This month, the Institute for One World Health (iOWH)–a non-profit pharmaceutical company based in San Francisco–announced that it had received FDA clearance to begin phase 1 trials on a novel cholera therapy. This announcement was in line with the organization’s mission of developing affordable drugs to combat disease in the developing world, but it is important to note that bringing this drug to market is still a long way off.
Developing drugs is an expensive and time-consuming process. If this sounds familiar, that’s because pharmaceutical companies always go out of their way to remind you of this fact. FDA phase 1 trials are the first of many steps to get a drug approved, wherein healthy patients receive different doses of the drug in question in order to identify the levels at which toxicity occurs. Next comes small trials (phase 2) followed by large-scale trials (phase 3). At this point, if a drug is shown to be safe and effective, it is approved, on the condition of post-marketing surveillance (phase 4). This whole process takes years and there is no guarantee that a drug will be approved or, once approved, be financially successful.
The cost of drug development is passed on to consumers, or at least insurance companies (who then pass it on to consumers by increasing monthly premiums). A non-profit drug company aims to reduce this mark-up by cutting out a big chunk of the price of drugs- namely, the profit (as the name would imply). The problem arises when non-profits require capital to develop and test their next drug. The iOWH has gotten around this by receiving funding from the Gates Foundation.
The question remains how sustainable and expandable such a model is. Can iOWH rely on philanthropists to cover its substantial R&D costs (and eventual legal liabilities)? Can other non-profits enter the industry and find success? Without profits from successful medications to offset the costs of failed drugs (or those that work in areas of the world where people cannot afford to pay much for them) iOWH and similar organization must find ways to ensure they have capital on hand to continue their mission.