The real figure is most likely higher, due to the lack of transparency of the agreements between the public sector and the private firms –US’ Operation Warp Speed, for instance, provided an advance of USD 12 billion to the industry–, which limits the tracking capacity. ● According to our information, 91.64% of these funds came from public and academic institutions and 59.36% of the total investment is being used to support vaccine development. When the objective of the funding was not clear due to a lack of transparency, it was classified as “Unspecified”. ● Investment in COVID-19 R&D is over four times the annual average investment in R&D for HIV/AIDS, malaria and tuberculosis combined during the period 2007-2018 (Figure 2), proving that the current system can react to public health emergencies when there is an appropriate response from the public sector.

As mentioned above, lack of transparency is one of the main problems in the current biomedical R&D System. In fact, Figure 1 may be misleading, as it shows very low investments from the private sector and these are likely to be underreported because the source database includes only investments that are made public. Moreover, public investments are likely to be also underreported in countries with less stringent accountability and transparency practices. China, for example, is currently developing several COVID-19 vaccines but is not included on the database because the country’s R&D investments are not made public.

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

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FIGURE 2. R&D Investments in Malaria, HIV and Tuberculosis for 2007 to 2018 and COVID-19 R&D Investment in 2020.

10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 TUBERCULOSIS 5,000,000

MALARIA HIV/AIDS

4,000,000

COVID-19

3,000,000 2,000,000 1,000,000 0 2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Source: Policy Cures Research G-Finder Database and COVID-19 R&D Tracker. Accessed 10/02/2021.

Based on the available data, 9 out of the 10 top funders are public institutions. The US government is by far the largest investor in COVID-19 R&D, disbursing almost 23% of the total amount provided to intermediaries and final recipients globally through the Biomedical Advanced Research and Development Authority (BARDA), 6% of the total via the National Institutes of Health (NIH), and almost 3% via the Department of Defence (DOD). The German Ministry of Education and Research (BMBF) contributed almost 12% of the total investments paid to intermediaries and final recipients. Other large public investors include the Canadian Strategic Innovation Fund, the European Commission and various government institutions in the UK, Norway and South Korea. The largest private contributor on the list is the not-for-profit Bill and Melinda Gates Foundation, which contributed 2.72% of the total investment (Table 3).

TABLE 3. Top 10 COVID-19 R&D funders.

FUNDING PROVIDED

% OF TOTAL GLOBAL FUNDING

US GOVERNMENT. BARDA/ASPR

2,105,830,783

22.87%

GERMAN GOVERNMENT. BMBF

1,073,607,577

11.65%

US GOVERNMENT. NIH

579,321,249

6.32%

UK GOVERNMENT.

493,897,730

5.44%

CANADIAN GOVERNMENT. STRATEGIC INNOVATION FUND

428,018,497

4.68 %

EUROPEAN COMMISSION

371,965,731

4.03%

KOREAN GOVERNMENT. MINISTRY OF HEALTH & WELFARE

304,991,601

3%

US GOVERNMENT. DOD

249,351,162

2.72%

BILL & MELINDA GATES FOUNDATION

225,031,600

2.72%

NORWEGIAN GOVERNMENT MINISTRY OF FOREIGN AFFAIRS

214,268,049

2.14%

Source: Policy Cures Research COVID-19 R&D tracker. Accessed 5/2/2021.

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

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“There is also a lack of transparency surrounding public sector investment: 36.78% of the final recipients of public funds are not disclosed.”

Most of the funds are allocated directly to the final recipient with only 19% handled through intermediaries —mainly public-private global health partnerships, such as the Coalition for Epidemic Preparedness Initiative (CEPI), a partnership that works on the development of vaccines against diseases with epidemic potential, and the Foundation for Innovative New Diagnostics (FIND), a non-profit that focuses on the development of diagnostic tools. Of the total investments handled by intermediaries, s and FIND 4.37%.

There is also a lack of transparency surrounding public sector investment: 36.78% of the final recipients of public funds are not disclosed. Of the known recipients of public and private funding, 9 out of the top 10 are pharmaceutical companies and the only public or academic institution in the top 10 is the University of Oxford, which received 1.19% of the total investment (Table 4).

TABLE 4. Top 10 COVID-19 R&D final recipients.

FUNDING RECEIVED

% OF TOTAL FUNDING

GSK AND SANOFI

1,050,000,000

11.41%

MODERNA, INC.

955,298,520

10.32%

JANSSEN BIOTECH, INC.

608,549,207

6.63%

NOVAVAX INC.

484,952,384

5.22%

REGENERON PHARMACEUTICALS, INC.

237,349,208

2.60%

ABCELLERA BIOLOGICS INC.

124,218,769

1.30%

UNIVERSITY OF OXFORD

113,302,209

1.19%

CUREVAC GMBH

84,844,028

0.87%

QUIDEL CORPORATION

71,634,644

0.76%

SAB BIOTHERAPEUTICS

69,800,000

0.76%

Source: Policy Cures Research. Accessed 5/2/2021.

