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From a bureaucratic backwater in the waning days of the Cold War, the fight against global poverty has become one of the hottest tickets on the global agenda. The cozy, all-of-a-kind club of rich country officials who for decades dominated the development agenda has given way to a profusion of mega philanthropists, new bilaterals such as China, "celanthropists" and super-charged advocacy networks vying to solve the world's toughest problems. While philanthropic foundations and celebrity goodwill ambassadors have been part of the charitable landscape for many years, the explosion in the givers' wealth, the messaging leverage associated with new media and social networking, and the new flows of assistance from developing country donors and diasporas together herald a new era of global action on poverty. The new scale and dynamism of these entrants offer hopeful prospects for this continuing fight, even as the new entrants confront some of the same conundrums that official aid donors have grappled with in the past.

On August 1-3, 2007, the Brookings Blum Roundtable gathered representatives reflective of this dynamic landscape to discuss these trends. Through robust discussion and continuing cross-sector partnerships, the conference hopes to foster lasting and widespread improvements in this new field of development.

2007 Brookings Blum Roundtable: Related Materials
	Read the roundtable report - Making Poverty History? How Activists, Philanthropists, and the Public Are Changing Global Development »  Download the participant list » (PDF)  Download the scene setter » (PDF)

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2007 Brookings Blum Roundtable Agenda:

1. Fighting Global Poverty: Who'll Be Relevant In 2020?
   • Matthew Bishop, The Economist, "Fighting Global Poverty: Who'll Be Relevant In 2020?"
   • Homi Kharas, The Brookings Institution, "The New Reality Of Aid"
   • Jane Nelson, Harvard University, "New Development Players And Models"
2. Angelina, Bono, And Me: New Vehicles To Engage The Public
   • Darrell M. West, Brown University, "Angelina, Mia, And Bono: Celebrities And International Development"
   • Joshua Busby, University of Texas, Austin, "Is There A Constituency For Global Poverty? Jubilee 2000 And The Future Of Development Advocacy"
   • Ngozi Okonjo-Iweala, The Brookings Institution, "Nigeria's Fight For Debt Relief: Tracing The Path"
3. Leveraging Knowledge For Development
   • Ashok Khosla, Development Alternatives Group, "Leveraging Knowledge To End Poverty"
   • Eric Brewer, University of California, Berkeley, "Development And Engineering"
4. Social Enterprise And Private Enterprise
   Chaired by: Mary Robinson, Realizing Rights: The Ethical Globalization Initiative
   • J. Gregory Dees, Duke University, "Philanthropy And Enterprise: Harnessing The Power Of Business And Entrepreneurship For Social Change"
5. Africa's Economic Successes: What's Worked And What's Next
   Moderated by: Paul Martin, former Prime Minister of Canada
   Panelists
   • Donald Kaberuka, African Development Bank
   • Ngozi Okonjo-Iweala, The Brookings Institution
6. Effecting Change Through Accountable Channels
   • Jane Nelson, Harvard University, "Effecting Change Through Accountable Channels"
   • Simon Zadek, AccountAbility, "Accountability Compacts: Collaborative Governance For The 21^stCentury"
7. Global Impact: Philanthropy Changing Development
   • Mark R. Kramer, FSG Social Impact Advisors, "Philanthropy, Aid, And Investment: Creating A Common Language"
   • Joseph O'Keefe, The Brookings Institution, "Aid - From Consensus To Competition?"
8. Keynote Address
   • Former Vice President Al Gore, Generation Investment Management

       

       

       

       

       

Event Information

Since the Rose Revolution in November 2003, Georgia has grappled with the many challenges of building a modern, Western-oriented state, including implementing political and economic reforms, fighting corruption, and throwing off the vestiges of the Soviet legacy. On the path toward a functioning and reliable democracy, Georgia has pursued these domestic changes in an often difficult international environment, as evidenced by the Russia-Georgia conflict in 2008.

On March 17, the Center on the United States and Europe at Brookings (CUSE) hosted President Mikheil Saakashvili to discuss Georgia’s approach to these challenges. A leader of Georgia’s 2003 Rose Revolution, Saakashvili was elected president of Georgia in January 2004 and reelected for a second term in January 2008.

Vice President Martin Indyk, director of Foreign Policy at Brookings, provided introductory remarks and Senior Fellow and CUSE Director Fiona Hill moderated the discussion. After the program, President Saakashvili took audience questions.

Video

• Georgia Is a Transformed Country
• Georgia Is a Valuable Asset to Europe
• The Key to Effective Change Is Youth

Audio

• From Popular Revolutions to Effective Reforms: The Georgian Experience

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20110317_saakashvili_transcript

      

As the Obama administration copes with Russia’s annexation of Crimea and continuing pressure on Ukraine, its actions invariably invite comparison to the Bush administration’s response to the 2008 Georgian-Russian war. But as the Obama White House readies potentially more potent economic sanctions against Russia, former Bush administration officials are bandying a revisionist history of the Georgia conflict that suggests a far more robust American response than there actually was.

Neither White House had good options for influencing Russian President Vladimir Putin. And this time, the fast-moving developments on the ground in Ukraine confront the United States with tough choices. Because the West will not go to war over Crimea, U.S. and European officials must rely on political, diplomatic and financial measures to punish Moscow, while seeking to launch negotiations involving Russia in order to de-escalate and ultimately stabilize the Ukraine situation. They are not having an easy time of it.

Neither did the Bush administration during the 2008 Georgia-Russia war. In a brief, five-day conflict, the Russian army routed its outnumbered and outgunned Georgian opponent and advanced to within a short drive of the Georgian capital, Tbilisi. Bush officials ruled out military options and found that, given the deterioration in U.S.-Russian relations over the previous five years, they had few good levers to influence the Kremlin. The sanctions Washington applied at the time had little resonance in Moscow.

In recent days, however, former Bush administration officials have described a forceful and effective U.S. response in Georgia. On “Fox News Sunday” on March 16, former senior White House adviser Karl Rove told Chris Wallace, “What the United States did was it sent warships to, to the Black Sea, it took the combat troops that Georgia had in Afghanistan, and airlifted them back, sending a very strong message to Putin that ‘you’re going to be facing combat-trained, combat-experienced Georgian forces.’ And not only that, but the United States government is willing to give logistical support to get them there, and this stopped them.”

Rove was echoing what former Secretary of State Condoleezza Rice wrote in a March 7 op-ed in The Washington Post: “After Russia invaded Georgia in 2008, the United States sent ships into the Black Sea, airlifted Georgian military forces from Iraq back to their home bases and sent humanitarian aid. Russia was denied its ultimate goal of overthrowing the democratically elected government.” Really? These statements do not match well with the history of the conflict.

War broke out the night of Aug. 7, when Georgian President Mikhail Saakashvili ordered his troops into the breakaway region of South Ossetia, after Russian forces shelled Georgian villages just outside South Ossetia. The Russians — by appearances, spoiling for a fight — responded swiftly with massive force. They turned the Georgian army back and overran much of Georgia.

As has been widelyreported, when the conflict began, one of Georgia’s five army brigades was serving as part of the coalition force in Iraq (not Afghanistan, as Rove claimed). On Aug. 10, U.S. C-17s began returning the brigade to Tbilisi, and it promptly went into combat.

The brigade was well-trained and experienced — but in counterinsurgency operations for Iraq, not combined arms operations. Facing a larger and far better-armed opponent, the brigade added little to the failing Georgian effort to halt the Russian advance. On Aug. 12, Moscow announced a cease-fire. French President Nicolas Sarkozy traveled to the Russian and Georgian capitals to formalize an end to the hostilities.

Did the U.S. airlift of the Georgian troops to Tbilisi change the tide of battle or Moscow’s political calculations? No. The Russian army handily drove them back.

What about the deployment of U.S. Navy ships to the Black Sea? The guided missile destroyer USS McFaul did enter the Black Sea to deliver humanitarian supplies to Georgia, passing through the Bosporus on Aug. 22 — 10 days after the cease-fire.

