A highly effective strategy is all but ignored by many companies and investors. Why, and what can be done to boost funding?
By Dan Zimmerman, Ken S. Rosenthal, and Eyal Talor

They've eradicated smallpox, and all but eradicated polio. Their successes in lowering the disease burden of any number of other diseases are well known. Vaccines have joined an elite group of public health and medical approaches such as penicillin, pasteurization, and insecticides that have virtually eliminated diseases such as syphilis, bovine tuberculosis, and malaria from many regions of the world.

Because they're administered a few times at most, they're also more cost-effective than many drugs that treat the same conditions. In recent years, economists such as David Bloom have argued convincingly that the cost savings are even more impressive because they go beyond the costs of medical care, and should include income lost to illness and its sequelae (see Why vaccines are a good investment). It's therefore more than a bit puzzling why vaccines are either not seriously considered or completely ignored as marketable products by most pharmaceutical and biotech companies, and by most persons or groups who could invest in them.

Simply stated, the reason is limited profit and large risk. At best, vaccines bring in $6 billion worth of revenues, about 1.5% of the current total annual pharmaceutical market worldwide. The market is splintered among more than a dozen pediatric vaccines and another dozen or so for travelers, other at-risk individuals, and the military. As a result, the market for any given vaccine is substantially below the $500 million per year threshold that a pharmaceutical company considers as a viable product to develop.

While companies may start to see an expanded return on R&D investments for certain products due to the over-the-counter market, that is not currently possible for vaccines due to requirements for parental administration (except for some oral and nasal) and the requirement for a "cold-chain" of most vaccines due to stability issues. Thus, the current average cost of bringing a vaccine to market is larger than can be borne by the market for most of the current vaccines. Although there are some vaccines which have the potential for a greater than $1 billion dollar market (e.g., hepatitis B virus, human papilloma virus), the total vaccine market is so limited that the required return on investment for commercial pharmaceutical and biotech companies does not justify investment in vaccine development.

All this means that a dire need exists for more vaccines and vaccine development programs, but stimulating research and development of highly effective vaccines is no small task. Still, we believe great progress could be made by addressing three major areas of research funding. First, we need to reassess the way in which the US government funds vaccine research. Second, we need to provide public-private partnerships with more incentives to collaborate with industry. Finally, we need to work out ways of funding vaccine research through healthcare costs. In this article we aim to outline the barriers in funding that are stifling vaccine research and development, and we will propose solutions to these issues.

The National Institutes of Health, currently the largest supporter of vaccine research in the world, funds projects through several intra- and extramural grants and programs, as well as through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer Research (STTR) programs. The NIH also funds large contract research on specific vaccines for clinical trials (e.g., the herpes simplex virus type 2 vaccine trial), and for bioterrorism agents through special programs and the Bioshield Program.

While the range of funding opportunities is impressive, an investigation of the number and type of vaccine research projects that have been funded over the last six years provides a more sobering view. We mined CRISP, a searchable database of all the projects and programs that NIH has approved and funded, to identify all research containing the keyword "vaccine" in the period FY 2000-2005. We found that about three percent of the extramural programs (3.34% research and 2.99% for SBIR/STTR), and eight percent of the intramural programs, identified vaccine as a keyword. Compare this with the much higher number of research projects that have drug or pharmaceutical as a keyword: 16.95% hits were obtained for extramural research grants, 18.5% for the intramural programs, and 27.1% for SBIR/STTR grants (Figure 1).

Another issue is whether the right vaccine research projects are receiving the correct priority. Searching the CRISP database for the type of program that was funded in the last six years shows that the diseases selected for funding do not appear to follow the recommendations outlined in the National Academy of Science's Institutes of Medicine (IOM) report on "Vaccines for the 21st Century; A Tool for Decision Making" (Table 1). For instance, three of the seven vaccines the IOM report states as being "highest priority" are for autoimmune conditions. Yet only seven (1.55%) autoimmune-focused SBIR/STTR vaccine programs were funded from a total of 451 SBIR/STTR vaccine grants in the last six-year period (see appendix and Figure 2).

Although this analysis provides a good overview of NIH funding, we should note that the approach has some limitations. First, the analysis is dependent on the keywords that the principal investigator chooses, and the search terms we used in the analysis may not match the key words used for the CRISP database. The analysis may also understate the number of vaccine research programs, as it has datasets only on funded programs and does not include the proposed but nonfunded programs. In addition, it appears that the CRISP database does not include vaccine development research (e.g., smallpox and anthrax) that Project Bioshield funded.