Although the current system has been able to develop a large pipeline of medicines, vaccines and diagnostics, some of the issues identified above that can lead to access barriers and system inefficiencies, such as lack of transparency in R&D funding disclosure, are still present in COVID-19 R&D. Moreover, it is important to highlight the role of public institutions in the R&D process; they fund and develop innovations, are first-hand investors, and take risks to create a viable market.

As candidates are moving through the pipeline, the role of the public institutions must be emphasised in policies that aim to ensure equitable and affordable global access to innovations. Factors such as IP management, lack of equitable distribution and the need to guarantee transparent and affordable pricing will continue to represent barriers in the current system unless governance mechanisms to facilitate global access are put in place.

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SECTION 3:

Governing the COVID-19 R&D Response: Existing Proposals for Enabling Access to COVID-19 Pharmaceutical Innovations In what is likely to be the largest joint global effort in biomedical R&D, public sector investments have been essential in incentivising COVID-19 R&D, and public and private actors are working together to develop pharmaceutical innovations to tackle the pandemic.

However, the system’s efficiency and its capacity to deliver new health technologies equitably continue to be undermined by some of the characteristics identified in Section 1: the use of patents, instead of other mechanisms, as the primary incentive for R&D preventing a faster manufacturing process that would scale up access to vaccines, the lack of transparency, and the shift towards a market-oriented mission.

While Section 2 identified the role of public institutions in R&D funding and discussed some of the weaknesses of the current system, such as how the lack of transparency could threaten the fair allocation of risks and rewards in an extreme situation like the COVID-19 pandemic, this section will discuss the attempts made to establish two global governance mechanisms to address some of these weaknesses and to increase social and economic efficiency to achieve equitable access to COVID-19 health technologies worldwide.

BOX 1. Policy Tools and Incentives Used to Drive Innovation and Access The set of incentives and policy tools used to steer pharmaceutical innovation in a certain direction has traditionally been divided into three categories: Push, Pull and Pool incentives.13,25,30 ● Push incentives are upfront grants or in-kind contributions given to contribute to the expenditure on R&D made by the recipient, that is, to subsidise research inputs. The idea is to steer the company’s research in a desired direction, assuming the risk of development failure. ● Pull incentives reward the results of research. Designed to reward research outputs, pull mechanisms incentivise companies by way of regulatory fast-tracks, development prizes, or by securing demand through advanced market commitments (AMCs). ● Pooling mechanisms collect data, IP, designs or any kind of asset related to a certain disease or therapy with a view to increasing data sharing and eliminating the barriers created by secrecy. By pooling patent-protected assets, several researchers and manufacturers can contribute to the R&D process, increase manufacturing capacity and reduce prices through generic manufacturing. Pooling reduces the cost of innovation, creates viable markets and facilitates generic competition, thereby reducing the price of medicines.

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

An ISGlobal discussion paper.

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Governing Push and Pull Incentives During the COVID-19 Pandemic.

COVAX Facility.

Realizing that the extraordinary need for COVID-19 vaccines, therapeutics and diagnostics could lead to geopolitical tensions and nationalist approaches 20,21, and mindful of the precedent set by the HIV crisis in the 1990s (during which the level of economic development yielded by each country was the main factor determining patient access to innovative antiretrovirals10), the World Health Organisation (WHO) launched the Access to COVID-19 Tools Accelerator (ACT-Accelerator) last April.

The mission of this multi-stakeholder platform is to speed the development and manufacture of COVID-19 diagnostics, treatments and vaccines and to promote equitable access, ensuring that public health criteria rather than economic power will be the principal driver of access to innovations.

The work of ACT-Accelerator is organised into three pillars: vaccines, therapeutics, and diagnostics. A fourth area of work focuses on strengthening health systems to ensure appropriate access to COVID-19 innovations.22 COVAX, the vaccines pillar of ACT-Accelerator, is an unprecedented global effort to develop and distribute vaccines. It is coordinated by three organisations: CEPI; Gavi, the Vaccine Alliance; and WHO. COVAX is a risk-sharing mechanism that pools and secures demand: on one hand it allows countries with lower purchasing power to secure their supply and on the other, it reduces the risk for manufacturers who are concerned about the cost of investing in the development and supply of vaccines without any guarantee of consistent demand for the end product.22 Within COVAX, CEPI oversees and coordinates vaccine R&D and the manufacturing stages of the process, Gavi will be in charge of procuring and delivery at-scale, and the WHO will work to ensure that allocation and political decisions are made based on public health criteria.22 Created in 2017 to stimulate vaccine R&D for diseases with epidemic potential, CEPI uses push incentives funded by public and philanthropic institutions to boost vaccine R&D for a set of diseases with epidemic potential. The partnership claims that vaccines are made accessible to the populations that need them by signing access clauses with all its grantees. Some NGOs have criticised the laxity of these clauses,23 which can include vaccine stockpiles free-of-charge for use in the event of an outbreak, safeguarding CEPI’s participation in the commercial returns of CEPI-funded vaccines, open access to research data and biological samples, and licensure of CEPI-funded vaccines, and stepin rights if a grantee breaches the terms of the agreement.24 Gavi also uses pull mechanisms, raising money from various countries and guaranteeing large vaccine orders once the end product reaches the market, offering developers longterm, stable, pooled demand. This approach reduces uncertainty and opportunity costs for manufacturers and allows Gavi and the participants of the scheme —called Advanced Market Commitment (AMC)— to negotiate price reductions by leveraging the large volume of vaccines to be purchased and setting market-segmentation strategies based on each country’s income level (also called tiered-pricing strategies), coupled with delivery and supply strategies, thereby facilitating access and affordability.25,26 With 183 countries engaged at different levels, the aim of the COVAX Facility is to fund the development, manufacture and distribution of 2 billion doses of vaccine by the end of 2021 through its Advance Market Commitment mechanism (COVAX AMC), sharing the risks across different vaccine projects.22