No evidence suggests these actions had much, if any, impact on Putin’s decision making. The Russians halted their offensive short of Tbilisi, figuring that occupying the capital was unnecessary. They thought — as did many in Georgia and the West — that the political shock of the rout would suffice to bring down Saakashvili’s government (though, in the end, it did not).

U.S. C-17s did fly humanitarian supplies to Tbilisi, but President Bush ruled out military action. His administration imposed modest penalties on Russia, ratcheting down bilateral relations, freezing a U.S.-Russia civil nuclear cooperation agreement and ending support for Moscow’s bid to join the World Trade Organization. U.S. officials found that they had little leverage to affect Moscow’s behavior.

The Obama administration has applied similar measures as it seeks to sway Putin again, but it has added a new penalty: visa and financial sanctions targeted at individual Russians, including some close to Putin. On March 20, the president also announced a new executive order to enable U.S. sanctions against key sectors of the Russian economy, including finance, energy and defense — the kinds of tough penalties that the United States has not previously applied against Moscow.

Despite the bluster of former Bush administration officials today, Washington in fact has a stronger hand in the current crisis in Ukraine in one other regard. In 2008, many European states held Saakashvili partially responsible for triggering the war with the Georgian advance into South Ossetia. Ukraine, by contrast, has acted with great restraint. This time, nearly all of Europe agrees that Russia’s actions are out of bounds. Sure enough, European states also appear more ready to sanction Russia than in 2008. Along with the various sanctions the U.S. alone has announced, European Union officials last week also announced visa and financial sanctions on individual Russians.

These moves might not end up shaking Putin from his course, but applying the new executive order could inflict real pain on the Russian economy — something Washington did not accomplish in 2008. Those who faced the challenge of punishing Russia over Georgia should understand the complexities of dealing with Putin and, at a minimum, cut the current administration a little slack.

Read the original article at POLITICO Magazine»

       

Harsh geopolitical realities and historic legacies have pushed the South Caucasus states of Armenia, Azerbaijan, and Georgia back onto the foreign policy agendas of the United States, the European Union (EU), and Turkey, at a time when all three have pulled back from more activist roles in regional affairs. The South Caucasus states have now become, at best, second-tier issues for the West, but they remain closely connected to first-tier problems. To head off the prospect that festering crises in the Caucasus will lead to or feed into broader conflagrations, the United States, EU, and Turkey have to muster sufficient political will to re-engage to some degree in high-level regional diplomacy. In “Retracing the Caucasian Circle Considerations and Constraints for U.S., EU, and Turkish Engagement in the South Caucasus,” authors Fiona Hill, Kemal Kirişci, and Andrew Moffatt explore the rationale and assess the options for Western reengagement with Armenia, Azerbaijan, and Georgia given the current challenges and limitations on all sides. Based on a series of study trips to the South Caucasus and Turkey in 2014 and 2015, and numerous other interviews, the authors review some of the current factors that should be considered by Western policymakers and analysts.

Constraints and considerations for U.S., EU, and Turkish engagement in the South Caucasus:

• Divergent trends in the South Caucasus
• Russia’s influence in the South Caucasus
• Regional conflicts
• The United States’ diminishing role in the South Caucasus
• Failure to integrate the South Caucasus into the EU
• Foundering relations with Turkey
• Dashed expectations in the South Caucasus of Western engagement

Despite the challenges that have beset the West’s relations with the South Caucasus and the growing disillusionment in Armenia, Azerbaijan, and Georgia, giving up on engagement is not an option.

Policy options for the future:

• The United States, EU, and Turkey must work together, rather than separately
• “Under the radar” coordination on creative interim solutions and working with other mediators
• Focus on the development of “soft regionalism”
• Work with Georgia as the hub for furthering soft regionalism
• Devise adaptable policies as relations with Iran and China develop in the region

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• Retracing the Caucasian Circle: Considerations and constraints for U.S., EU, and Turkish engagement in the South Caucasus

       

I write this as I learn of the beating death of an Azerbaijani journalist Rasim Aliyev. His “crime” was to post a Facebook item about football. What follows seems insignificant compared to his murder.

Two articles have appeared in prominent Western outlets in the past month addressing developments in the South Caucasus and the need for adjustments in U.S. (and Western) policy toward the region. The first was an excellent, in-depth Brookings report titled "Retracing the Caucasian Circle—Considerations and Constraints for U.S., EU, and Turkish Engagement in the South Caucasus"; the second was a shorter essay that Bill Courtney, Denis Corboy, and I penned for Newsweek on the need to reboot policy toward Armenia, Azerbaijan, and Georgia. Both reflected the difficulty of writing about the “South Caucasus” as if the three countries had common interests and objectives. Increasingly these interests and objectives are diverging, except for a growing unhappiness with the United States and the West for not paying attention to—or doing enough to support—the region. In the case of Azerbaijan, the frustration stems from U.S. leaders paying too much attention to the appalling human rights situation in the country.

What’s making the Azerbaijanis so upset with the West?

The authors of the Brookings report point to elite cynicism over Western disinterest and policy failures in the region as sources of Azerbaijani leaders’ unhappiness. This, in their view, is causing Armenia, Georgia, and Azerbaijan—for different reasons and in different ways—to tack toward Russia.

We have a different take in our Newsweek piece. We argue that the unhappiness results from governing elites recognizing that U.S. and Western policy regarding human rights, democracy building, corruption, and conflict resolution (especially the Nagorno-Karabakh conflict) threaten regime stability. Therefore, the tacking toward Russia is a conscious choice to avoid pressure and the transparency that closer association with the United States and Europe would involve.

The new orientation of these countries requires serious adjustment in Western policies. There are four new drivers prompting change (beyond the role of Russia): the regional consequences of the Iran nuclear agreement; the growing economic crisis, which is affecting the South Caucasian states in different ways; the threat of renewed military conflict between Armenia and Azerbaijan; and the internal security implications of suppression of human rights. While each country responds to these drivers in different ways, they are the source of a new dynamic in the South Caucasus that requires a fresh Western policy approach.

Three wild cards will shape these drivers and the Western approach to them: First, how hard will Russian President Vladimir Putin push his objective of rolling back the degree of Western influence achieved since the fall of the Soviet Union? Second, how well will Iran play the nuclear agreement card, especially regarding its reentry into global energy markets? Third, how distracting will Turkey’s military response to the Islamic State and the Kurdistan Workers’ Party (PKK) be for Turkey’s interests in the South Caucasus and its objective of becoming a regional energy hub?

The shortcomings of soft regionalism

What is to be done? Faced with such a challenging situation, the default policy response is to provide more assistance (economic and military), dispatch senior officials from Western capitals to visit the region, and indulge (rather than criticize) democracy and human rights abuses, all in the name of developing a strategic partnership. In other words: Show more love.

That business-as-usual approach is inappropriate for these challenging times. In the case of Azerbaijan, it is an inappropriate response to the continued violations by the Baku regime of basic human rights and freedom of expression.

The Brookings paper suggests a multilateral approach (involving the United States, EU, and Turkey) based on soft regionalism. I do not believe that soft regionalism will work. The best we can hope for is parallel bilateral engagement on the basis of common interests (e.g. conflict prevention) and shared values (e.g. democratic evolution, observance of human rights). We need to treat the energy issue in the region as a commercial rather than geopolitical one. Changes in the global energy market have undermined the geopolitical significance of Caspian energy resources compared to two decades ago. With low energy prices likely the norm for the near future, energy no longer plays a strategic role for the region. Among other weaknesses, the soft regionalism prescription implies coordinated interests with Turkey—this will be difficult absent an opening in Turkish-Armenian relations.

Who needs who more?

