“Nonprofit pharma” might seem like an oxymoron, along the lines of  jumbo shrimp or anecdotal evidence. And, on first hearing, it may arouse some skepticism.

Industry critics are apt to object: “Are you kidding? Profit is what pharma is all about.” Industry defenders, on the other hand, will argue that profits are essential to pay for research; without profits there will be no more great new products. 

They are both wrong for, in fact, there are nonprofit pharma companies, and  while they’re small, they have their special niche in the total market. Their announced goal is to break the price barriers that often keep patients in centers of poverty from being treated for lethal endemic diseases. What may have an even greater impact on Big Pharma is that at least one of these companies has a product development strategy that has the potential of upsetting the patent apple cart. 

To see why, let’s take a closer look at two such enterprises, both started by visionary pioneers.
Drs. Sunil Shaunak and Victoria Hale have little in common except for their willingness to forego the profit to be made from their efforts. They arrived at their common goal by different routes—one from academic medicine, the other from a career at FDA and then Genentech, so while the “why” of what they’re doing is very similar, the “how” that led them to their current roles represents two different adventures. It’s a David and Goliath encounter which, according to Richard Gold, director of the Center for Intellectual Property Policy at McGill University, “could alter the pharma landscape.”  And, as someone identified only as an “industry insider” told the Guardian of London, it could become “a huge intellectual property issue.”

David No. 1
Professor Shaunak of the Imperial College and his associate Steve Brocchini of the London School of Pharmacy formed a company called PolyTherics, which they describe as dedicated “to using biomedical polymers to optimise [the British spelling]…biopharmaceuticals for the treatment and cure of the world’s most important diseases.”  People in academic medicine have a choice, Shaunak told an Imperial College journal. “They can use their ideas and creativity to make large sums of money for small numbers of people, or they can look outward to the global community and make affordable treatments for common diseases.” It’s the latter path that he and his associates have chosen. 
The key to their drug development strategy is pegylation. This is a technique for enhancing medications, and it was used to formulate Pegasys, a Roche product for hepatitis. The active ingredient is alpha-2 interferon, to which the polyethylene glycol (PEG) polymer has been linked to make it sufficiently stable to be clinically useful. But because pegylation  is a costly process, Pegasys is expensive, too expensive to make it widely affordable in countries of prevailing poverty, precisely where hepatitis is most pervasive.

What PolyTherics has done is to develop what Shaunak terms “second-generation pegylation,” which he describes as “an innovative, patent-protected approach” that he says is more efficient and therefore less expensive than that used to produce Pegasys. 

Also different is the PolyTherics marketing strategy.

 There are some 200 million people worldwide infected with hepatitis C, but Shaunak estimates that only one out of seven can afford the available treatment. “We have provided something cheaper and better that we can make available on the market within three years,” he says. His group is motivated, according to the School of Pharmacy of the University of London where Brocchini is on the faculty, not on their own behalf or that of their employers, but rather “by the global need for affordable medicines…In the process they have been applauded as a ‘shining example’ of how university-based scientists have a real impact on global health.”

The promise of what Shaunak calls “the ethical pharmaceutical model” led the Wellcome Trust and the British Department for Trade and Industry to help fund it. Those with long memories may recall that before the days of direct-to-consumer advertising, the US pharmaceutical industry used to refer to its products as “ethical drugs” to distinguish them from those less estimable medications that were promoted to the public. Thus, the wheel turns.  

When it comes to the “R” of R&D what Shaunak and Brocchini have done is therefore not so different from what goes on in the labs of traditional pharma companies. But when it comes to the “D,” they chose to go their own way. Though they did take out a patent on their process, which they assigned to the university, it was only to “ensure that somebody can’t steal it from us” and use it to make money.

They have, not surprisingly, been accused of busting the pegylation patent. Not so they say, describing themselves in an article in Chemistry World as “clever and inventive people” who have developed a better drug that they intend strictly for patients who currently can afford no treatment whatever. “So, in many ways,” Shaunak insists, “our approach is complementary and not competitive to the big pharmaceutical approaches.” He also stresses that, unlike the AIDS situation, where generic companies have been making cheaper copies of patented drugs, sometimes without a license, the PolyTherics model calls for the development of new, patentable entities that conflict with no existing patents.  