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

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“Vaccine Nationalism is not only threatening access to COVID-19 health technologiesin LMICS but also in HICs.”

In contrast to this multilateral effort, certain countries (mostly high-income countries) have signed bilateral agreements with vaccine manufacturers, thereby threatening the global allocation framework developed by the international community.20,27,28 The accountability and transparency of the COVAX Facility must be ensured, especially with respect to how agreements with companies are decided, and how prices are negotiated. Covax has been thrown to the similar confidential negotiations supported by all Western countries, if they wanted to get contracts. Once again, accountability, transparency and global coordination are essential: a) to ensure that all potential access barriers are addressed (e.g., IP and technology transfer, supply, and pricing negotiations); b) to ensure enough manufacture capacity and c) to tackle the issue of vaccine nationalism.

Vaccine Nationalism is not only threatening access to COVID-19 health technologies in LMICS but also in HICs. The lack of manufacturing capacity together with the lack of transparency seems to be behind the dispute between AstraZeneca (AZ), one of the first COVID-19 vaccine manufacturer to get European Medicines Agency approval.

In spite of the advanced payment totaling 336 million EUROS that the EU had made in summer 2020, AZ announced than half of the pre-financed order would not be delivered on time due to capacity constraints, while the UK was not affected. Such a decision facilitated the publication of the contract between the European Commission and AZ, that otherwise would have remained secret. Its publication did not pretend to be an example of transparency practices but to work a pressuring mechanism with the company to respect the agreed commitments.

Governing Pool Mechanisms During the COVID-19 Pandemic.

Covid-19 Technology Access Pool (C-TAP) As mentioned in Section 1, a lack of transparency, an unequal distribution of risks and rewards, and the social inefficiency of the pharmaceutical companies’ business model is resulting in suboptimal outcomes for the biomedical R&D system. Owing to these factors and the monopoly granted by patents, the system may not be fit to deliver accessible and affordable innovative vaccines at the scale and pace required to end the current pandemic.

Bearing in mind these problems, and drawing from other experiences, including the Medicines Patent Pool (MPP), which facilitates non-exclusive public health-driven licenses to facilitate equitable access 30,31 to HIV and Hep treatment , and the public disclosure of the COVID-19 genetic sequence that boosted vaccine development,31 the 73rd World Health Assembly approved the creation of the COVID-19 Technology Access Pool (C-TAP), a global collaborative initiative led by WHO and the government of Costa Rica that proposed a global pool of technologies that would include clinical and preclinical data, licences for treatments, diagnostics and vaccines, technology transfer agreements, and any other asset relevant to COVID-19 R&D.31 C-TAP works to advance the pooling of efforts from public and private sources to expedite research, innovation and universal access through open collaboration and transparency.32 The aim is to remove, as long as the pandemic continues, the barriers caused by secrecy and patent-supported monopolies, facilitating the use of innovations and technologies free-of-charge or in exchange for royalties, lowering the price of innovations, and particularly expanding manufacturing capacity through technology transfers.

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C-TAP is an attempt to modify some aspects of the system responsible for inefficiencies (e.g., transparency, IP, pricing). It is, however, dependent on voluntary participation, and public and private institutions have so far overlooked the solidarity call to action. The call was met with scepticism from pharmaceutical companies, which argued that a voluntary pool would threaten their IP rights. It might be worth noticing that similar arguments were used ten years ago when the MPP was created and now over 10 patent holders have licenses signed with them. Furthermore, it was not supported by many high-income countries, leaving some multilateral organisations (UNITAID, WHO), lower middle-income countries and a few highincome countries as the only sponsors.33 On a related matter, India and South Africa led a petition to the World Trade Organisation (WTO) to waive IP rights for all technology, treatments and vaccines necessary for the response to the pandemic until the majority of the world population receives effective vaccines. This would facilitate much broader production, and potential distribution of these technologies. The petition, which is supported by 99 members, mainly low- and middle-income countries of the WTO is unlikely to prosper unless a majority of WTO members support it which would need to include some high-income countries.

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

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SECTION 4:

The Preferred Supplier Model, an Alternative Based on Public Sector Leverage Throughout this paper, certain aspects of the pharmaceutical R&D system have been identified as barriers to the efficient development of innovative treatments, vaccines and diagnostics, and to universal access to these benefits. These barriers that limit access to innovations and impede the correct functioning of the system are created by a number of factors: the lack of transparency, the unequal distribution of risks and rewards in the R&D process and the dependence on patents as the main incentive for innovation, leading to a margin-driven and profit maximisation model.

