Why we're still waiting for an AIDS vaccine
The bottom line is this: A traditional bottom line approach isn't enough to combat the worst epidemic since the Spanish Flu.
NEW YORK (Fortune) -- The next time someone tells you that an unfettered free market can solve all of our social problems, ask them why it is taking so long to develop a vaccine to combat the worst epidemic since the Spanish flu pandemic of 1918.
I'm talking, of course, about AIDS, which has killed nearly 25 million people since the first cases were documented in 1981. About 3 million died last year, and another 4 million were infected with HIV, the virus that causes AIDS, according to UNAIDS.
This summer, the long-running search for an AIDS vaccine is again in the news. The Bill and Melinda Gates Foundation recently awarded $287 million in grants to researchers working on a vaccine. Later this month, about 20,000 people will converge on Toronto for the 16th International AIDS conference, where there will be lots of talk about a vaccine.
The thing is, people have been talking about an AIDS vaccine for a long time. In 1984, Margaret Heckler, who was then the secretary of Health and Human Services, said a vaccine could be ready for testing in a couple of years. In 1997, President Clinton challenged the nation to come up with a vaccine within a decade. Today, the experts say a vaccine probably will not be ready for at least another 10 years.
Prevention programs - promoting abstinence, monogamy and the use of condoms - have slowed down HIV infection rates. But a vaccine remains the best hope of bringing the epidemic under control.
So what's taking so long?
Partly, it's the science. HIV is one of the most complicated viruses ever identified. It replicates and mutates rapidly, and targets the very immune system that protects us from disease. I don't pretend to understand the science, so I won't try to explain it, but you can learn more at the Web site of the International AIDS Vaccine Initiative, which offers this basic q-and a.
Big pharma doing less than you think
But economics comes into play, too. The five big pharmaceutical companies that make vaccines - GlaxoSmithKline (Charts), Merck, Novartis (Charts), Sanofi-Aventis (Charts) and Wyeth (Charts) - all do research into AIDS. No drug company wants to be accused of ignoring the epidemic. But they are doing a lot less than you might imagine.
According to IAVI and the Aids Vaccine Advocacy Coalition, private industry invested about $75 million into AIDS vaccine research in 2005 - only about 10 percent of the $759 million spent on research. (Nearly all of the rest came from governments, led by the United States.)
Global spending on an AIDS vaccine from all sources - government, private industry and foundations - represents less than 3 percent of global spending on AIDS, according to IAVI. In other words, virtually all of the money spent on AIDS has gone to treatment rather than prevention - no surprise given the high costs of treatment and the influence exercised by AIDS patients.
Drug companies have good reason for their reluctance to invest more in AIDS prevention. Because there's no clear path to finding a vaccine, the costs of research are high.
Conducting human clinical trials of potential vaccines is also no simple matter. It raises a slew of ethical, political and economic issues, and requires the cooperation of thousands of healthy but at-risk people.
As if those weren't obstacles enough, there's no guarantee that whoever finally develops an AIDS vaccine will make money selling it. The need for the vaccine is greatest among poor people in the global south. Resources there are scarce. Distribution will be a challenge.
What's more, because most vaccines need to be administered once or twice, they aren't nearly as profitable as drugs that have to be taken daily over long periods of time - like the best-selling drugs that lower cholesterol, help control asthma or deal with depression.
"People are looking for blockbuster drugs, the multi-billion drug, the next big thing," says Seth Berkley, president and founder of IAVI. "Vaccines haven't necessarily been the most profitable market."
Despite all that, there are reasons for optimism. Merck is currently conducting what is called a "proof of concept," or Phase 2, study on a vaccine candidate involving about 3,000 people in North and South America, the Caribbean and Australia. This could lead to a large-scale, or Phase 3, trial if things go well.
Meanwhile, a Phase 3 trial currently underway in Thailand is testing a combination of vaccines produced by Sanofi-Aventis and a private company called VaxGen. About 30 other smaller-scale trials are also underway, most involving partnerships between governments and the private sector.
More broadly, AIDS experts and advocates are seeking ways to create market incentives to drive research. The Gates foundation grants will help; they are large, and they come with strings attached, requiring researchers to collaborate with one another. The idea, in essence, is to develop a body of knowledge that will make it less expensive for the drug companies to develop vaccines.
At the same time, academics and government officials are looking for ways to assure the drug companies that there will be demand for a vaccine, after they create one. One idea under discussion is called an Advance Market Commitment - a large sum of money, perhaps $2 or $3 billion, guaranteed by governments, that would guarantee pricing at certain levels to a successful vaccine-maker. This idea is interesting, complex and controversial and you can read more about it here and here.
The bottom line is this: A traditional bottom line approach won't bring us a vaccine. More creative thinking is needed - and it seems to be on the way. AIDS experts agree that progress is being made and that the problem is solvable.
"There's been a lot more collaboration, a lot more money, a lot more scientific understanding," said Mitchell Warren, executive director of the AIDS Vaccine Advocacy Coalition. "But still no vaccine."