Brocchini makes the same point. “We are following a model of innovation that addresses some of the issues we all recognize must be solved to make medicines more affordable, especially for neglected diseases in resource-limited regions of the world.”  But then he adds, “We are very keen to keep this new innovation in the UK,” and that could have interesting implications if Britain’s chronically underfunded National Health Service were to see a way to save some money. As an article in Ottawa Citizen points out, what it calls PolyTherics’ “aggressive challenge to the intellectual property rights of major companies” carries a risk. They “don’t violate the letter of patent law” in the paper’s opinion, but “once licensed, these drugs could compete with their more expensive cousins even in rich countries. That could spook the pharmaceutical industry, and it’s seldom desirable to spook a big industry.”

Professor Shaunak, however,  sounds confident that his strategy will prevail. As he told the Guardian: “The pharmaceutical industry has convinced us that we have to spend billions of pounds to invent each drug. We have spent a few million.” But, he acknowledges, “Yes, it will be a threat to the monopoly that there is.”

Asked to comment, a Roche spokesperson had this to say: “This compound is many years away from being launched and therefore we will not speculate on the availability of the medicine. As this is a new molecule, Dr. Shaunak and  his team will need to go through the same registration process as the large pharmaceutical manufacturers do. There are many steps that need to happen in order for new medications to be registered and launched.”  

Meanwhile PolyTherics is focusing not on legal matters but on going through the steps Roche describes to register their drug in India. With the government paying for the required clinical studies, PolyTherics has arranged with Shantha Biotechnics in Hyderabad to market its medication at affordable prices. The promise of this collaborative effort has prompted the British high commissioner for India (in effect Britain’s ambassador) to comment “This approach to making cost-effective medicines is a shining example of how exciting innovations in our best universities can be rapidly turned into new and useful global healthcare products.”

David Number 2
The model PolyTherics has pioneered in Britain is closely matched by Institute for OneWorld Health in the US. In fact it is a step ahead: It already has a India’s product approval.
Last September, Victoria Hale, PhD, the company’s founder and CEO, issued a message to her staff  that began exultantly: “We did it! The government of India approved our first drug, Paromomycin IM Injection, to cure Visceral Leishmaniasis (VL).”

It was the first of Hale’s two personal triumphs that fall. Later that month she was named  a MacArthur Fellow, but her achievements did not come easily. After earning her doctorate in pharmaceutical chemistry from the University of California, San Francisco,  she went to work as a senior reviewer for the Food & Drug Administration, then switched to Genentech in 1995. There she put her FDA experience with licensing to such good use that management was stunned when only three years later she submitted her resignation. With her future assured, why would she quit? “There were a few numbers I couldn’t get out of my head,” is her explanation.

There were actually two sets of numbers. First there were the high death rates in Asia, Africa and Latin America from diseases that lacked accessible treatment. Leishmaniasis, for instance, was killing some 60,000 people every year, second only to the death rate from malaria. Second were the reports that only 21 out of 1,500 new drugs developed in the decade ending 2004 could be used to treat diseases endemic in the poorest nations of the world. Companies such as Genentech, she realized, are not in a position to address this problem. Their corporate responsibility is to their stockholders, so they have little opportunity to spend the huge sums it takes to develop products that the potential beneficiaries can’t afford to buy. 

That lopsided imbalance is what persuaded Hale to quit the for-profit world and start searching for a way to provide effective and affordable medicines for people suffering from neglected diseases in the developing world. 

Staking her family’s savings on the pursuit of her visionary mission, Hale attended international conferences and met with epidemiologists and tropical disease experts searching for the right match between need and opportunity. It became obvious to her that tackling malaria would take more money than she could ever hope to raise; that sleeping sickness had been “adopted” by the French humanitarian organization, Doctors Without Borders. By that time her money had run out, so she and her husband—Avieh Herskowitz, MD, now her partner and chief medical officer of OWH—took out a loan for an additional $315,000.

Then serendipity took a hand. At a tropical disease conference in Antwerp, Hale  heard a presentation by Shyam Sundar, an Indian physician, who explained that thousands of people in India, Bangladesh and Nepal were dying of leishmaniasis (also called black fever and kala azar), even though an effective medication—paromomycin—was sitting on the shelf. He called it nothing less than a crime.

Paromomycin, an antibiotic originally developed by an Italian company, was eventually abandoned by a later owner for lack of sufficient sales. Meanwhile, however, initial clinical studies had shown remarkable efficacy against black fever. When no commercial company could see a way to sell it profitably, it was eventually turned over to the World Health Organization which, having placed its hopes on another agent, stopped any further work on paromomycin.
Made aware of this tantalizing tale, Hale met with Sundar, and in 2000 he invited her to visit him in India. He showed her the patients dying of VL, the ubiquitous cow dung where the parasite-carrying sand flies did their breeding, and the equally ubiquitous poverty. He took her to the hospital in Patna, state capital of Bihar, and to his free clinic in Muzaffarpur, where he had devoted more than 20 years to his struggle to treat the disease. The only drugs at his disposal, however, were either too expensive for his patients or had toxic side effects. Knowing that all this time a single injection of paromomycin could not only cure the infection but also stimulate an immune response that confers lifetime protection almost drove Sundar mad. But as he also explained to his audience in Belgium, he could not find a company willing to undertake the expensive clinical testing needed to obtain marketing approval. The ROI was bound to be negative.