Section 1 of the present paper has shown how a lack of transparency about R&D investment remains an issue in COVID-19 R&D. This problem affects public institutions as well as the private sector, with almost half of the recipients of public funding still undisclosed. Transparency is the key to ensuring efficiency and accountability for how public money is spent and to achieving a fair distribution of rewards based on information about who are the main risks takers in R&D funding.

Public institutions are playing a central role in the discovery and development of COVID-19 vaccines, treatments and diagnostics, with an unprecedented contribution of investment to fund pharmaceutical R&D. In such a scenario, it is essential that the agreements between funders and recipients should include conditions designed to ensure that none of the aspects mentioned above jeopardise access to an innovation that can tackle COVID-19. As some of these agreements are not conditioned ex ante, governance mechanisms are being set ex-post (after funding agreements are signed) which are likely not sufficient to ensure that global equitable access is granted, as shown in Section 2.

In addition, the results produced by the existing system in recent years 34 do not lead to the conclusion that simply increasing inputs (e.g., financial incentives, prizes and rewards) will be sufficient to strengthen and improve its outcomes. Rather, the evidence points to a need to reconsider the laws and norms that regulate and direct the system.

The system reacted promptly to the sudden emergency posed by COVID-19 and is implementing mechanisms to ensure that nobody is left behind. However, repurposing and strengthening the system needs to go beyond a single disease or point in time.

There is clearly a need to address the political and organisational constraints inherent in the system to make a permanent impact and re-establish relationships across the different sectors. 4 In other areas, the leverage that the public sector has as a large purchaser of goods and a key player in the market, subsidising and supporting innovation, has been explored as a political tool to implement changes in corporate behaviour.35 Today, exploring how this leverage could be used to improve access to

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

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pharmaceutical innovations would appear to be a reasonable step forward. In fact, the latest communication from the European Commission on the Pharmaceutical Strategy for Europe, states that “Actions in the area of public procurement can foster competition and improve access. Public buyers should design smart and innovative procurement procedures, e.g. by assessing the role of ‘winner-takes it all’ procedures and improving related aspects (such as price conditionality, timely delivery, ‘green production’ and security and continuity of supply) including via the Big Buyers initiative launched under the SME Strategy”.

A Preferred Supplier Model Aimed at Redirecting Public and Private Interactions.

The COVID-19 pandemic is testing the resilience of the system and its capacity to respond to a planetary crisis, and although the investments made to develop and produce a vaccine are unprecedented, issues remain around transparency and directionality, raising concerns about equitable distribution and access to the vaccines, treatments and diagnostic tests produced.

Strengthening the system to improve its outcomes, accountability and transparency will not be achieved solely by increasing inputs (funding, resources, etc.), but by redefining how the different actors (both public and private) interrelate.

Companies and public sector actors interact in many different ways, for example the following: ● As shown in this paper, companies receive billions in public investments to fund the research and development of new pharmaceutical products. ● Clinical trials of pharmaceutical companies’ products often use public sector infrastructures and resources. ● Regulatory agencies assess and approve the safety and efficacy of pharmaceutical products to facilitate access to national markets. ● Pharmaceutical companies’ product representatives engage with healthcare professionals in different sectors to provide information and promote their products. ● Pharmaceutical companies participate in tenders and other procurement mechanisms established by health systems.

“Strengthening the system to improve its outcomes, accountability and transparency will not be achieved solely by increasing inputs but by redefining how the different actors interrelate.”

Procurement and supply practices have been identified as ways in which commercial partners can apply sustainability and ethical principles focused on the environment and human rights issues (such as child labour and equal opportunity and nondiscriminatory employment practices29). Corporations, including pharmaceutical companies, implement responsible procurement practices (for example, those evaluated in B Corps certification) designed to impose environmental, social and ethical standards on their suppliers and to work only with those suppliers (preferred suppliers) who fulfil the predefined criteria.29,36,37 This practice is fully aligned with the Sustainable Agenda and the Sustainable Development Goals, as well as the Ten Principles of the UN Global Compact.36,37

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

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The aim of ISGlobal’s 4S proposal is to mirror these practices by establishing standards and indicators related to certain factors designed to reorient the R&D system towards a more public-health-oriented model. To achieve this, we propose four principles upon which the relationships between public and private partners should be founded and shaped.

The objective of these four principles is to address some of the weaknesses identified in this paper. Our purpose is to mirror practices that have been implemented by the private sector and to introduce ethical standards in procurement and supply chains, setting public health and ethical standards to redirect the research agenda and supply chain practices.

The aim of this proposal is not to develop new governance bodies, but rather to establish a set of principles focussed on helping to direct the existing mechanisms by way of appropriate metrics and indicators, which companies would be obliged to fulfil if they wish to engage with public sector actors. These principles would be applicable at national, regional and international levels.

