Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases by Michael Kremer, Rachel Glennerster

The book “Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases” by Michael Kremer defines what it takes to encourage pharmaceutical research in neglected diseases. This book provides a detailed overview of the key influences and incentives that motivate research in these diseases. It begins with an examination of the current cost-sharing systems of drug development, with an analysis of the strengths and weaknesses of current arrangements. Kremer then provides an empirical analysis of what motivates research in neglected diseases, including exploring the incentives to engage in research and to make use of more expensive treatments and newer technologies. He also examines how competition within the industry influences research decisions.

Kremer concludes the book with a discussion of ten possible policy tools to improve access to treatments for neglected diseases. He summarizes several key threats to successful medical development: global disparities in access to care, externalities from drug development, and the difficulty of incentivizing companies to pursue research in this field. He also encourages society to “work together to take a truly global approach to addressing these challenges.”

Kremer develops the idea that pharmaceutical companies should be incentivized for their work on neglected diseases. He proposes risk-sharing arrangements that would provide financing assistance to drug companies if the drugs they develop are deemed too expensive to be commercially viable. Additionally, Kremer suggests the possible inclusion of a “lifeline clause”, which would guarantee access to promising treatments even if the cost of their design and development is too high. This would have the effect of increasing incentives to pursue research and development in neglected diseases, while simultaneously removing market failure caused by high drug prices.

Kremer also outlines several other policy tools that have the potential to increase incentives, such as targeted tax breaks, subsidies and direct grants. He also discusses new approaches to pricing and financial risk, as well as offering industry-wide challenge funds that could prime the pump for research and development, enabling companies to share a common financial risk.

Kremer’s book provides a powerful argument for government intervention. Incentives for research must reflect the reality that there is a limited market for treatments of neglected diseases. The structure of global healthcare systems is likely to remain unchanged for many years to come, with many countries struggling to pay for basic healthcare. Therefore, any policy instruments must take into account the realities of these financial constraints and seek to incentivize treatment development that is tailored to this context.

Overall, “Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases” provides a comprehensive overview of the challenges and potential solutions to increase investment in neglected diseases. The book argues that the key to creating incentives lies in the creation of cost sharing arrangements and the implementation of risk-sharing policies that encourage private companies to engage in research. By doing so, the book offers valuable insights into the challenges and potential solutions to increase access to treatments of neglected diseases.