Piera Morlacchi
A New Solution Suggesting the
Need for a New Equation
Innovations Case Discussion:
The Institute for OneWorld Health
When Victoria Hale first came up with the notion of starting the Institute for
OneWorld Health (iOWH), some cautioned that the idea of a non-profit pharma-
ceutical company developing drugs to treat neglected diseases was a proven loser1.
The more direct among them might also have inquired why a successful scientist,
trained in being analytic, consistent and logical, would undertake such an evident-
ly hopeless project. Yet a few years later, iOWH has not only achieved its first drug
approval (i.e. Paramomycin for the treatment of leishmaniasis or ‘black fever’,
approved for use in India), it has also seen that same drug included in WHO’s
Essential Medicines list, and has research results in the New England Journal of
Medicine. This turnaround raises a question: Did skeptics fail to grasp Hale’s clever
insights, misjudge the depth of her commitment, or underestimate the extent of
her potential good fortune? Put more simply, is Hale’s a story of smarts, guts, Und
luck?
GUTS, SMARTS, AND LUCK
Let’s start with “smarts.” Hale did begin with a clever hunch. Pharmaceutical drug
development is organized around profitability and not around the objective of
human impact. Simple principles of optimization would indicate that taking the
profit imperative out of the drug development equation would create an opportu-
nity to enhance human impact. Other organizations, for example the Tropical
Disease Initiative2 and the International AIDS Vaccine Initiative (IAVI)3 are based
on a similar notion. Although the idea of drug development driven by a non-prof-
it organization is not new or unique to iOWH, the particular manner in which
iOWH has brought together key elements in its model—the commitment to
Piera Morlacchi is a Lecturer of Organization and Entrepreneurship, Science and
Technology Policy Research (SPRU) University of Sussex, United Kingdom and Senior
Research Fellow, International Centre for Health Outcomes and Innovation Research
(InCHOIR), Columbia University, New York. Her research focuses on medical inno-
vation, health policy and entrepreneurship.
© 2008 Piera Morlacchi
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Piera Morlacchi
human impact, the mobilization of networks, and of course the focus on drug
development—is distinctive. The organizational design of iOWH suggests—at
least when considered after the fact—the work of an imaginative, but nonetheless
pragmatic designer.
But what of “guts”? Skeptics would have had some justification for classifying
iOWH a priori as a non-rational undertaking—a “bad,” even “foolish” idea. Gegeben
the initial success of iOWH, it would seem that rational analysis would then have
obscured the opportunity for useful institutional innovation. The ability to disre-
gard the fear of failure and to persist with an idea that others deem foolish seem to
characterize the events that led to the founding and following activities of iOWH.
This brings us to “luck”. Drug development is an activity fraught with irre-
ducible uncertainties. As Hale notes, nur 1 drug in 100,000 that is discovered
makes it to the market. Drug discovery and development in the pharmaceutical
industry is a lengthy, costly and uncertain process where a large number of prom-
ising compounds that are screened in the discovery phase of the process are dis-
carded in development phase as a result of testing in assays, animals and humans
for safety and efficacy. Failures are inevitable, but if they are outlived they can be
viewed as springboards to new successes. For instance, prior to the success with
Paromomycin for the treatment of black fever in India, iOWH pursued the devel-
opment of another promising compound, a cysteine protease inhibitor called
K777, to treat Chagas disease, a leading cause of heart failure among the poor in
Latin America. As a consequence of negative results in preclinical studies and
problems with manufacturing the drug, the program on Chagas disease resulted in
a dead-end and the work on K777 was abandoned4. Success with paromomycin for
black fever followed from perseverance in matching promising drugs with neglect-
ed diseases after the failure with K777 for Chagas disease.
The ability by iOWH to outlive failures and the persistence that leads to suc-
cesses can be viewed as a mix of luck, ‘guts’ and clever hunches. Jedoch, im
following part of this essay I would like to suggest that maybe another interpreta-
tion of the events narrated in the case is possible. We may not look at the iOWH
case as a story of smarts, guts or luck, but as an entrepreneurial story where the
same imagination and playful action that scientists employ in the lab transformed
a seemingly foolish business idea into an interesting organizational experiment.
ENTREPRENEURSHIP AS USEFUL IMAGINATION AND PLAYFUL ACTION5
The level of uncertainties and ambiguities in the pharmaceutical community, als
experienced by scientists like Victoria Hale, is well described in the narrative6.
James March7 argued that in uncertain and ambiguous situations actors adopt rea-
soning processes and criteria to make decisions which can be viewed as non-
rational from a traditional ‘rational choice’ standpoint. Their actions are not con-
sequential or driven by explicit calculation of their consequences in terms of objec-
tives and so not rationally justified. A non-profit pharmaceutical company devel-
oping drugs to treat neglected disease does not seem to make rational sense and
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A New Solution Suggesting the Need for a New Equation
looks like a foolish idea. Andererseits, when actions are not driven by logic
of consequences, they leave room for “playful action”, foolishness and useful imag-
ination that create new meanings and visions. A non-profit pharmaceutical com-
pany is one of those visions which is a potential solution to the problem of neg-
lected diseases that affect the world’s poorest people.