In ISGlobal’s view, every interaction between public and private partners could be subject to these preferred supplier principles, allowing only those companies that fulfil the criteria to interact preferentially with the public sector.

If a preferred supplier system was established, companies wishing to interact with the public sector would have to compete by performing best at a number of metrics, based on public health needs and expectations of how companies should redefine their business practices.

Interactions between public and private sector organisations should be based on the following four principles, the core pillars of ISGlobal’s proposal: ●

Sharing needs. To ensure that the biomedical research agenda prioritises

●

Sharing risks & rewards. To ensure a more balanced and transparent

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Sharing results. The pharmaceutical R&D system should strengthen its accountability and transparency mechanisms. If public funds are to be invested in R&D, conditions should be imposed to ensure that the benefits derived from the R&D process, (the knowledge generated and not just the end product/s) are accessible. A preferred supplier would provide access to the results of clinical trials and to all the information on drug candidates that have not been successful. This data could be used to create a public pool with relevant data to inform future R&D efforts. The aim is to treat knowledge and information as what it is: a public good.

the public health needs of society, the preferred supplier will have to invest a tangible share of its R&D efforts in meeting public health needs. The model must also take into consideration the regulatory and market access commitments of new drugs.

distribution of the R&D risks and rewards at every level of the development pipeline, the preferred supplier would acknowledge receipt of public resources of all kinds received at any point during the R&D cycle. The amount of public funding received will have repercussions on the IP protection and/or the participation in the commercial benefits associated with the end product as well as on the final price, and the donor will have a say in those decisions.

Moreover, the recipient of the public R&D funding will be required to provide information on all the production costs associated with the new asset, so that these can be taken into account in the pricing and market strategy. In return, a preferred supplier would have access to a larger pooled demand from the public institution implementing this strategy.

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Sharing outputs and outcomes. To ensure that the industry is sustainable and focuses not only on economic results but also on the health outputs of its activity, interactions between public and private companies should be subject to different standards than those imposed on preferred suppliers. Preferential access to public funds could be granted to companies demonstrating compliance with best environmental practices in manufacturing and distribution or criteria related to corporate practices, such as stringent policies to reduce buybacks and favour reinvestment of capital in the R&D process.

Similarly, equitable access practices could be measured and used to achieve status as a preferred supplier.

Implementing a preferred supplier model would entail the development of metrics and indicators that would allow the public sector to select and prioritise companies with better performance in these indicators, for example, when two companies are offering similar or equivalent products or services not shown to be different by the appropriate clinical and cost-effectiveness research. An obvious limitation for this selection would be when we are talking about an innovative product which is only provided by one company. In this case, other approaches should be taken in order to guarantee the public interest.

These pillars are just indications of what companies would need to do to engage with public institutions. Each of the four pillars would require different areas of analysis and indicators in order to fairly assess the companies’ performance. Different sets of indicators would be required to evaluate different types of companies, for example those focused on generic products, small biotech companies and larger pharmaceutical multinationals, because different behaviours are expected from companies with very different business models. In addition, many of the areas within these principles need further definition, such as the therapeutic areas towards which R&D investments from companies would need to be directed and the definition of R&D investments.

Furthermore, the scope of application needs to be defined. If a preferred supplier model is to be established, the market size of the public partner needs to be sufficiently large to make companies adopt the measures assessed in the pillars discussed above. For this purpose, a joint global effort will be needed to get these standards accepted by all, low-, middle- and high-income countries.

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BOX 2. 4S proposal: A SWOT analysis

Strengths ● The model aims to redirect the system’s performance to achieve outcomes more oriented towards public health interests and medical and patients’ needs. ● Flexible: the system’s outcomes would depend on the indicators set by the model for choosing a preferred supplier. ● Capacity to incorporate civil society, academia and public institutions in the development of the indicators and metrics required to implement the model. ● Once developed, it may be easily applied to different settings (other organisations, regions, countries, etc.).

Weaknesses ● The public partner/countries/organisation for the implementation of the project needs to be defined. Which countries/organisations should implement this model in order to create a critical mass (i.e. sufficient market size) to ensure that the companies will comply and not withdraw from certain markets or countries? ● The metrics and indicators needed to establish and implement the preferred supplier model need to be developed as well as a methodology for comparing different company types, standards and practices. For example, the differing business models of small biotechnological companies and larger pharmaceutical companies will have to be considered in order to not favour one type of company over another. ● What would be the role of public R&D institutions and how will they fit into this model to allow competition across public and private R&D institutions? ● Some of the pillars (e.g., transparency) need to be enforced by legislation: for example, companies should be obliged to disclose their investments and pricing strategies.

Legislation to this effect has recently been passed in Italy. Consequently, establishing transparency criteria for becoming a preferred supplier may be difficult.

Opportunities ● The momentum created by the COVID-19 global health crisis can be used to promote a shift towards a needs-driven direction in pharmaceutical R&D as an opportunity to open up new markets. ● A preferred supplier model is fully aligned with the Sustainable Development Agenda, promoting access to quality essential medicines, targeting global health priority diseases, such as AIDS, tuberculosis, malaria, NTDs and other priorities, including AMR and epidemic preparedness; and supporting R&D in medicines, vaccines and diagnostics. ● This model can be aligned with other priorities of the Sustainable Development Agenda, implementing environmental criteria and labour conditions to become a preferred supplier and fostering innovation and sustainable industrialisation.

