Most disasters of similar severity can't be averted but with proper preparation, loss of life can be minimized. With enough life boats, the Titanic would be just another sunken ship. With a proper levee, Katrina would have been just another big storm.
Since last weekend, news coverage has been consumed by an earthquake of unprecedented magnitude and an ensuing tsunami, followed by multiple breakdowns in nuclear electrical generation plants.
The earthquake and tsunami are estimated to have taken close to 10,000 lives, but it is the breakdown of the nuclear plants that has captured most of the attention. Though most natural disasters have the half-life of one news cycle, the Fukushima disaster could be with us for as long as the half-life of an encapsulated reactor.
As people who have spent time in Japan, studied Asian society and been trained in defense against radiation events, we believe that it is reasonable that the Japanese government is carefully managing the release of information about this event. In a society that is used to conformity and cooperation, a breakdown in social predictability could cause widespread panic.
By the same token, the Japanese government and Japanese engineering are not to blame for what is happening. The sequence of events was unforeseeable and engineering for an earthquake of unprecedented size was unimaginable. But as a consequence of the disaster, a peacetime radiation tragedy is a strong possibility and there is no approved medicine to meet the threat of widespread radiation sickness.
The United States is not immune from a similar nuclear power plant accident. We have slightly more than 100 nuclear reactors generating electricity in the U.S., some of which are near known geological faults.
Several radioactive countermeasures are now in development, but none has been approved for use in a nuclear disaster. Once approved, a radiation countermeasure could be stockpiled for use in the event of a Fukushima-like emergency or a terrorist attack to treat military personnel and civilians exposed to high doses of radiation.
And even though these medicines have a secondary use, to increase the amount of radiation that can be given to cancer patients, they don't have the billion-dollar revenue potential that attracts investors and research agreements with large pharmaceutical companies.
In 2004 the Biomedical Advanced Research and Development Authority (BARDA) was created by Congress with a $5.5 billion budget to purchase medical countermeasures from companies to meet natural disasters like pandemic flu and man-made disasters like radiological contamination.
Though BARDA has the funds to purchase biothreat countermeasures, the number of companies that can actually supply them is limited and even then, those available products are in early clinical development.
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.