Discuss the role of public co-funding and strategic priority frameworks in addressing market failures in drug discovery for AMR, neglected tropical diseases and rare diseases.

Drugs for antimicrobial resistance (AMR), neglected tropical diseases (NTDs) and rare diseases have high social value but low commercial returns. This is a classic market failure. India's ₹5,000 crore Promotion of Research and Innovation in Pharma MedTech (PRIP) scheme [1] uses public co-funding and a Strategic Priority Innovation (SPI) framework to correct it. The fix is useful but only partial.

Nature of the market failure

• AMR: New antibiotics are kept in reserve to slow resistance, so few doses are sold. WHO says an extra US$250–400 million a year is needed to sustain antibiotic development [2].
• NTDs: Diseases such as dengue mostly affect poor patients, who have little ability to pay.
• Rare diseases: Small patient pools cannot recover R&D costs. This is why India needed a dedicated National Policy for Rare Diseases [3].

Role of public co-funding

• De-risking: Later-stage projects get 35% of their cost (capped at ₹100 crore). Start-ups and MSMEs get 100% of the first ₹1 crore at the early stage [1].
• Crowding in private money: In Round 1, ₹1,600 crore of public money for 41 projects is expected to bring in ₹3,020 crore of private investment [4].
• Filtering out weak projects: Firms still pay 50–65% of the cost themselves [1][5], so weak projects are less likely to apply.

Role of the SPI framework

• Targeting: Support rises to 50% for rare diseases, AMR, vaccine-preventable and tropical vector-borne diseases, and pandemic pathogens. These areas have high public-health value but low market potential [5].
• Early results: Six SPI projects cover pneumonia/meningitis, dengue, influenza and next-generation TB vaccines. Round 1 also funds an antibacterial against multidrug-resistant Gram-negative infections [4].

Limitations

• Push without pull: Grants lower the cost of research but do not guarantee buyers after approval. WHO urges pull incentives (rewards paid only when a product reaches patients) [2]. For example, the UK's subscription model pays a fixed fee regardless of how many doses are used [6].
• Additionality: Large firms hold 22 of the 41 projects [4]. Some of that research might have happened without the grant.
• Opaque access terms: Pricing and supply commitments to public programmes have not been published.

Public co-funding and SPI targeting lower the cost of trying, which is one half of the market failure. The other half, a guaranteed market, is still unaddressed. Pairing PRIP with a guaranteed-purchase mechanism under NAP-AMR 2.0 [7], reserving funds for start-ups and publishing project outcomes would turn India's "pharmacy of the world" strength into innovation for public health. This would advance SDG 3.3, which aims to end NTD epidemics.