Finding a Cure: Incentivizing Partnerships between Disease Advocacy Groups and Academic Commercial Researchers

I. INTRODUCTION II. PARTNERSHIPS BETWEEN DISEASE ADVOCACY GROUPS AND ACADEMIC AND COMMERCIAL RESEARCHERS: THE RISE OF VENTURE PHILANTHROPY A. Disease Advocacy Group Funding for "De Novo " and "Repurposed" Drug Research B. The Shift from the Charitable Granting to Venture Philanthropy C. Benefits of the New Model: Removing Risk and Closing Funding Gaps III. LEGAL AND SOCIAL ISSUES SURROUNDING THE VENTURE PHILANTHROPY MODEL A. Structuring the Partnership B. Legal Issue: Seat on the Board of Directors C. Social Issue: Should Nonprofits be Making such Risky Investments? D. Despite these Concerns, Venture Philanthropy has Proven Its Value in Advancing Disease Research IV. INCENTIVIZING PUBLIC-PRIVATE PARTNERSHIPS FOR DISEASE RESEARCH A. Patent Law 3. A Proposal for Broader Experimental Use and Safe Harbor Exceptions for Orphan Drug Development B. Priority Review Vouchers V. WHEN A NEW DRUG IS DISCOVERED, SHOULD DISEASE ADVOCACY GROUPS CONTROL PRICING AND ACCESS? A. Orphan Drugs can be Expensive and May Not be Accessible to Everyone Affected by the Disease B. Public-private Partnership Contracts for Tiered Pricing Systems are a Good Mechanism to Control Orphan Drug Prices VI. Conclusion I. INTRODUCTION "The unique and mutually beneficial partnership that led to the approval of Kalydeco serves as a great model for what companies and patient groups can achieve if they collaborate on drug development." (1) In January 2012, the FDA approved a new breakthrough drug for cystic fibrosis: Kalydeco (ivacaftor), the first available drug that treats the cause and not just the symptoms of cystic fibrosis. (2) Cystic fibrosis is the most common fatal genetic disease among Caucasians, affecting approximately 30,000 people in the United States. (3) The average life expectancy for people with the disease is thirty-eight years. (4) While the gene that causes cystic fibrosis was discovered in 1989, (5) it has taken over two decades and a unique collaboration to find a cure. (6) The collaboration that gave rise to this drug discovery involved a partnership between a for-profit bioscience company, Vertex Pharmaceuticals, and a national nonprofit organization, the Cystic Fibrosis Foundation. (7) The impetus for this collaboration was simple: "the disease is prevalent enough to cause widespread pain, but too small for profit-minded bioscience companies to risk massive resources in pursuit of a cure." (8) Thus, the Foundation invested over $45 million into Vertex in 2000 for research and development of a drug for the disease. (9) This was "the largest grant of its kind by a nonprofit disease group." (10) By 2012, the Foundation had awarded Vertex over $75 million in funding (11) and has invested $260 million in drug development since the mid-1990s. (12) When the Cystic Fibrosis Foundation made its initial investment, such "venture philanthropy" was uncommon. (13) As the chief executive, Robert Beall, told one reporter, it was "the biggest gamble I ever made." (14) Today, however, such partnerships are becoming more common. (15) In 2008, U.S. disease foundations invested approximately $90 million into for-profit companies for drug development. (16) This was thirteen times more than was invested in 2000. (17) The objective of this Article is to examine the benefits and challenges of these novel partnerships and suggest ways that changes in the laws or regulations can promote these partnerships without undue harm to the goal of advancing research for cures for patients. To achieve this objective, Part I describes how partnerships between disease advocacy groups and for-profit companies have evolved and the benefits of the new venture philanthropy business model. Part II examines the legal and social issues of the venture philanthropy model. Part III then proposes various changes to laws and regulations that could help incentivize these partnerships. …