Threats ● Implementation of the model will require international cooperation and governance, a requirement that has been identified as a weakness of the current model. This may be of especial relevance in areas related to transparency, in which non-disclosure agreements between companies and purchasers are common. ● As happened with the UN Global Compact and other initiatives that have been embraced by both public and private industry partners and have contributed to increased global welfare and more ethical standards, the 4S model cannot succeed without the support of influential governments, supranational organisations and visionary industry leaders.

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Could the Implementation of a Preferred Supplier Model During the COVID-19 Pandemic Have Helped Redirect R&D Outcomes?

Although a model similar to the preferred supplier model proposed by ISGlobal’s Innovation and Policy team was not in place during the COVID-19 pandemic, many of the ideas included in the current proposal are not new in the field of access to medicines and innovation policy.

As mentioned in Section 2, CEPI’s access policy includes clauses in its contracts to ensure some level of transparency and affordability. However, it is worth mentioning that the Coalition’s access policies were changed in 2018. Before that change, some of those clauses were closer to the pillars of the preferred supplier model presented above.

In those, CEPI’s core principles were defined as equitable access, cost coverage and shared risks and benefits. 24 ● Development of plans to manufacture and maintain an investigational stockpile of vaccines ● Disclosure of pricing strategies and methodologies to ensure affordability and sustainability ● Plan stating the awardee’s obligations in terms of vaccine registration and marketing, as well as the volume of doses to be made available ● Public disclosure of clinical trial results (positive and negative results) and open access to publications, data and information sharing from CEPI-funded projects ● The shared risks/benefits policy included a breakdown of potential costs to be covered by the Coalition and reward participation clauses, such as participation in commercial benefits from licensed vaccines generated by a CEPI-funded project. ● Finally, although CEPI did not seek ownership of IP generated from its funding, they did include step-in rights in case the awardee could not meet the affordability and availability expectations.

These principles and clauses, which are, to some degree, similar to the 4S Model’s principles of shared risks, needs and results, were revisited in 2018. The policy was reviewed after some vaccine manufacturers expressed concerns about the policy’s inflexibility and were not open to negotiation because they did not consider the conditions to be consistent with a competitive business model. 38 The revisited access policy is more flexible and is used more as a set of guidelines on how future contracts should be negotiated on a case-by-case basis. 39 These were the guidelines and policies applied during the negotiation of contracts between CEPI and its awardees during the COVID-19 pandemic, and even though these agreements have access-related clauses, it has been necessary to implement ad-hoc global governance mechanisms, such as COVAX, to try to improve access to COVID-19-related innovations.

This experience illustrates that even though a model may appear logical and feasible, there are many factors involved in the implementation of pharmaceutical innovation policies. As explained by Maryam Bigdeli et al., 3 “economic, trade and industry objectives on one hand and public health goals on the other, may be at best disconnected or worse, conflicting”. In the case of the COVID-19 pandemic, incredibly complex factors and determinants affect the development, manufacture and supply of pharmaceutical innovations. If a preferred supplier model had been in place before the pandemic hit, it could have helped international donors to decide which companies they should work with, prioritizing those ready to share their technology to scale up production, which is one of the clear priorities to ensure universal vaccination as quick as possible. However, it is difficult to ascertain whether such a model would have helped to improve outcomes.

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SECTION 5:

Conclusions and Recommendations The shockwave unleashed by the COVID-19 pandemic opens a window of opportunity for the potential reform of the pharmaceutical R&D system. Proposals and initiatives such as global data, knowledge and technology pools (e.g., C-TAP) and global pooling of demand (e.g., ACT-Accelerator) were unthinkable just one year ago, as was the extraordinary global effort made by the public sector to advance the development and coordinate global purchasing mechanisms for therapies, vaccines and diagnostic tests, creating strong pipelines in a matter of months.

Recognition of the role of the public sector as a market-creator and market-shaper, not only in terms of funding and de-risking early investments in R&D but also in terms of carrying out R&D up to clinical stages and developing demand-pooling mechanisms, has changed the traditional belief that the public sector cannot bring value to the economy and that market interventions crowd out private entrepreneurs. 6,9 The development of a preferred supplier model (and of other models that use the purchasing power of public institutions to shape the conditions of production, supply and access to pharmaceutical innovations) is consistent with the debates around the public sector’s capacity to shape markets through its procurement mechanisms in order to improve health, social and environmental outcomes. In addition, it is fully aligned with the sustainable agenda touching, as it does, on issues related to several of the Sustainable Development Goals.

The design and implementation of a preferred supplier model should start by ensuring that all stakeholders involved are heard, including patient and civil society organisations, public-sector professionals and, of course, investment banks and pharmaceutical companies. The input of all these stakeholders is essential to an understanding of the possibilities of a new market model for health innovations.