The burden of choice in this relationship with the West must shift from the outside parties to the South Caucasian states themselves. The outsiders should stop talking about “strategic” partnerships, trans-Caspian pipelines and Silk Roads because this perpetuates a “you-need-us-more-than-we-need-you” starting point. Rather, the time has come for Armenia, Azerbaijan, and Georgia to decide on their own where their interests coincide with those of the West. That’s where we and they can begin to develop meaningful relationships, rather than trying to invent a veneer to cover differences—as in the case of Azerbaijan’s record on human rights.

Another recent article in Newsweek, by Theodore Gerber and Jane Zavisca, raised questions about promoting democracy and human rights where populations and elites are skeptical of U.S. motivations in promoting these issues. Fairly, the article questions the effectiveness of the traditional instruments of promoting opposition political parties and local NGOs as a way of winning “hearts and minds” in the former Soviet Union. Unfortunately, these traditional instruments tend to emphasize the attractiveness of the “American way of life” through student and scientific exchanges. This offers a variant on the soft regionalism theme advanced in the Brookings paper. Both require a receptivity to change that both elites and populations increasingly find threatening. Developing a values-based relationship is difficult when values diverge.

To the extent our interests do not coincide, then the Western policy focus must be transactional and rest exclusively on conflict prevention and/or amelioration. It also should not shy away from pressing all three South Caucasian states on their obligations to observe international standards regarding human rights, democracy, and freedom of expression.

       

       

       

       

       

       

       

       

       

       

       

       

British debates about welfare reform have often been influenced by American ideas. The Clinton-era welfare reforms were echoed in some of Tony Blair’s alterations to British benefits. Gordon Brown, as Chancellor, introduced a new Working Tax Credit as a direct result of studying the Earned Income Tax Credit. Brown particularly liked the political advantages of a ‘tax cut for hard-working families’, as opposed to a ‘benefit handout to welfare families’.

But now the transatlantic traffic in ideas on welfare is going the other way. The U.K.’s introduction of a single, unified system of transfer payments – the Universal Credit – is getting quite a bit of attention in the wonkier regions of D.C. politics. Paul Ryan, at a Brookings summit on social mobility, mentioned the Universal Credit (UC) as a possible inspiration for a new round of welfare reform. (Ryan is giving a speech at AEI in a couple of weeks: we’re likely to hear more about his thinking then.) When the architect of the UC, Iain Duncan Smith, visited D.C. recently, he held a series of meetings with leading Republicans to discuss his reforms.

The main attractions of the Universal Credit are fourfold:

1. Simplicity. By unifying five cash benefits and an ‘in kind’ benefit (Housing Benefit) into a single, monthly payment, the complexity of the system from the point of view of the recipient will be greatly reduced.
   
   
2. Cost control. Housing Benefit is paid directly to the landlord, which reduces the tenant’s incentive to control costs.  Add that to the crazily overheated U.K. housing market, and should come as no surprise that Housing Benefit has become a major strain on the system, quintupling in cost in real terms over the last two decades to hit £24 billion a year (c. $41bn), to become the second-biggest element of the U.K.’s system, after pensions.  By including an allowance for housing in the single cash payment in UC, the recipient will be incentivized to control their own housing costs.
    
3. Stronger work incentives. The UC has a flatter ‘taper’ than existing benefits, meaning that cash payments are reduced more slowly as earnings rise. In particular, the UC will allow benefit recipients to work part-time (less than 16 hours a week), and still keep claiming. On the downside, incentives for second earners in two-adult families will be reduced. 
   
   
4. Tighter and more targeted work requirements. The UC will contain stronger requirements to seek work than existing benefits, and importantly, has a ‘sliding scale’ of requirements, depending on the position of the recipient. For example, parents with children under the age of 1 will be exempt from work requirements; those with children aged between  1 and 5 will be obliged to attend for interviews with a case worker to prepare for a return to work; those with children at school will be required to ‘actively seek work’.

Sounds pretty good, doesn't it? And in fact it is, on paper at least. In practice the introduction of UC has been marked with huge overspend and delay on the required new IT system. The whole exercise has also been made much harder by cuts in many of the relevant cash benefits, as well as the introduction of a ‘household cap’ on total welfare receipts. The Universal Credit as an idea has a lot of support. As so often, it has been putting the idea a reality that has been difficult.

What—if anything—can the U.S. take from the UC? Short answer: not much. 

Many of the problems the UC addresses do not really apply in the U.S. Work incentives are already pretty strong in the U.S., thanks to the relative generosity of the EITC, and the relative meanness of out-of-work welfare supports. Also, there are already much stronger work requirements in the U.S. system. Some want to go further, and add work requirements to the receipt of food stamps, for example. But this would not require a major overhaul.  As Melissa Boteach and her colleagues at the Center for American Progress write,“the primary problem that the Universal Credit is supposed to address in the United Kingdom—the lack of incentive for jobless workers to enter the labor force—is far less of an issue in the United States”.

The UC also further centralizes an already highly centralized system, by getting rid of Housing Benefit, which is currently administered by Local Authorities. The U.S. system is much less centralized, with states and cities having a high degree of control over the way TANF and SNAP are administered. It is hard to see how anything like a UC could work in the U.S. at anything higher than State level. A Wisconsin Universal Credit makes sense in a way that a U.S. Universal Credit does not.  But if shifting towards block grants to states is really what this is about (see Marco Rubio’s ‘flex fund’ idea),that’s a whole different debate.

A final point. Simplicity and ease of use for the recipient is a key goal of the UC, and a worthy one. The stress and difficulties faced by low-income families just in applying for assistance is unacceptable in the 21st century. But it is not clear that the whole system has to be upended to achieve this goal. Technology ought to allow a single access point to the system, with the complexity out of sight of the user. 

In the U.K. the Universal Credit has a strong rationale, despite the implementation challenges. In the U.S., it is a solution in search of a problem. 

      

In new Urban-Brookings Tax Policy Center analysis of Earned Income Tax Credit (EITC) take-up at the county level, Benjamin Harris, a fellow in Economic Studies, and Research Assistant Lucie Parker use zip-code level data on taxes and demographics to take a "fresh look" at the EITC. "Since its creation in 1975," they write, "the Earned Income Tax Credit has played a major role in the U.S. safety net." Earlier this year, Harris presented EITC take-up using IRS data from 2007. Compare that to the new list of ten counties with the highest share of EITC recipients below:

Rank	County	EITC Share (pct)
10	Sharkey Co., MS	50.5
9	Quitman Co., MS	50.7
8	Coahoma Co., MS	51.6
7	Starr Co., TX	52.1
6	Claiborne Co., MS	52.7
5	Humphreys Co., MS	53.0
4	Buffalo Co., SD	54.1
3	Shannon Co., SD	54.5
2	Holmes Co., MS	55.5
1	Tunica Co., MS	56.1

"The regional variation EITC claiming is stark," Harris and Parker conclude. "The counties with the highest share of taxpayers claiming the EITC are overwhelming located in the Southeast. ... [O]ver half the taxpayers in a large share of counties in Alabama, Georgia, and Mississippi claim the EITC. With few exceptions, almost all counties with high EITC claiming are located in the South. Relative to the South, the Northeast and the Midwest have much lower claiming rates. Moreover, average EITC benefit closely follows the pattern for share of taxpayers taking up the credit: in counties where more taxpayers claim the credit, the credit is larger on the whole."

Visit this U.S. map interactive to get county level data on share of taxpayers claiming EITC as well as average EITC amount, in dollars, per county.

      

       

Policy Brief #175

As the nation strives to recover from the “Great Recession,” job creation remains one of the biggest challenges to renewed prosperity. Small businesses have been among the most powerful generators of new jobs historically, suggesting the value of a stronger focus on supporting small businesses—especially high-growth firms—and encouraging entrepreneurship. Choosing the right policies will require public and private decision-makers to establish clear goals, such as increasing employment, raising the overall return on investment, and generating innovations with broader benefits for society. Good mechanisms will also be needed for gauging their progress and ultimate success. This brief examines policy recommendations to strengthen the small business sector and provide a platform for effective programs. These recommendations draw heavily from ideas discussed at a conference held at the Brookings Institution with academic experts, successful private-sector entrepreneurs, and government policymakers, including leaders from the Small Business Administration. The gathering was intended to spur the development of creative solutions in the private and public sectors to foster lasting economic growth.

