Vaccines, Generics, and Open Source

From the NY Times this morning:

HONG KONG, Oct. 11  –  Roche, the maker of the main drug that would be used against a possible bird flu epidemic,
is under growing pressure to allow production of generic versions of
the medicine, with a senior Taiwanese official saying that his country
could begin manufacturing it in a couple months if it received
permission.

But the company and some outside experts
say production of the drug, Tamiflu, is so complex and time-consuming
that even generic makers could not quickly expand global supplies.

Those
putting pressure on Roche, a Swiss company, include the head of the
United Nations and health officials in some nations. They are asking
whether the health of hundreds of millions of people in a possible
pandemic should depend on the efficiency and productivity of a single
corporation.

When I was at my first venture capital firm, Euclid Partners, we had investments in several vaccine companies. We loved vaccines because they were preventative. It seemed to be a much more efficient way to provide health care.

But we didn’t make a lot of money on our vaccine companies and as we studied the market, we came to realize that vaccines are not particularly good products to own in the grand scheme of the pharmaceutical business. I won’t go into the reasons why because its been a long time and I’ll probably botch it and there is always the possibility that things have changed for the better.

But this article reminded me that vaccines are a critically important part of the overall health care picture and we need more vaccines, for more diseases, available in more places.

But how to get there?

Our drug discovery and development process is so expensive that any company undergoing the effort needs to be compensated with high prices and monopolies for a long period in order to get a return on investment.

Generics are great, but they are only available once the patent period expires and, if the article in the NY Times is to be believed, there are some compounds that are so complex to manufacture that its hard to do it in generic form.

It makes me wonder if the pharma/healthcare industry can take a page from the software industry’s playbook and do something like open source.  Why can’t we get the academics who make the initial discovery to "open source" their work and require anyone who improves the work to do the same.  Then when the final product is available, it will be generic from day one?

Maybe this exists already.  As I said, I don’t know very much about the healthcare industry.

But if it does exist, it seems that vaccines are a great place to put this approach to work.