In an entrepreneurial situation like the iOWH case actions are not driven by
the logic of consequences, but by alternative logics. Victoria Hale explains her and
iOWH’s actions and decisions in terms of identity: ‘pharmaceutical scientists who
work at iOWH share a belief that their work can change the world and save lives’8.
Their identities of pharmaceutical scientists who work to save lives are reified in a
variety of routines and organizational processes that characterize the organizations
that they found and work in. Darüber hinaus, being pharmaceutical scientists who work
to save lives result in a preference for particular ways to act: their actions are mean-
ingful but without clear pre-determined goals, driven by a generalized goal or
human aspiration—saving the lives of the poor. People at iOWH focused on doing
what they know how to do well—drug development and regulatory approval. A
non-profit pharmaceutical company without shareholders but supported by a
committed and diverse range of stakeholders is free to act based on its identity, i.e.
saving lives by developing drugs, and its actions are not constrained, like other for-
profit pharmaceutical companies, by the need to be profitable to keep sharehold-
ers happy and not taking risks that deeply affect profit. iOWH focuses on collabo-
ration and works in partnership with a network of committed stakeholders (e.g.
scientists from other organizations who volunteer their services for a limited peri-
od of time or pharmaceutical companies and universities that donate cast off leads
or foundations that give philanthropic financial support). This approach enabled
the organization to succeed in developing a drug for a neglected disease.
iOWH tries to figure out through useful imagination and experiential learning
(e.g. ‘trial and error’ approach and lesson learned from the failure with the Chagas
disease mentioned above) how to translate the foolish idea of a non-profit phar-
maceutical company in an organizational artifact. It is treating a conjecture ‘it
might be possible to take the profit imperative out of the drug development equa-
tion’9 as a hypothesis to test. iOWH is in itself an ‘experiment’, which embodies sci-
entists’ pleasure of finding things out10 through direct action and experimentation.
Gesamt, what can we learn from this discussion of the iOWH case as an entre-
preneurial story of useful imagination and playful action? First of all, verwenden
March’s words “we would like to be able to say ‘this idea, which looks like a bad
idea, is actually a good idea’ without being able to say precisely why it is a good
idea”11. Darüber hinaus, iOWH is an experiment that, if it can be replicated, may result
in a possible solution for the problem of neglected diseases of the poor. Der Schlüssel
issue becomes ‘How do we create more innovative solutions to the problem of
public health?'.
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Piera Morlacchi
INSTITUTIONAL EXPERIMENTS IN PUBLIC HEALTH
Whether in public health or in
other domains, no protocol
exists for screening ideas to sort
the “foolish bad ideas” from the
“foolish good ideas.” A high
level of experimentation at
individual, organizational and
institutional levels remains the
only way to test these ideas and
generate innovative solutions to
the problems of our society.
During the last few years there has been a resurgence of interest in neglected dis-
eases that disproportionately affect the world’s poorest people. A distributed glob-
al effort is under way to raise awareness and moral outrage about a series of key
problems like the “90/10 gap”12 described by Hale, and the lack of incentives for
private pharmaceutical com-
panies to develop drugs for
markets with low revenue
Potenzial (e.g. rare diseases
and diseases that affect the
poor). Many decry the limi-
tations of the current phar-
maceutical business model
in promoting drugs not only
for diseases that are com-
monly encountered in devel-
oping countries, but also for
diseases prevalent in rich
Länder.
In developed
countries there is a focus on
“me-too” products and as a
continuously
Ergebnis
increasing prices, the num-
ber of people who can afford
or have access to medicines is
shrinking and public health
care costs are spiralling out
of control. Profits, lobbying activities and consequent political protection afforded
the pharmaceutical industry in developed countries are attracting more criticism.
Signals are growing stronger that the global pharmaceutical industry requires
alternative models and initiatives.
von
A range of possible solutions have been proposed and partially tested and
implemented through the mobilization of private and public resources, such as
‘public-private partnerships for health’ for the development and production of
new drugs, a patent pool for essential medicines, international R&D treaties for the
pharmaceutical community13, transfer of drug development technologies to devel-
oping countries, pooled procurement efforts and commitments by governments,
grant funding from private foundations and investments by international agen-
cies14. Some of these proposals and initiatives are quite moderate and require some
tinkering with the current institutional status quo. Other solutions are more radi-
cal and demand radical changes in our current institutions (e.g. research treaties,
TRIPS and the current intellectual property regime) and the conception of new
models of innovation.
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A New Solution Suggesting the Need for a New Equation
The case shows that what is needed to transform global health are people with
radical and imaginative ideas who take available resources and create innovative
Lösungen. These innovative solutions can take the shape of products like drugs or
devices (e.g. auto-disable syringe15), new business models and organizational
forms like private-public partnership for health (e.g. Global Alliance for Vaccines
and Immunization GAVI), ‘open source’ approach to drug development (e.g.