	RECOMMENDATIONS
	What incentives and assistance could be made available to “gazelles” and to small business more generally? What policies are likely to work most effectively? In the near term, government policies aimed at bolstering the recovery and further strengthening the financial system will help small businesses that have been hard hit by the economic downturn. Spurred by the interchange of ideas at a Brookings forum on small businesses, we have identified the following more targeted ideas for fostering the health and growth of small businesses (and, in many cases, larger businesses) over the longer run: Improve access to public and private capital. Reexamine corporate tax policy with an eye toward whether provisions of our tax code are discouraging small business development. Promote education to help businesses struggling with shortages of workers with particular skills, and promote research to spur innovation. Rethink immigration policy, as current policy may be contributing to shortages of key workers and deterring entrepreneurs who wish to start promising businesses in our country. Explore ways to foster “innovation-friendly” environments, such as regional cluster initiatives. Strengthen government counseling programs.

The term “small business” applies to many different types of firms. To begin, the small business community encompasses an enormous range of “Main Street” stores and services we use every day, such as restaurants, dry cleaners, card shops and lawn care providers. When such a business fails, it is often replaced by a similar firm. The small business community also includes somewhat bigger firms—in industries such as manufacturing, consulting, advertising and auto sales—that may have more staying power than Main Street businesses, but still tend to stay relatively small, with under 250 employees. While these two kinds of small businesses contribute relatively little to overall employment growth, they are a steady source of mainstream employment. If economic conditions do not support the formation of new businesses to replace the ones that fail, there would be a significant net destruction of jobs and harm to local communities.

Yet another type of small business has an explicit ambition for rapid growth. These high-growth companies are sometimes known as “gazelles.” According to the Small Business Administration, small businesses account for two-thirds of new jobs, and the gazelles account for much of this job creation. The most striking examples—such as Google and eBay—have tended to be in high-tech industries and were gazelles for a significant time before they graduated to be very large businesses. However, gazelles exist in all industry types and in all regions of the country, and the large majority are not grazing in the nation’s technology-dominated Silicon Valleys. According to one expert, the three largest industry categories for high-growth companies are restaurant chains, administrative services and health care companies. One non-high-tech example is Potbelly Sandwiches, a restaurant chain that began in Chicago. Another is the San Francisco-based Gymboree Corporation, a provider of child development programs and children’s clothing.

 

Fostering the Development of High-Growth Companies

High-growth small businesses represent only about 5 percent of total startups, making it important to determine how to spot and foster them. A key common characteristic is that growth is critically dependent on the entrepreneurs who start these companies; they are people on a mission, charismatic leaders who can inspire creativity and commitment from their staffs.

The age of these firms is highly correlated with when their growth is highest. Generally, the most dramatic growth occurs after at least four years of existence—and coincidentally lasts about four years—before it slows again to a more typical pace for small businesses. Of course, some firms such as Google defy this pattern and continue to experience high growth for many years.

Although dynamic small businesses can be found nearly everywhere and in many industries, some regions spawn more of them than others. These regions may have especially supportive features, such as a critical mass of potential workers with relevant skills, a social climate and network that encourage idea generation, locally available venture capital, or some combination of these factors.

Unfortunately, attempts to anticipate which companies or even industries are likely to produce gazelles are prone to error. Thus, excessive emphasis on national industrial policies that favor specific industries are likely misplaced. Without knowing how to target assistance precisely, broad strategies, such as assistance with funding, knowledge, contacts and other essential resources, may be the best approach to fostering high-growth businesses. Such support has the added value of also aiding Main Street businesses.

Many of the most promising policies focus on removing obstacles that hinder entrepreneurs with solid business plans from launching and expanding their businesses.

Funding

As a result of the burst of the dot.com bubble in early 2000 and the recent financial crisis, small businesses have found the availability of venture capital funds drastically diminished. The crisis has also made it more difficult to obtain funding from banks and other conventional means. These trends particularly affect the “missing middle” of small businesses—roughly, those with between 10 and 100 employees.

The venture capital market. Historically, venture capital has financed only a relatively small portion of small businesses, but those financed have tended to be the ones with the greatest growth potential. In recent years, firms that eventually grew to where they could issue initial public stock offerings generally relied more heavily on venture capital financing than the average small business.

The dollar value of venture capital deals funded today is only about one-fifth the size it reached at its peak. While the peak amount may have been too large, today’s value is probably too small. With their capital heavily invested in a small range of industries and locales, it seems likely that venture capital firms have missed a high proportion of potential investment opportunities. Further, “once burned, twice shy” funders have increasingly focused on larger, later-stage ventures. Consequently, mezzanine financing, which new companies need to survive and thrive in the critical early stages, is scarce.

The funding problems partly stem from venture capital firms today having less money to invest. Some investors who formerly contributed to such firms have become more risk-averse, and worse performance figures have discouraged new investors. Lack of venture capital affects some industries more than others, and even some green energy companies—viewed by some as one of the nation’s more promising industry sectors—have moved to China, where financial support is more readily available.

Bank lending. In contrast to large businesses, which can turn to capital markets for funding, many small businesses are dependent on banks for financing. Although the worst of the 2008–09 credit crunch is behind us, many small businesses still find it difficult to obtain bank loans. Community banks, a key source of small business financing, have been hard hit by losses in commercial real estate, which have limited their lending capacity. Further, many small business owners who historically would have used real estate assets as collateral for expansion loans can no longer do so because of declines in real estate prices. In addition, small businesses that have, in the past, used credit cards to purchase equipment and supplies have been hindered by reductions in credit limits.

Overall economic conditions

The high degree of uncertainty currently surrounding the economic and financing climate may have prompted many entrepreneurs and would-be entrepreneurs to hold off on growth plans. Despite their reputation as high-flying risk-takers, good entrepreneurs take only calculated risks, where the benefits outweigh the dangers. Uncertainties about the future trajectory of the economy merely increase risk without raising potential rewards.

Government policies

Government policies affect the climate for small businesses in many ways. For example, small businesses face substantial hurdles when entering the complicated world of federal grants and contracts. At the state level, severe budget shortfalls mean that even well-designed initiatives to boost small businesses may founder.

The Small Business Administration (SBA) assists the full continuum of small businesses through a variety of means. These include: an $80 billion loan guarantee portfolio; specialized counseling and training centers; specialized business development programs targeting the socially and economically disadvantaged; oversight to ensure that at least 23 percent of federal government contracts go to small businesses (with certain preferences for minority and women-owned businesses); and the Small Business Innovation Research and Small Business Investment Companies programs.

The Obama administration is attempting to broaden support for small businesses by bringing the SBA into multi-agency initiatives that tackle common problems. For example, the Departments of Energy, Commerce, Housing and Urban Development, Education, and Labor, along with the National Science Foundation and the SBA, are supporting a five-year, nearly $130 million Energy Regional Innovation Cluster.

Strength of “social capital”

Through the 1990s, the United States was a worldwide leader in fostering innovation and entrepreneurship and reaped the reward of employment growth. Current international comparisons suggest that we are now closer to tenth place among some 70 nations in our ability to support innovation. Much of what has kept our nation from remaining in the top spot appears to relate to insufficient cultural support for entrepreneurship.

Strong social networks in specific geographic regions appear to substantially bolster the growth of innovative businesses. These networks are built around entrepreneurial dealmakers who serve as the nodes of the network, forming connections among researchers, entrepreneurs and investors. Unfortunately, many regions and industries lack strong networks.