Despite these shortcomings, the clear take-home message is that the NIH needs to substantially increase its efforts on vaccine programs. It is also clear that vaccine grants for conditions that the IOM has deemed to be high-priority are both under-represented and under-funded by the NIH extramural granting programs and even less represented in the SBIR/STTR programs.

The funding issue doesn't end there. The review process for projects is in general oriented toward basic science categorized by tissue, organ, system, microbe, or clinical disease, rather than more advanced development areas such as vaccine-oriented research or indeed vaccines in general. This issue is compounded by the fact that organ- or disease-based study sections often review vaccine applications - vaccine/immunology study sections represent only about three percent of the total vaccine-based grant applications. As a consequence, review sections most likely have a minor representation of immunology or vaccine specialists, and the interests and the expertise of these reviewers is weighted towards basic research, with few trained in analysis of vaccine research and development. Awareness of the problems with review of vaccine grants likely also causes potential grantees to shy away from "vaccines" and focus their proposals on basic research.

To address this issue, we propose that the NIH establish special panels that have the requisite expertise, as well as broad representation from industry, academia, and public health. There should also be a focus on therapeutic vaccines, such as those that target autoimmune diseases, transplantation antigens, Alzheimer dementia, obesity, hypertension, cancer, smoking cessation, and chronic infections such as HIV. Currently, the review process for vaccines for these diseases is spread over perhaps 10-20 different CSR study sections involving council review by a dozen institutes or centers and is handled by more than eight institutes of NIH. (The National Institute of Allergy and Infectious Diseases and the National Institute on Aging also fund some vaccine research, such as for autoimmune conditions.) This concept of centralized and specialized review is not without precedent; it can be modeled around the special ad hoc panels for various HIV vaccine programs such as HIVRAD and CHAVI that the NIAID established.

Foundations are becoming an increasingly important source of funding for vaccine research. The Bill and Melinda Gates Foundation, for example, primarily funds vaccines for infectious diseases in developing countries, in particular those that lack incentives for corporate investment. However, the Gates and other foundations restrict their funding to academic and nonprofit institutions. As a result, these foundations must funnel their funding through another foundation or institute that does not have such restrictions, such as the International AIDS Vaccine Initiative or the Global Alliance for Vaccines and Immunization, in order to enlist the critical resources of a for-profit company.

Redistributing the funds in this manner is necessary to take advantage of the crucial expertise that only for-profit companies have developed, particularly in advanced stages of development, such as Good Laboratory Practices, Good Clinical Practices, and product scale-up for general distribution. Unfortunately, this obscures opportunities, results in delays, creates an additional layer of bureaucracy, and adds to the cost and nonproductive time of a project.

Funding by nonprofit foundations would benefit from changes in the US tax laws and policies that allow and encourage these foundations to support vaccine development outside the realm of nonprofit organizations and academia. This could be done by limiting the profit from these awards by the for-profit organizations, and by allowing the nonprofit agencies to impose caps on salaries and other items, similar to NIH grants for businesses.

Because preventive vaccines are a public health priority and therefore the responsibility of the government, another way to boost funding for vaccine research could be based around the creation and funding of a government-backed Vaccine Research and Development Fund (VRADF). This VRADF would work in a similar manner to government-mandated industry contributions, such as the Federal Deposit Insurance Commissions for banks or the Pension Benefit Guaranty Corporation, but in this case funds would come from the healthcare industry and insurance providers.

The NIH foundation, which was set up to fund solutions to healthcare problems, could serve as a model, or the umbrella agency to administer these funds. The VRADF could be created initially with the use of a surcharge from the fastest growing segments of the therapeutic markets (prescription and OTC drugs), and healthcare and insurance providers, since it benefits all. Another approach would be to mandate the NIH to devote a percentage of its funding towards vaccine R&D, with a specific vaccine set aside. This approach would decrease the need for a large amount of new appropriations and use an established system for administration, with a group that has shown innovation in implementation by the various NIAID programs and the CSR new pilot R01 program.

The potential social and commercial benefits of such a successful vaccine funding-enhancement program are too great to ignore. For the general population, a successful program would result in decreased morbidity and mortality, fewer lost workdays, and lower overall healthcare costs. For the pharmaceutical and biopharmaceutical industry, it would alleviate the financial disincentives concerning the limited or zero return on investment that is part and parcel of the current policy for vaccine development programs. This may also stem the erosion in the number of vaccine developers and manufacturers, and the marked decline in the ability to supply much-needed vaccines globally.

Dan Zimmerman is senior vice president of R&D, cellular immunology at Cel-Sci Corporation in Baltimore. Ken Rosenthal is professor of microbiology, immunology, and biochemistry at Northeastern Ohio Universities College of Medicine. Eyal Talor is senior vice president of research and manufacturing at Cel-Sci.