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FOLLOWING THE MONEY IN VENTURE PHILANTHROPY:
The public funds disease foundations // Disease foundations help fund for-profit companies // All with a buessinesslike focus on meeting goals

Venture Philanthropy: A New Driver for Research

By Lauren Arcuri Ware // Photographs by Andrew B. Myers // Summer 2013
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Andrew B. Myers for Proto

Nine-year-old Shan Rée of West Vancouver, British Columbia, was no stranger to hospitals. Since infancy, she had been admitted two or three times a year for the intravenous antibiotics and intensive breathing treatments that helped her fight the chronic lung infections of cystic fibrosis (CF), a progressive genetic disease that also disrupts the digestive system. In between hospital stays, she underwent a rigorous daily regimen of chest physical therapy and inhaled medications. She took digestive enzymes with everything she ate, plus daily oral antibiotics and pills for reflux and gastric emptying.

Then, three years ago, she joined a clinical trial of Kalydeco (ivacaftor), a drug developed by the biotechnology firm Vertex with funding from the Cystic Fibrosis Foundation. Now, she has been able to stay out of the hospital and no longer harbors bacteria in her lungs. She still takes digestive enzymes, but needs fewer, and her only medication other than Kalydeco is a multivitamin. She has more energy and breathes more easily, says her mother, Wendy Rée. Her latest result on a sweat test, the classic diagnostic tool for CF, was nearly normal. “Basically, her life is normal now,” says Wendy Rée.

Kalydeco helps only the 4% of people with CF who share Shan’s genetic mutation, known as G551D, but for those patients, it corrects the core defect in chloride transport that the mutation causes. And it has led to many similarly heartening stories, with debilitating symptoms dramatically improving or disappearing. Vertex, with continued financial help from the CF Foundation, is now pursuing drugs that could combine with Kalydeco to treat the most common mutation, Delta F508, which is carried by about 90% of people with CF, as well as treatments for other rare mutations.

The CF Foundation sold part of its share of royalties from Kalydeco sales to generate funds to reinvest in research and clinical trials for these new drugs and others. It’s part of a plan, put into place over a decade ago, that has provided $315 million to for-profit companies to fund research. By absorbing some financial risk inherent in early-stage drug development, the foundation can motivate for-profit companies to develop drugs that could treat CF, a disease that affects only 30,000 people in the United States—and that therefore offers relatively little profit potential for drugmakers.

This novel approach to kick-starting research has been dubbed venture philanthropy, or medical research philanthropy. Traditionally, the CF Foundation and other disease foundations, funded primarily through public donations, have supported academic research into their diseases. Funneling dollars to for-profit companies is a departure, but it’s one that increasing numbers of foundations are pursuing. The Michael J. Fox Foundation, the Multiple Myeloma Research Foundation, the National Multiple Sclerosis Society and many other patient advocacy groups are now funding medical research by pharmaceutical and biotechnology companies.

Many patients, researchers and physicians are thrilled by the results and future prospects of these partnerships. The nonprofits argue that without their funding, Kalydeco and other desperately needed treatments wouldn’t exist. But not everyone is pleased. Foundation investments may blur the line between philanthropy and profit, and concerned physicians, researchers and ethicists are asking whether the benefits of these partnerships outweigh the risks. What are the potential ethical implications, and how can clear boundaries be drawn?

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1. “Ivacaftor Treatment in Patients With Cystic Fibrosis and the G551D-CFTR Mutation,” by Isabelle Sermet-Gaudelus, European Respiratory Review, March 2013. A look at effects of Kalydeco on patients with the G551D mutation, including marked improvements in lung function. 


2. “The Most Important New Drug of 2012,” by Matthew Herper, forbes.com, December 27, 2012. Herper bestows this honor on Kalydeco, citing it as a genomics triumph and noting that its development was powered by a patient group. 


3. “Using Data to Treat Cancer and Drive Innovation,” by Linda Tischler, Fast Company, April 2013. Kathy Giusti, CEO of the Multiple Myeloma Research Foundation, talks about her foundation’s initiative: creating a large, collaborative study that will collect and analyze multiple myeloma genomics data and that mandates open sharing of data among academic medical center and community center participants.

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