Access to decision-making information. Entrepreneurs need an array of information and advice about how to tackle the problems that arise at different stages in business development. The SBA reports that companies that have taken advantage of their long-term counseling programs, for example, have higher growth than companies that have not.

Opportunity for all. Social networks are self-selecting, and some people have to work extra hard to gain entry to a region’s network of entrepreneurs. While various organizations exist to help women and people of color access entrepreneurial skills and information, these efforts may not suffice. Under-representation of any group presumably would filter out a number of potential high-growth companies.

Workforce issues

A long-time strength of the American workforce, worker mobility has declined. This trend has been attributed in part to an aging population and in part to the current difficulty people have in selling their homes. Businesses report difficulty finding employees with the right training, especially at the technician level, where straightforward vocational training could help.

Global competition

Increasing global competition for good projects, entrepreneurs and capital is a positive trend from an international perspective, but runs counter to the national goal of promoting rapid growth in U.S. industry and employment. Today, many entrepreneurs can choose among starting a business here, in their home country, or even in a third, more hospitable nation. At the same time, current U.S. immigration policy hinders entrepreneurs from coming here to launch their companies. A recent report from The Brookings- Duke Immigration Policy Roundtable concluded that “educated workers with the knowledge and skills to innovate are critical” to the United States and recommended increasing the annual number of skilled visas.

 

Policy Goals for Small Business

Measuring Results

More work is needed to identify key policy goals and priorities related to small business success. Critically, what would constitute “improvement” in public policy regarding small business employment, and how would we measure it? Clearly, increasing the total number of jobs created each year (by both small and large businesses, net of job destruction) would be a positive outcome, all else being equal. Another potential goal would be improving the “quality” of the jobs created, as measured by average compensation or by job creation in new industries or geographic areas where unemployment is high. Creating “good jobs” that bring generous compensation would seem to be always desirable, but this outcome could conflict with other social goals, for example, if the jobs created required skills out of the reach of groups that are traditionally difficult to employ.

Slowing job destruction could be as important as increasing the creation of new jobs, but discouraging layoffs without increasing performance would do more harm than good. The trick is to raise the quality of marginal firms so that their improved performance allows them to retain employees they would otherwise have to let go.

A final key factor in setting policy goals that would support small businesses is measuring the cost to taxpayers of the initiatives that flow from the goals. This includes the subsidy cost contained in the federal budget, as well as costs and tradeoffs in society at large.

Changing Key Policies

Small businesses face both short-run and long-run challenges. With regard to the former, many small businesses have been hard hit by the recession and appear to be lagging behind larger businesses in their recovery. The cyclical struggles of this sector in part reflect the dependence of many small firms on the still-strained banking system for their financing; they also reflect the high toll that our extremely soft labor markets have taken on demand for Main Street goods and services. Thus, government policies aimed at broadly bolstering the recovery and further strengthening the financial system will yield important benefits to small businesses.

The government, in conjunction with the private sector, can also take steps that will foster an economic environment that is supportive of entrepreneurship and economic growth over the long run. Specific policy steps that might help small businesses (and, in many cases, large businesses) include:

Improve access to public and private capital. Implementing serious financial reform will reduce the likelihood that we will see a repeat of the recent credit cycle that has been so problematic for the small business sector. When credit market disruptions do occur, policymakers should be attentive to whether temporary expansions of the SBA loan guarantee program are needed to sustain lending to creditworthy borrowers. The SBA should also consider expanding the points of access to its loan programs through an expansion of its lending partners. Finally, the SBA (or a similar entity) might encourage venture capital funds to broaden their investments beyond familiar areas by systematically bringing these investors together with entrepreneurs from neglected geographic regions and business sectors.

Reexamine corporate tax policy. More thinking is needed about whether provisions in our tax code discourage small business development in a way that is harmful to the broader economy and that places the United States at a relative disadvantage internationally. For example, Congress might consider whether it would be beneficial, on net, to lower employment taxes as a way of spurring hiring at businesses with high-growth potential. In addition, some analysts believe there would be gains from increasing tax credits for research and development and further lowering taxes on capital equipment. A design priority in all cases should be simplicity, as complicated rules can limit take-up among smaller firms that do not have extensive accounting or legal expertise.

Promote education and research. Entrepreneurs report difficulty in finding workers with the skills they need for manufacturing, technology and other jobs that do not require four-year college degrees. Access to such educational opportunities, including tailored vocational training, should be affordable and ubiquitous.

At the university level, improvements are needed in the way academic research is brought to the commercial market. Continued public and private support for basic research might be wise, particularly if we are in a trough between waves of innovation, as some analysts believe. The large investments by the National Science Foundation, National Institutes of Health, Defense Advanced Research Projects Agency, and other ambitious public and private programs laid the groundwork for many of the high-growth businesses of today. It may be worth exploring whether support for research in “softer” areas than the sciences might do an equal or better job of inspiring innovations.

Rethink immigration policy. A reconsideration of limits on H1-B visas might help entrepreneurs struggling with shortages of workers with particular skills. In addition, current immigration policy discourages immigrants who want to establish entrepreneurial businesses in America. Any efforts to expand immigration are frequently perceived as “taking jobs away from Americans,” but studies have shown that new businesses create jobs for Americans.

Explore ways to foster “innovation-friendly” environments. Some regions of the United States clearly do a better job of encouraging innovation. Silicon Valley is the classic example, but there may be as many as 40 such clusters scattered around the country. While clusters often arise organically, typically near major universities, some states have made an explicit commitment to innovation and entrepreneurship. Examples include the Massachusetts Technology Collaborative and California’s Biological Technologies Initiative, involving community colleges statewide. Federal, state and local policymakers should keep a keen eye on ways of adapting best practices from these initiatives as information becomes available about which elements are most effective.

Strengthen government counseling programs. The SBA might do more to expand and tailor its already successful growth counseling programs to better meet the needs of both Main Street and potential high-growth businesses, as well as firms at different developmental stages. Any effort to expand small businesses’ opportunities for federal grants and contracts should be accompanied by significant streamlining of the application process.

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*A slightly modified version of this commentary appeared in the St. Louis Post-Dispatch on October 19, 2004.

So it looks like Missouri's gubernatorial race will turn on "character" issues.

GOP consultant Paul Zemitzsch predicts Secretary of State Matt Blunt will portray Claire McCaskill, the Democratic state auditor, as "an extra-liberal female candidate" and "waffler" when things get ugly. McCaskill, for her part, has already countered one attack on her "hypocrisy" with her own attack on Blunt's veracity.

Look for more talk about character as Election Day approaches.

Yet that would be too bad.

Missouri needs to talk about some other things this fall.

In a recent statewide report, "Growth in the Heartland: Challenges and Opportunities for Missouri," for example, we argued that Missouri faces a land-use and competitive crisis that demands serious attention.

The crisis is not new—we described it two years ago—but the fact remains that Missouri's chaotic style of low-density development is defacing the state's rural heritage, gutting towns and cities, and exacting a heavy toll on Missourians' pocketbooks and quality of life just when the state needs to compete at a higher level on those factors.

Just look around:

Strip malls and home sites chewed across nearly 350 square miles of Missouri prairie and fields in the 1990s as sprawl engulfed rural Missouri and the state continued to develop land almost four times as fast as it's been adding population.

Cities are struggling, as fast exurban growth either outstrips city and town growth or, in the case of St. Louis, drains the center-city of vibrancy.

And recently decline has spread beyond the state's big urban centers into numerous older suburbs, so that inner-ring municipalities like Wellston and Rock Hill in the St. Louis area, or Raytown and Grandview near Kansas City, now suffer from population losses.

Why do these trends matter? For some the concern is cultural. They fear the state is losing its rural ambiance. For others the threat is environmental. They know scattershot development is tainting the Ozark lakes and degrading Missouri's natural areas.

However, for us the concern is mostly economic: By remaining virtually laissez faire on growth and development issues, we fear the Show Me State is undercutting its ability to parlay its very real assets in the life sciences and other high-value industries into a broader prosperity.

