Donor investment choices in developing countries: a methodology and some illustrative results based on Public-Private partnerships for product development (PD PPPs)

Abstract

Background: Public-Private Partnerships for product development (PD PPPs) have been developed as a major initiative to increase the number of innovative interventions for diseases mainly affecting populations in developing countries. Their development and funding have been supported by a number of donors, who are also interested in evaluating the cost-effectiveness of PD PPs in comparison with other uses of donor expenditure such as increased support for existing programmes. Methods: Evaluating the cost-effectiveness of PD PPPs raises a number of methodological and empirical problems. First, the costs and likely product outcomes of the PD PPP process must be simulated by drug or vaccine and by disease area. Second, an efficiency frontier of existing therapies must be constructed, to estimate the potential yield of shifting that frontier via PD PPP investment versus moving up the existing frontier. Third, the cost-effectiveness of PD PPP investment depends in part on the likely demand for products of the PD PPP process, based on the expected quality of PD PPP products, willingness to pay for health gain, budget constraints and disease burden. Ideally a cost-effectiveness frontier can be constructed empirically by collecting evidence on the total costs and effects of a full set of existing interventions, and we demonstrate this for one restrictive budget scenario. However, for two other scenarios we consider, such information is not readily available, and we have to use a simplifying assumption.We show that it is possible to make a simplifying assumption about the cost-effectiveness of the intervention(s) that will be displaced from other disease budgets to fund the new technology - that is, the "opportunity cost" of funding the new technology. The assumption we adopt is that the cost per DALY averted of the healthcare programmes being displaced will on average have a slope equivalent to a straight line at the midpoint between the cost-effectiveness of the new technology and the maximum willingness to pay for health gain: the maximum willingness to pay will signal the cost-effectiveness of the last acceptable intervention within the budget constraint if resources were all allocated using cost-effectiveness criteria. Results: Using our model we estimate the cost per DALY averted for a range of HIV, TB and Malaria drugs and vaccines in the PD PPP programme. In gneeral these compare favourably with existing interventions but some are subject to significant uncertainty, particularly relating to the underlying R&D; process for vaccines compared to drugs. Conclusions: This study offers a framework to assess the cost-effectiveness of providing additional resources to tackle major health problems in developing countries, using the example of investment in R&D; via PD PPP mechanisms compared with investment in existing interventions. The results suggest that trying to shift the cost-effectiveness frontier may be a cost-effective use of resources. The methods used to reach this results should be generalisable to other interventions