Independent adjudication committee solves business confidence concerns and effectively reviews the innovation

Michael Kremer and Rachel Glennerster, 2004, “Strong Medicine: Creating Incentives for Pharmaceutical Research on Neglected Diseases,” Princeton, https://www.jstor.org/stable/j.ctt1dr365r

An independent adjudication committee (IAC) would need to judge whether the eligibility conditions had been satisfied. The committee should (a) have some discretion to waive technical requirements other than regulatory approval; (b) monitor purchased products to ensure continuing safety and efficacy; and (c) have the power to discontinue purchase of a vaccine if it turned out to be less safe or efficacious than originally anticipated. The committee would also adjudicate whether second-generation vaccines are superior to the initial vaccine (see chapter 10). Having a committee, independent from the funder of the commitment and from other political pressures, that potential developers can trust, is key to providing the credibility needed to reassure potential investors that the commitment will not be reneged upon (see chapter 10). To guard against rejecting useful vaccines, the IAC would have the discretion to waive technical requirements for vaccines that seemed desirable but did not meet all the technical standards. On the other hand, the adjudication committee should not have authority to impose new conditions for acceptability. Otherwise, the committee could abuse its discretion by raising standards after pharmaceutical companies have sunk investments in R&D. If post-license clinical trials are needed to ensure that purchased vaccines remain safe and efficacious, the vaccine commitment contract should specify the committee’s monitoring powers and responsibilities. An adjudication committee should be structured in a way that insulates it from political pressure and gives developers confidence that the rules would be interpreted fairly. Methods would have to be devised to assure pharmaceutical executives that adjudicators would not abuse their discretion to lower the returns on research after the fact. Once a vaccine developer had sunk hundreds of millions of dollars into R&D, adjudicators might be tempted to offer a price for the vaccine that covered only manufacturing costs or to insist on excessive product testing and improvements. This is an example of what we previously identified as a time-consistency problem. The credibility of a vaccine commitment would be enhanced by appointing decision-makers trusted by vaccine developers and insulating them from political pressures through long-term appointments. It would also make sense to write the rules used for eligibility and pricing so as to put limits on the committee’s discretion.