On the one hand, Missouri's dispersed development adds to the size of the state's enormous—and crumbling—highway system. Already Missouri taxpayers struggle with a maintenance backlog that will require half a billion dollars a year over the next 10 years—$200 million more than current finding will provide.

On the other, we suspect that the state's spread-out, low-quality development diminishes Missouri's appeal to the educated workers necessary to prosper in biotech, medical instruments, and infomatics. Educated workers gravitate to vibrant urban centers with plenty of amenities. Missouri's sprawl, by contrast, drives them away by draining the state's downtowns and Main Streets of life and variety.

And so we say it again: Missouri and the gubernatorial candidates need to face up to some tough realities this fall:

• Missouri can't afford to keep sprawling, even with tax revenues stronger this year. Blunt and McCaskill need to tell Missourians how they will foster more efficient, less chaotic growth that doesn't break the bank

 

Ditto the highway issue: Notwithstanding rural pleas, Missouri can't afford to keep building new roads until it contends with the maintenance hole it's paved itself into. The candidates absolutely must explain how they will modernize the state's deteriorating transportation system while aligning it with the principles of sound land-use and fiscal sanity

 

And what about the whole connection of economic vitality to strong cities and higher education? Growth now depends on brainpower and quality of life. Therefore, the candidates owe it to Missourians to detail how they will bolster the quality and affordability of Missouri's colleges and universities. They also must explain how they plan to bolster the state's flagging town and city centers to attract and retain the best and the brightest

In sum, the Show Me State stands at a crossroads.

With huge issues about their state's future livability and prosperity in the balance, Missourians shouldn't buy into a campaign focused on character issues and divisive wedge issues.

Instead, they should insist candidates Blunt and McCaskill address the state's problems head on and get to work.

 

      

Event Information

Antibacterial drug resistance is a global public health threat poised to worsen due to the combination of the inappropriate use of existing drugs and a marked decline in innovative antibacterial drug development. In order to tackle this problem, stakeholders must consider comprehensive strategies that address both drug development and stewardship.

On February 7, the Engelberg Center for Health Care Reform convened an expert workshop, “Modernizing Antibacterial Drug Development and Promoting Stewardship” to explore a two-pronged approach to combating antibacterial drug resistance that includes: 1) the development of pathogen-focused antibacterial drugs that target the most serious public health threats; and 2) stewardship efforts for all antibacterial products in order to preserve their utility. Participating stakeholders included experts from the drug development and health care industries, the clinical community, government, and academia. These stakeholders shared their insights on potential frameworks and evidentiary considerations for pathogen-focused drug development, and efforts underway to promote the appropriate use of commonly used antibacterial drugs in the ambulatory care setting.

Event Materials

• Antibiotic Development Slides
• 07 antibacterial expert workshop discussion guide
• 07 antibacterial expert workshop public agenda
• 07 antibacterial expert workshop meeting summary

       

Antimicrobial resistance is one of the most significant threats to public health globally. It will worsen in the coming decades without concerted efforts to spur the development of new antibiotics, while ensuring the appropriate use of existing antibiotics. Antimicrobial therapy is essential for treating and preventing bacterial infections, some of which can be life-threatening and acquired as a result of
critical medical interventions, including surgery, chemotherapy and dialysis. However, the international rise in antimicrobial resistance has weakened our antibiotic armamentarium and multi-resistant bacteria now cause over 150,000 deaths annually in hospitals around the world (WHO, 2013). Unfortunately, the evolution of drug-resistant pathogens is unavoidable due to random genetic changes in the pathogens that can render antibiotics ineffective. While antibiotic therapy can succeed in killing susceptible pathogens, it also inadvertently selects for organisms that are resistant. Because each exposure to antibiotics contributes to this process, efforts to restrict antibiotic usage only slow the development of resistance. Ultimately, innovative antimicrobial drugs with diverse mechanisms of action will be needed to treat emerging resistant pathogens.

Combating resistance

Inappropriate use of antibiotics contributes significantly to the acceleration of resistance. Needlessly exposing patients to antibiotics (for example, for viral or mild infections likely to resolve on their own), the use of overly broad-spectrum antibiotics and suboptimal doses of appropriate therapy hasten the evolution of resistant pathogens. While affordable, rapid and accurate point-of-care diagnostics are essential for determining appropriate therapy for many bacterial diseases, routine clinical use will be limited if the tests are too expensive or not accessible during routine clinical encounters. In the absence of a clear diagnostic result, many health care providers prescribe empiric broadspectrum therapy without knowing exactly what they are treating. Although inappropriate use is widespread in many parts of the world, where antibiotics are available without a prescription or oversight by a health care provider or stewardship team, overuse abounds even where antibiotic prescribing is more tightly regulated.

Studies conducted in the USA indicate that around 258 million courses of antibiotics are dispensed annually for outpatient use (Hicks, 2013) and up to 75 per cent of ambulatory antibiotic prescriptions are for the treatment of common respiratory infections, which may or may not be bacterial in origin (McCaig,1995). Recent evidence suggests that over half of these prescriptions are not medically indicated. For example, 60 per cent of US adults with a sore throat receive an antibiotic prescription after visiting a primary care practice or emergency department, despite the fact that only ten per cent require treatment with antibiotics. This is particularly troubling given the availability of rapid tests that can detect Group A Streptococcus, the bacteria responsible for the ten per cent of cases that require antibiotic treatment.

The overuse of antibiotics has been driven largely by their low cost and clinical effectiveness, which has led many patients to view them as cure-alls with few risks. This perception is reinforced by the fact that antibiotics are curative in nature and used for short durations. However, the clinical effectiveness of these drugs decreases over time, as resistance naturally increases, and this process is accelerated with inappropriate use. Moreover, there are numerous consequences associated with the use of antibiotics, including over 140,000 emergency department visits yearly in the USA for adverse incidents (mostly allergic reactions; CDC, 2013a). In addition, antibiotics can eliminate protective bacteria in the gut,
leaving patients vulnerable to infection with Clostridium difficile, which causes diarrhoeal illness that results in 14,000 deaths every year in the USA (CDC, 2013b). It is estimated that antimicrobial resistance costs the US health care system over US$20 billion annually in excess care and an additional $35 billion in lost productivity (Roberts et al., 2009).

The inappropriate use of antimicrobial drugs is particularly concerning because highly resistant pathogens can easily cross national borders and rapidly spread around the globe. In recent years, strains of highly drug-resistant tuberculosis, carbapenem-resistant Enterobacteriaceae and other resistant pathogens have spread outside their countries of origin within several years of their detection. Because resistant bacteria are unlikely to stay isolated, stewardship efforts must be improved globally and international attention is needed to improve surveillance of emerging pathogens and resistance patterns.

A major challenge for clinicians and regulators will be to find stewardship interventions that can be scaled-up and involve multiple stakeholders, including providers, drug manufacturers, health care purchasers (insurers), governments and patients themselves. Such interventions should include practical and costeffective educational programmes targeted towards providers and patients that shift expectations for antibiotic prescriptions to a mutual understanding of the benefits and risks of these drugs.

Educational programmes alone, however, will not be sufficient to lower prescribing rates to recommended levels. Pushing down the inappropriate use of antibiotics also warrants stronger mechanisms that leverage the critical relationships between the stakeholders. For example, health care purchasers can play an important role by using financial disincentives to align prescribing habits with clinical guidelines that are developed by infectious disease specialists in the private and public sectors. This type of approach has the potential to be effective because it includes multiple stakeholders that share responsibility for the appropriate use of antibiotics and, ultimately, patient care.

