This is where government can and must be involved, to foster development of countermeasures to natural and man-made disasters, to prevent disabling disease and potentially avert the threat of death. Developing new medicines can take decades and cost hundreds of millions of dollars. But there is no coherent funding system for medicines to meet the kinds of disaster that BARDA is compelled to prepare for.
One remedy to the challenges BARDA faces in meeting its Congressional mandate is to enable what we call the Drug Development Incentive Fund (DDIF).
In last quarter's journal of Biosecurity and Bioterrorism: Biodefense Strategy, Practice and Science, we formally proposed the formation of the DDIF as a not-for-profit corporation funded by the government to foster development of new medical technology in the national interest. The DDIF would provide seed money to get promising technologies off the ground and prove their potential.
There is precedent for an entity similar to the DDIF. In-Q-Tel, a government-funded corporation, was funded by Congress in 1999 to advance communication and information technology beneficial to national security that government agencies needed, but that were not being developed at the time by private corporations. Among many other technologies, we owe advanced encryption technologies used every day in e-commerce to early investments made by In-Q-Tel.
The ability to take ownership and leadership positions in a company would be a significant distinguishing characteristic of the DDIF that government agencies lack.
While the National Institutes of Health can invest in early-stage technologies through grants, and government authorities such as BARDA can provide financial support for more developed technologies through contracts, there is no government entity that can provide early-stage development companies with both a funding source and strategic guidance as an investor.
The DDIF would make modest investments in promising technologies with the prospect that government investment would reduce risk of success and encourage private investors to invest much more in the company.
Like other investors, the DDIF would receive stock and warrants or hold debt in the companies in which it invested. If those companies are successful, the DDIF would share in their success. In this way, with even modest success, the DDIF could become a self-sustaining, not-for-profit corporation.
Creation of the DDIF would result in significant dividends. In a single act, such an organization would provide for the advancement of strategic science of national importance, invest in projects that yield significant public health returns, advance the promises of preclinical and early phase research, revitalize biopharmaceutical investment, and create valuable innovation-economy jobs.
Though a fund like the DDIF could not prevent natural or man-made disasters from ever occurring, it could provide the U.S. with the necessary countermeasures to minimize human tragedy resulting from such disasters.
Steve Brozak is president of WBB Securities, an independent broker-dealer and investment bank specializing in biotechnology, medical devices and pharmaceutical research. Henry Bassman is a Managing Director at WBB Securities.