That was the holy grail Hale had been looking for. Given the additional advantage  that paromomycin was off patent, she went to Geneva to get the product data in WHO’s files, but for reasons that are clouded in controversy, it took her two years to get access. (She was, however, used to bureaucratic stonewalling. It had taken her four tries to get the IRS to believe that a pharmaceutical company really and truly could be willing not to make a profit, and therefore was reluctant to grant OWH tax exempt status.)

With the data finally in hand, what Hale had to look for next was the money to complete the clinical studies needed for approval by the Drug-Controller General, the Indian counterpart of the FDA. Recruiting the patients, doing a year’s worth of monitoring, shipping blood samples to California—that added up to an annual expenditure of some $30 million and no second mortgage could cover that, so she sent her business plan to potential donors and foundations and a copy wound up on the desk of Bill Gates. According to a report that makes it sound too easy, “he sent her a check for $4.7 million,” which turned out to be the first installment on an eventual $101 million in Gates Foundation grants.

Meanwhile Hale had found an Indian manufacturer, Gland Pharma, that agreed to manufacture and market the drug and sell it at its own cost of $10 per treatment. Now with the support of the Indian government, Hale is working to bring the product to Bangladesh and Nepal. Later she hopes also to have it made available in Brazil and Africa— other leishmaniasis hotspots. The last time a disease was eradicated was smallpox back in the 1970s. Now, thanks to Hale’s efforts, there is a good chance that black fever may be next.

But even that does not end her ambitious agenda. As she said when she won approval of paromomycin, “This proves that it is possible to develop new medicines using an entrepreneurial, nonprofit model,” so she is now searching for a better way to treat childhood diarrhea, a killer of some two million children under five in the developing world each year—more than die from TB, malaria and AIDS combined. Once again the Bill and  Melinda Gates Foundation has stepped up to the plate with a $46 million grant to help OWH develop a medication that can be mixed with the rehydration fluids routinely used to treat childhood diarrhea. Such a combination, it is hoped, would not only control the immediate symptoms but also to help to clear the underlying infection. And, of course, be cheap.   

Given the conventional approach to drug development, that might be considered a quixotic enterprise—except that Hale has shown that it can be done. As she said when paromomycin was approved, having “proved to ourselves—and to the world—that we can do it…we are ready to do it again.” 

SIDEBAR: Calling all billionaires

The fight against untreated diseases has to be fought on many fronts, and guerrilla tactics like those of Drs. Shaunak and Hale cannot do it all. The efforts of Big Pharma are also needed, and Merck’s willingness to distribute Mectizan free of charge to treat river blindness in Africa is only one such example. 

Among other nonprofit efforts meanwhile, the Gates Foundation (where are the other billionaires?) is helping to fund the Global Alliance for Vaccines and Immunization (GAVI). Since vaccine development for tropical diseases is often hampered by uncertainty as to whether there will be a market to recoup the investment, GAVI’s strategy is to create what it calls “advanced market commitments,” asking rich countries to put up money that poor countries can use to buy vaccines once they are developed. Launched in early 2007, the alliance has so far raised $1.5 billion from Canada, Italy, Norway, Russia and UK. Its initial goal is to immunize children against resistant strains of pneumonia. Success, it is estimated, could save the lives of 5.4 million children by 2030.

And sometimes it takes a partnership between for-profit and nonprofit enterprises. To meet treatment needs until a vaccine becomes available, the nonprofit TB Alliance is working with Materia Medica in Beijing to develop drugs effective against the growing threat of resistant infections. Then, just this March, Sanofi-Aventis announced that it will make ASAQ—its combination antimalarial— available to public health agencies on a nonprofit basis. The advantage of ASAQ is that it takes just three days at two pills per day (one in children) to be effective, and that the combination is expected to minimize the development of drug resistance. In addition, working together with Drugs for Neglected Diseases, a drug development offshoot of Doctors Without Borders, the company will let generic competitors copy it without paying a royalty.
Explained a Sanofi spokesperson: “We are not nasty people working against poor countries and seeking only profits.” And that seems to sum up all these various efforts.