Key obstacles to antibiotic development

The continual natural selection for resistant pathogens despite efforts to limit antibiotic use underscores the need for new antibiotics with novel mechanisms of action. To date, antimicrobial drug innovation and development have not kept pace with resistance. The number of approved new molecular entities (NME) to treat systemic infections has been steadily declining for decades (see Figure 1). Some infections are not susceptible to any antibiotic and in some cases the only effective drugs may cause serious side effects, or be contra-indicated due to a patient’s allergies or comorbidities (e.g. renal failure). There is significant unmet medical need for therapies that treat serious and life-threatening bacterial diseases caused by resistant pathogens, as well as some less serious infections where there are few treatment alternatives available (e.g. gonorrhoea).

Antibiotic development for these areas of unmet medical need has been sidelined by a number of scientific, regulatory and economic obstacles. While the costs and complexity of any clinical trial necessary for approval by drug regulators can be substantial, in part due to the large study samples needed to demonstrate safety and efficacy, the infectious disease space faces a number of unique clinical challenges. Patients with serious drug-resistant infections may be in need of urgent antibiotic therapy, which can preclude efficient consent and timely trial enrolment procedures; prior therapy can also confound treatment effects if the patient is later enrolled in a trial for an experimental drug. In addition, many patients with these pathogens are likely to have a history of longterm exposure to the health care setting and may have significant comorbidities that render them less likely to meet inclusion criteria for clinical trials.

Emerging infections for which there are few or no treatment options also tend to be relatively rare. This makes it difficult to conduct adequate and well-controlled trials, which typically enrol large numbers of patients. However, clinical drug development can take many years and waiting until such infections are more common is not feasible. Another issue is that it may also not be possible to conclusively identify the pathogen and its susceptibility at the point of enrolment due to the lack of rapid diagnostic technologies. Ultimately, uncertainty about the aetiology of an infection may necessitate trials with larger numbers of patients in order to achieve sufficient statistical power, further compounding the challenge of enrolling seriously ill infectious disease patients in the first place.

The need to conduct large trials involving acutely ill patients that are difficult to identify can make antibiotic development prohibitively expensive for drug developers, especially given that antibiotics are relatively inexpensive and offer limited opportunities to generate returns. Unlike treatments for chronic diseases, antibiotic therapy tends to last no longer than a few weeks, and these drugs lose efficacy over time as resistance develops, leading to diminishing returns. The decline in antimicrobial drug innovation is largely due to these economic obstacles, which have led developers to seek more durable and profitable markets (e.g. cancer or chronic disease) in recent decades. There are only a handful of companies currently in the market and the development pipeline is very thin. Changes to research infrastructure, drug reimbursement and regulation are all potentially needed to revitalise antibiotic innovation.

Opportunities to streamline innovative antibiotic development

In the USA, several proposals have been made to expedite the development and regulatory review of antibiotics while ensuring that safety and efficacy requirements are met. In 2012, the US President’s Council of Advisors on Science and Technology recommended that the US Food and Drug Administration (FDA) create a ‘special medical use’ (SMU) designation for the review of drugs for subpopulations of patients with unmet medical need. Drug sponsors would be required to demonstrate that clinical trials in a larger patient population would need much more time to complete or not be feasible. A drug approved under the SMU designation could be studied in subgroups of patients that are critically ill, as opposed to the broader population, under the condition that the drug’s indication would be limited to the narrow study population. The SMU designation was discussed at an expert workshop convened by the Brookings Institution in August 2013. Many participants at the meeting agreed that there is a pressing need to develop novel antibiotics and that such a limited-use pathway could support the appropriate use of newly approved drugs.

The Infectious Diseases Society of America developed a related drug development pathway called the Limited Population Antibacterial Drug (LPAD) approval mechanism. The LPAD approach calls for smaller, faster and less costly clinical trials to study antibiotics that treat resistant bacteria that cause serious infections. Both the SMU and LPAD approaches would allow drug developers to demonstrate product safety and efficacy in smaller patient subpopulations and provide regulatory clarity about acceptable benefit–risk profiles for antibiotics that treat serious bacterial diseases. The US House of Representatives is currently considering a bill¹ that incorporates these concepts.

A recent proposal from the drug manufacturer industry for streamlined antibiotic development is to establish a tiered regulatory framework to assess narrow-spectrum antibiotics (e.g. active versus a specific bacterial genus and species or a group of related bacteria) that target resistant pathogens that pose the greatest threat to public health (Rex, 2013: pp. 269–275). This is termed a ‘pathogen-focused’ approach because the level of clinical evidence required for approval would be correlated with the threat level and feasibility of studying a specific pathogen or group of pathogens. The pathogen-focused approach was also highlighted at a recent workshop at the Brookings Institution (Brookings Institution, 2014). Some experts felt that the approach is promising but emphasised that each pathogen and experimental drug is unique and that it could be challenging to place them in a particular tier of a regulatory framework. Given that pathogen-focused drugs would likely be marketed internationally, it will be important for drug sponsors to have regular interactions and multiple levels of discussion with regulators to find areas of agreement that would facilitate the approval of these drugs.

Antibiotics with very narrow indications could potentially support stewardship as well by limiting use to the most seriously ill patients. Safe use of these drugs would likely depend on diagnostics, significant provider education, labelling about the benefits and risks of the product, and the scope of clinical evidence behind its approval. Because these antibiotics would be used in a very limited manner, changes would potentially need to be made to how they are priced and reimbursed to ensure that companies are still able to generate returns on their investment. That said, a more focused drug development programme with regulatory clarity could greatly increase their odds of success and, combined with appropriate pricing and safe use provisions, could succeed in incentivising antimicrobial drug development for emerging infections.

Endnote
1 H.R. 3742 – Antibiotic Development to Advance Patient Treatment (ADAPT) Act of 2013.

References
Barnett, M. L. and Linder, J. A., 2014. ‘Antibiotic prescribing to adults with sore throat in the United States, 1997–2010’. JAMA Internal Medicine, 174(1), pp. 138–140.

Brookings Institution, 2013. Special Medical Use: Limited Use for Drugs Developed in an Expedited Manner to Meet an UnmetMedical Need. Brookings Institution. Available at: www.brookings.edu/events/2013/08/01-special-medical-use

Brookings Institution, 2014. Modernizing Antibacterial Drug Development and Promoting Stewardship. Available at: www.brookings.edu/events/2014/02/07-modernizing-antibacterialdrug-development [Accessed 11 March 2014].

CDC, 2013a. Antibiotic resistance threats in the United States,2013 [PDF] CDC. Available at: www.cdc.gov/drugresistance/threatreport-2013/pdf/ar-threats-2013-508.pdf#page=25 [Accessed 16 January 2014].

CDC, 2013b. Clostridium difficile. Antibiotic resistance threats in the United States, 2013 [PDF] CDC. Available at: www.cdc.gov/drugresistance/threat-report-2013/pdf/ar-threats-2013-508.pdf#page=50 [Accessed 16 January 2014].

Hicks, L. A. et al., 2013. ‘US Outpatient Antibiotic Prescribing, 2010’. New England Journal of Medicine, 368(15), pp. 1461–1463.
Infectious Disease Society of America, 2012.

Limited Population Antibacterial Drug (LPAD) Approval Mechanism. Available at: www.idsociety.org/uploadedFiles/IDSA/News_and_Publications/IDSA_News_Releases/2012/LPAD%20one%20pager.pdf [Accessed 5 March 2014].

Infectious Disease Society of America, 2012. Limited Population Antibacterial Drug (LPAD) Approval Mechanism [PDF] Infectious
Disease Society of America. Available at: www.idsociety.org/uploadedFiles/IDSA/News_and_Publications/IDSA_News_Releases/2012/LPAD%20one%20pager.pdf  [Accessed 18 January 2013].

Kumarasamy, K. K., Toleman, M. A., Walsh, T. R. et al.,2010. ‘Emergence of a new antibiotic resistance mechanism in India,
Pakistan, and the UK: A molecular, biological, and epidemiological study’. Lancet Infectious Diseases, 10(9), pp. 597–602.