Tropical Diseases Initiative16), innovative foundations (e.g. Bill and Melinda Gates
Foundation), and new institutions like research treaties for pharmaceutical and
open licensing policies for university innovations17. A non-profit pharmaceutical
company that develops drugs for neglected diseases that affect the poor is one of
these ideas that is becoming a reality and aspires to be an innovative alternative to
existing models for drug development.
Whether in public health or in other domains, no protocol exists for screening
ideas to sort the “foolish bad ideas” from the “foolish good ideas.” A high level of
experimentation at individual, organizational and institutional levels remains the
only way to test these ideas and generate innovative solutions to the problems of
our society. Experiments are used to test hypotheses, but in few cases they come up
with results that challenge underlying assumptions and theories. Sometimes radi-
cal solutions to a problem are rejected because they require revising our assump-
tions regarding how to think about the problem. Then the key question becomes:
Which other assumptions do we need to take out from our “equations” about glob-
al public health if we really want to find radical solutions to its problems? Profit,
value of life weighed in terms of ability to pay and competition may not be the only
ones.
Endnotes
1. Check Hayden, 2007.
2. Sehen
3. Sehen
4. Sehen
5. Many of the ideas that follow and I use to re-interpret the iOWH case in this part of the essay are
borrowed from the work of James March on decision making, goal ambiguity, and technology of
foolishness (Marsch, 1971 Und 1978; Coutu and March, 2006) and from the contribution of Saras
Sarasvathy who further elaborated some of March’s ideas on these topics to explain entrepreneur-
ial expertise and how entrepreneurs create value (Sarasvathy, 2001; Sarasavthy and Dew, 2005).
6.‘The pride I felt in being a pharmaceutical scientists became overwhelmed by feelings of shame
and embarrassment at being part of an industry that was not taking full responsibility for the dis-
eases of the world. In further considering the problem, I began to wonder if it might be possible
to take the profit imperative out of the drug development equation.’ (Hale, 2008: 107).
7. Marsch (1971 Und 1978).
8. Hale (2008), pp.107.
9. Ibidem.
10. Feynman (1999).
11. Augier and Kreiner (2000), S. 295.
12. Trouiller et al. (2002).
13. Love and Hubbart (2004).
14. Tansey (2006).
15. Morlacchi (2006).
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Piera Morlacchi
16. Maurer et al. (2004).
17. Kapczynski et al. (2005).
Verweise
Augier, M. and K. Kreiner (2000). “An Interview with James G. March.” Journal of Management
Inquiry 9(3): 284-287.
Check Hayden, E. (2007). “Straight talk from … Victoria Hale.” Nature Medicine 13(11): 1274.
Coutu, D. and J. G. Marsch (2006). “Ideas as Art.” Harvard Business Review: 83-89.
Feynman, R. (1999). The Pleasure of Finding Things Out. London, Penguin books.
Hale, V. (2008). “Seeking a Cure for Inequity in Access to Medicines.” Innovations 2(4): 105-117.
Kapczynski, A., S. Chaifetz, et al. (2005). “Addressing Global Health Inequities: An Open
Licensing Approach for University Innovations.” Berkeley Technology Law Journal 20: 1031-
1114.
Liebe, J. P. and T. Hubbard (2004). Make Drugs Affordable: Replace TRIPS-Plus with R&D Plus.
2007.
Marsch, J. G. (1971). The Technology of Foolishness. Decisions and Organizations. J. G. Marsch.
New York, Blackwell.
Marsch, J. G. (1978). “Bounded Rationality, Ambiguity, and the Engineering of Choice.” The Bell
Journal of Economics 9(2): 587-608.
Maurer, S. M., A. Rai, et al. (2004). “Finding Cures for Tropical Diseases: Is Open Source an
Answer?” PLOS Medicine 1(3): 183-186.
Morlacchi, P. (2006). “Simple Technologies that Save the World: The Auto-disable Syringe and
the Movement for Safe Injection.” Unpublished manuscript.
Sarasvathy, S. D. (2001). “Causation and Effectuation: Toward a Theoretical Shift from
Economic Inevitability to Entrepreneurial Contingency.” Academy of Management Review
26(2): 243-263.
Sarasvathy, S. D. and N. Dew (2005). “Entrepreneurial Logics for a Technology of Foolishness.”
Scandinavian Journal of Management 21(4): 385-406.
Tansey, G. (2006). Expanding Policy Options for Access to Medicines for All. Negotiating
Health. Intellectual Property and Access to Medicines. P. G. T. A. D. V.-E. Roffe. London,
Earthscan.
Trouiller, P., P. Olliaro, et al. (2002). “Drug Development for Neglected Diseases: A Deficient
Market and a Public Health Policy Failure.” Lancet 359(9324): 2188-2194.
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