If we were to rely simply on the free market, there would be little incentive for companies in the developed world to develop solutions to health care problems that predominantly affect the developing world, as we know they do not have the resources to afford many effective but costly treatments. There are numerous programs either in action or proposed that offer financial incentives for functional solutions, but many only offer an award once the solution has been proven effective. Examples of this include the Health Impact Fund which allows manufacturers to patent a drug but sell it at cost and in exchange receive a portion of at least $6 billion annually that is proportional to its global health impact compared to all registered drugs for the year. The problem with such solutions is that in order to gain a reward, the solution must be effective which means the manufacturer must bear all up front research and development costs. This has the effect of limiting the playing field to large pharmaceuticals or individuals with established grants. Ultimately this excludes individuals with novel ideas without a proven track record, which makes receiving grants difficult. One incentive scheme that avoids this problem is the Grand Challenges in Global Health program, funded by the Gates foundation.
The Grand Challenges program awards a large number of $100,000 grants to people who present unique and promising treatments, without any requirement of medical affiliation. Further, these grants need only the support of one member from the review panel, not a majority, thus increasing the likelihood more unique projects will gain funding. These awards, the most recent of which were awarded last week, have as a result promoted both cutting edge biological research, such as using gold particles to reduce drug resistance, and non-biologic research that still has the potential to improve the health of the developing world such as a light that scares off mosquitoes.
The importance of such an incentive program is that it encourages creativity and courage by eliminating the fear of failure and ultimately not being rewarded. There are potentially applications for such a structure in propositions like the HIF. For example, the HIF could award researchers in part for promising proposals and in part for realized success. One of the other problems with the HIF is that it requires companies to divert funds that could be used towards a blockbuster drug to a drug that would maximally make less money than a blockbuster. An incentive structure that awards in part up front would not require such a diversion, and still maintains the lure of a reward for actualized success. While a perfect incentive program remains elusive, we can look to the results so far of the Grand Challenges program for inspiration.