Patient organisations, civil society organisations and researchers should have a preferential seat at the table when decisions are being made concerning the direction the system should take. Their input is essential in the definition of the areas the R&D system should focus on and in ensuring accountability and transparency in both public and private institutions.

Since the goal of a preferred supplier model is to create a sustainable model that can ensure the development of new pharmaceutical innovations based on public health needs and appropriate global access to the end products, it is vital to ensure that all the stakeholders understand the risks and benefits of participating in the model.

While investments by public institutions in pharmaceutical R&D often play a key role in the development of new medicines, vaccines and diagnostics, these contributions are not conditioned by any sort of mechanism designed to ensure that society benefit from the value created with public money. It is, therefore, essential to implement

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

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public purchasing mechanisms designed to create responsible, sustainable markets and to direct companies towards new, more sustainable, business models that will help to create social and economic value for society as a whole. ● For the public sector, the development and implementation of a preferred supplier model entails participating in a business model that could redirect the R&D System to improve its outcomes based on public health and public interest metrics. Using the current window of opportunity to strengthen its negotiating position by putting in place a preferred supplier model is paramount to ensuring that the outcomes of R&D improve people’s lives. ● For the funders, investors and shareholders in the pharmaceutical industry, it could be a way to guarantee the commercial interest of States or to fasttrack approval processes. Also, as a natural step forward in being seen as active shapers of new social business models: doing good and being financially sustainable by charging fair prices and satisfying unmet demand for innovative global health solutions. For pharmaceutical companies, as public scrutiny and accountability increases, the space for social, ethical and sustainable practices increases, leaving a narrow margin for practices that are clearly not aimed at improving the efficiency and efficacy of the system. ● For citizens, both as consumers and as workers, a preferred supplier model could more easily ensure that some of the globally relevant public health needs, such as the development of treatments, vaccines and diagnostics for rare diseases, neglected diseases associated with poverty or diseases with epidemic potential are addressed.

All in all, a preferred supplier model could introduce new practices and behaviours in public contracting and corporative practices. The opportunities that may have been generated by the intersection of the Sustainable Development Agenda and COVID-19 R&D investments should be used to implement business models that incorporate social responsibility and accountability into company practices.

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

An ISGlobal discussion paper.

ANNEX

PREFERRED SUPPLIER MODEL PRINCIPLES

CEPI-INITIAL

CEPI-REVISITED

»

Negotiation of manufacturing commitments and volumes with awardee or with a third party if awardee does not have capability/capacity.

● Estimates of number of doses of each of the Project Vaccines that may be produced and dates by when such volume will be achieved. An estimate of the cost of doses of each of the project vaccines for both the investigational stockpile and any additional doses.

● A progress report on the scale-up of the platform for manufacturing and a good-faith estimate of the cost of the scale-up where such scale-up is necessary.

● Partners have also agreed to measures that will ensure that the vaccine price is at a level the publicsector agency agrees is affordable for use in the Affected Territories.

● Collaborating with other actors in the global health community to ensure the procurement, allocation, deployment and administration of licensed vaccines to protect global health at a price that does not limit equitable access and is sustainable for the manufacturer.

● Coordinating with other actors in the global health community to enable licensure of vaccines funded

by CEPI, including by securing resources for pivotal clinical trials.

● Funding the development of vaccines and maintaining investigational stockpiles to be used free of charge when an outbreak occurs.

»

»

The individual contract between CEPI and the awardee will set out (i) the processes by which the boundaries for the price of a licensed vaccine will be determined, and (ii) the awardee’s obligations in terms of registration and launch of the licensed vaccine in countries, manufacturing and availability, volume of doses and regulatory steps to best facilitate timely and sustainable access for populations in need.

● Equitable access to the final product.

Follow WHO recommendations with respect to access to and release of investigational vaccine stockpiles for emergency use and its use for conducting phase 3 clinical trials.

● Equitable access during an epidemic or a public health emergency of international concern.

Comparison of the Four Pillars of ISGlobal’s Preferred Supplier Model and CEPI’s Policies

ACCESS

Sharing needs: to ensure that the biomedical research agenda prioritises the public health needs of society, the preferred supplier will have to invest a tangible share of its R&D efforts in neglected, chronic and other high priority diseases (to be defined) for which new treatments and diagnostics are urgently needed. The model will also take into consideration the regulatory and market access situation of the new drugs.

Equitable access to the final product, prioritising those most in need for whom the product represents a greater health impact, with collection of the necessary data.

»

Prices, while set as low as possible and as close to optimal marginal cost as possible, must be sustainable for the awardee to maintain manufacturing, supply, and availability.

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IP & PRICING

TRANSPARENCY

The amount of public funding will impact IP protection and/or participation in the commercial benefits arising from the end product. It will also influence the final price, giving the donor a say in such decisions.

The recipient of public R&D funds will be required to share information on the real R&D and production costs of the new asset so that these can be taken into account in the negotiation of the final price.

Sharing results: to promote greater transparency, sharing of information and better access to clinical trials results, a preferred supplier will provide access to the clinical trial results and all the information related to drug candidates that have ultimately been abandoned. Those data could be especially useful in the creation of a public database with relevant information to inform future R&D efforts.

