1. Finding Cures for Tropical Diseases: Putting Innovation Economics to Work Stephen M. Maurer Goldman School of Public Policy Nov. 21, 2006 Economics of Innovation: Econ 124/PP190-4/PP290-4

2. Theory and Practice Teaching vs. Using

3. The Problem 500 Million People The Patent System Hasn’t Worked Selling HIV Drugs to Africa

4. The Opportunity Bill Gates’ Troubles Virtual Pharma AdvancedMarkets Price is Everything!

5. Basic Concepts Agency Problems – Researchers Agency Problems – Sponsors Eliciting Information Efficient Pricing

6. The Mantra No Institution is Dominant Pick the Best Institution for The Problem Be Agnostic!

7. New Wrinkles Efficient Pricing Revisited “Distributional Issues” Multi-Part Innovation Pay-As-You-Go or End-to-End?

8. The Innovation Environment Basic Research Finding Targets Optimizing Targets Finding Lead Compounds Optimizing Lead Compounds Process Development Pre-Clinical Testing Phase I Tests Phase II Tests Phase III Tests Approval Manufacturing Phase IV Tests Marketing & Distribution

9. Choices Patent Reform Harmonization & Targeted Interventions Supplementing Patents AdvancedMarkets Replacing Patents Virtual Pharma

10. Harmonization Depends on Disease TB vs. Malaria vs. Sleeping Sickness Inadequate Reward For Research? For Entering Particular Countries? Parallel Imports

11. Targeted Grants Virtual Pharma Strategic Investing Crowding Out

12. AdvancedMarkets Matching Payments Independent Adjudication Committee Why Not a Prize? Hybrid Cases Politics The Patent Mystique Avoiding Choices Hidden Taxes

13. Is It Efficient? AdvancedMarkets

14. Picking the Best Institutions AdvancedMarkets

15. Getting the Best Price AdvancedMarkets

16. Getting the Best Price (Pt. 2) Estimating the Required Reward R&D Costs The Price of Guessing Wrong AdvancedMarkets

17. Getting the Best Price (Pt. 3) Estimating R&D Costs The Accounting Answer Drug Company Data Independent Estimates Market Arguments Is the Accounting Answer Right? AdvancedMarkets

18. Who Gets The Savings? AdvancedMarkets

19. The Agency Problem AdvancedMarkets

20. Why An IAC? AdvancedMarkets

21. Why An IAC? The Corruption Problem AdvancedMarkets

22. Virtual Pharma Choosing Institutions

23. Basic Research Finding Targets Optimizing Targets Finding Lead Compounds Optimizing Lead Compounds Process Development Pre-Clinical Testing Phase I Tests Phase II Tests Phase III Tests Approval Manufacturing Phase IV Tests Marketing & Distribution Virtual Pharma: Eliciting Information

24. Targeted Investment Prizes Grants Contract Research Targeted Tax Credits Government Equity Investments Open Source Harry Fox Licenses Virtual Pharma: Institutions for Eliciting Information

25. Basic Research Finding Targets Optimizing Targets Finding Lead Compounds Optimizing Lead Compounds Process Development Pre-Clinical Testing Phase I Tests Phase II Tests Phase III Tests Approval Manufacturing Phase IV Tests Marketing & Distribution Virtual Pharma: Agency Problems: Researchers

26. Targeted Investment Prizes Grants Contract Research Targeted Tax Credits Government Equity Investments Open Source Harry Fox Licenses Virtual Pharma: Institutions & Agency Problems

27. Virtual Pharma: Efficient Pricing Getting the Best Price The Patent Problem Open Source & Grants Enforcing The Best Price Buying Power & Repeat Games

28. Virtual Pharma: “Can Government Pick Winners?” Is Pharma Efficient? Shareholders Are Foundations Efficient? Some History Foundations as Shareholders?

29. Do Hybrids Make Sense? Strategic Investing Picking Winners Splitting the Reward Politics

30. Choices AdvancedMarkets vs. Virtual Pharma Uncertain R&D Costs Two Stage Competition Big Pharma’s Buying Power Cold-Blooded Foundations

31. Finding Cures for Tropical Diseases: Putting Innovation Economics to Work Stephen M. Maurer Goldman School of Public Policy Nov. 21, 2006 Economics of Innovation: Econ 124/PP190-4/PP290-4