Other aspects, such as transparency about production and R&D costs: the recipient of the public R&D funds will be required to share information on the production cost of new products and assets, which will be taken into account in the pricing negotiation.

● CEPI’s preferred approach is not to take ownership of IP, but rather to seek a non-exclusive, sub-licensable, worldwide license on necessary background IP and foreground IP related to priority pathogens. ● When the awardee is unable or unwilling to further vaccine development and equitable access, CEPI and the awardee will agree a process to activate a worldwide license of foreground and background IP to enable third-parties to advance development of the vaccine candidate or meet equitable access obligations in the event of a defined trigger. ● CEPI will be entitled to activate arrangements agreed upfront in the contract for accessing the awardee’s know-how, trade secrets, and other undisclosed knowledge and materials related to the vaccine candidate if facilitating technology transfer to one or multiple third-parties is deemed necessary to advance development of the vaccine candidate or meet equitable access obligations. ● Public disclosure of results and open access of publications are obligatory and awardees must share all data and information arising from CEPI funding with the broader scientific community to foster follow-on research that will increase innovation.

This includes registering clinical trials in a publicly accessible database before patient recruitment as well as sharing of data and results (including negative results) via a public route. ● CEPI and the awardee will agree that obligations related to pricing will be established through a transparent and agreed methodology that will take into account information about public and philanthropic investments in the vaccine, cost of goods, expected volume/scale of production, price of existing comparable products, cost of maintaining manufacturing capacity, procurement agreements, and other mechanisms for recovering cost of manufacturing the vaccine, and other relevant information.

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

An ISGlobal discussion paper.

● Step-in rights if the partner is in breach of its obligations or cannot, will not, or has not used reasonable efforts to fulfil its obligations under the partnering agreement. Once triggered, the step-in rights allow CEPI to use and/or sublicense IP rights and to access the materials and data needed to move forward with another partner.

● Ensure project continuity by using a Preferred or Trusted Partner. This would be an entity jointly agreed to by CEPI and the original partner to whom the original partner would provide the necessary IP licences and technology transfer to enable the research or manufacturing to continue.

● Requiring partners to share project data relevant to topics of interest, such as disease-specific assays, animal models, correlates of protection or diagnostics and epidemic preparedness mechanisms, subject to reasonable protection for partners’ rights of confidentiality and ownership rights under the Agreements.

● Clinical data and results (including negative results) must be disclosed publicly through an easily discoverable public route.

● CEPI requires all results arising from their funding to be published open access. A copy of the final manuscript of all research publications published must be deposited in PubMed Central or otherwise made freely available upon acceptance for publication or immediately after the publisher’s official date of final publication.

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GOVERNANCE

SHARED RISKS/ BENEFITS

Sharing risks: to ensure a more balanced and transparent distribution of the R&D risks at every stage of the development, a preferred supplier would publicly acknowledge all forms of public investment received at any point in the R&D cycle. The amount of public funding received will have repercussions on the IP protection and/or the participation in the commercial benefits associated with the final product as well as the final price and the donor will have a say in those decisions.

In the case of an epidemic or a PHEIC declared by WHO, which necessitates emergency use, CEPI will:

● In circumstances in which commercial benefits may accrue to the awardee, CEPI will recoup a share of such commercial benefits or choose an alternate and equivalent benefit-sharing arrangement commensurate with CEPI’s investment. These are the principles by which specific arrangements will be entered into with awardees on a case-by-case basis during contracting. Any commercial benefits recouped

by CEPI will immediately be returned to the funding pool for re-investment in other projects since CEPI is a non-profit organisation.

● In support of ongoing global efforts, CEPI will revise, adopt and implement data-sharing best practices consistent with global norms and with the WHO; make use of global platforms for sharing clinical trial data and results to facilitate collaboration between stakeholders; and expedite regulatory approval and equitable access during a public health emergency.

● Follow the WHO’s recommendations with respect to access to and release of the investigational vaccine stockpiles for emergency use; and, together with the WHO, affected countries and other partners, decide on the use of investigational vaccine stockpiles for conducting and completing phase 3 clinical trials.

The implementation of a preferred supplier model entails the development of a set of principles that will help to direct existing mechanisms by way of appropriate metrics and indicators.

Companies would have to fulfil these criteria if they want to engage with the public sector. This model could be applicable at national, regional and international level.

The development of metrics and indicators should involve and consider all stakeholders, including patient associations, civil society and advocacy groups as well as investment banks and multilateral organisations.

COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

An ISGlobal discussion paper.

● “The Parties shall agree in good faith how such benefits (if any) arising are to be managed in a fair, equitable and proportionate manner, taking account of the financial contribution of each of the Parties to the Product Background IP and Product Foreground IP being exploited, the public and philanthropic nature of the CEPI Funding, the public benefit derived from the proposed Development and Exploitation, and any private or ancillary benefit that may arise. Any benefits sharing shall be subject to a separate agreement that the Parties shall execute in a timely manner.”

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COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model.

An ISGlobal discussion paper.

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