McCaig, L. F. and Hughes, J. M., 1995. ‘Trends in antimicrobial drug prescribing among office-based physicians in the United
States’. Journal of the American Medical Association, 273(3), pp. 214–219.

President’s Council of Advisors on Science and Technology, 2012. Report to the President on Propelling Innovation in Drug
Discovery, Development and Evaluation. Available at:www.whitehouse.gov/sites/default/files/microsites/ostp/pcast-fdafinal.pdf    [Accessed 5 March 2014].

Rex, J. H. et al., 2013. ‘A comprehensive regulatory framework to address the unmet need for new antibacterial treatments’. Lancet Infectious Diseases, 13(3), pp. 269–275.

Roberts, R. R., Hota, B., Ahmad, I. et al., 2009. ‘Hospital and societal costs of antimicrobial – Resistant infections in a Chicago
teaching hospital: Implications for antibiotic stewardship’. Clinical Infectious Diseases, 49(8), pp. 1175–1184.

WHO (World Health Organization), 2010. Fact Sheet: Rational Use of Medicines [webpage] WHO. Available at:
www.who.int/mediacentre/factsheets/fs338/en [Accessed 28 February 2014].

WHO (World Health Organization), 2013. Antimicrobial Drug Resistance [PDF] WHO. Available at: http://apps.who.int/gb/ebwha/pdf_files/EB134/B134_37-en.pdf [Accessed 6 March 2014].

WHO (World Health Organization), 2013. Notified MDR-TB cases (number per 100,000 population), 2005–12. WHO. Available at:
https://extranet.who.int/sree/Reports?op=vs&path=/WHO_HQ_Reports/G2/PROD/EXT/MDRTB_Indicators_map [Accessed 28 February 2014].

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• Antibiotics Stewardship and Innovation

       

After decades of neglect, Latin American governments are increasingly focusing on urban slums. What often spurs their policy interventions is a desire to counter violent criminality leaking out from the poor marginalized slums controlled by gangs into the city centers the better-off residents want to keep safe. But tackling the socioeconomic dynamics of slums -- the trap of poverty, discrimination, lack of public goods and social services, and rule by nonstate actors -- is not only complex, but also costly. Governments, elites, and middle classes tend not to want to spend resources on slums. Effective policies have to be sustained for decades, and political will and tax revenues for such complex state-building are frequently scarce.

Focusing on a discreet intervention – providing low-cost housing – becomes tempting. Rarely is it sufficient. The condition of the buildings alone is not what makes a slum a slum. Moving residents from slums to better low-cost housing has encountered systematic challenges not just in Latin America, but also in other places where it has been tried, such as Kenya. Instead, policies need to focus on broader community dynamics, including public safety, legal job creation with sufficient income, human capital development, and robust connectivity of slums to economically-thriving areas, something residents of the latter often don’t want.

Paradoxically, real estate dynamics can have pernicious effects. If broader pacification does take hold and public safety in slums increases, some slum areas can become desirable real estate with vast development possibilities. Developers may well seek to buy the land by offering “better” low-cost housing to slum residents to get them to move. Since many slum residents do not have title to their residences, forced displacement also occurs, albeit under the cloak of being nice to the poor.

Instead of being limited to the provision of alternative residences, policies to address slums need to be about inclusion, economic growth, safety, and connectivity of slums with the thriving city parts, and accountability of city-governance authorities.

This commentary was originally published by the Inter-American Dialogue’s Latin America Advisor. 

      

       

       

       

       

       

Indian and Israeli relations are getting even friendlier: Indian Foreign Minister Sushma Swaraj visited Israel in January, and the trip is widely thought to precede higher level visits, including by Prime Minister Narendra Modi (he’d be the first Indian head of government to visit Israel). Israeli President Reuven Rivlin and Prime Minister Benjamin Netanyahu have both also indicated that they plan to travel to India “soon.”

The foreign minister’s visit was part of the ongoing Indian effort not just to broaden and deepen India’s relationship with Israel, but also to make it more public. But the trip—not just to Israel, but to what the Indian government now routinely calls the state of Palestine—also highlighted the Modi government’s attempt to de-hyphenate India’s relations with the Israelis and Palestinians. 

What is the state of India’s relationship with Israel, the Modi government’s approach toward it, and this de-hyphenated approach? 

A blossoming friendship

Since India normalized relations with Israel in 1992, the partnership has developed steadily. The countries have a close defense, homeland security, and intelligence relationship—one that the two governments do not talk much about publicly. Shared concerns about terrorism have proven to be a key driver; so have commercial interests (including Israel’s quest for additional markets and India’s desire to diversify its defense suppliers, get access to better technology, and co-develop and co-produce equipment). India has become Israeli defense companies’ largest customer. Israel, in turn, has shot up on India’s list of suppliers. 

In the early 1990s, Israel—like the United States—did not really figure on India’s list of defense suppliers. However, between 2005 and 2014, it accounted for 7 percent (in dollar terms) of military equipment deliveries—the third highest after Russia and the United States. As Indian President Pranab Mukherjee recently noted, Israel has crucially come through for India at times “when India needed them the most” (i.e. during crises or when other sources have not been available, for example, due to sanctions). The president referred to the assistance given during the Kargil crisis in 1999 in particular, but there has also been less publicly-acknowledged help in the past, including during India’s 1965 and 1971 wars with Pakistan. 

Beyond the defense and security relationship, cooperation in the agricultural sector—water management, research and development, sharing of best practices—might have the most on-the-ground impact, including in terms of building constituencies for Israel at the state level in India. Israeli ambassadors have indeed been nurturing this constituency and reaching out to the chief ministers of Indian states for a number of years. (Incidentally, India, for its part, has felt that the closer relationship with Israel has created a constituency for it in the United States.)

Economic ties have also grown: The two countries are negotiating a free trade agreement, and have been trying to encourage greater investments from the other. The success of Indian and Israeli information technology companies has particularly led to interest in collaboration in that sector. 

The governments have also been trying to increase people-to-people interaction through educational exchanges and tourism, with some success. Israeli tourism officials have highlighted the 13 percent increase in arrivals from India over the last year. And tourist arrivals to India from Israel have doubled over the last 15 years, including thousands of Israelis visiting after their compulsory military service. 

Let’s go public

The India-Israel relationship has developed under Indian governments of different stripes. It was normalized by a Congress party-led government and progressed considerably during the United Progressive Alliance coalition government led by the party between 2004 and 2014. However, while some ministers and senior military officials exchanged visits during that decade, there were not that many high-visibility visits—especially from India to Israel, with the foreign minister only visiting once. A planned 2006 trip by then Defense Minister Mukherjee was reportedly cancelled because of Israeli military operations in Gaza and then the Lebanon war. The last Israeli prime minister to visit India was Ariel Sharon in 2003, and no defense minister had ever visited despite those ties. 

The Israeli ambassador has talked about the relationship being “held under the carpet.” More bluntly, in private, Israeli officials and commentators have said that India has treated Israel like a “mistress”—happy to engage intimately in private, but hesitant to acknowledge the relationship in public. The explanations for this have ranged from Indian domestic political sensitivities to its relations with the Arab countries.

[I]n private, Israeli officials and commentators have said that India has treated Israel like a “mistress”—happy to engage intimately in private, but hesitant to acknowledge the relationship in public.

When the Bharatiya Janata Party (BJP)-led government took office in May 2014 with Modi at its helm, there was a belief that the partnership with Israel would be a priority and more visible. Relations under the BJP-led coalition government between 1998 and 2004 had been more conspicuous. When in opposition, BJP leaders had visited Israel, and also been supportive of that country in election manifestos and speeches. 

As chief minister of the state of Gujarat, Modi himself had expressed admiration for Israel’s achievements, including “how it has overcome various adversities to make the desert bloom.” Traveling there in 2006 with the central agricultural minister, he also helped facilitate trips for politicians, business leaders, and farmers from his state to Israel. His government welcomed Israeli investment and technological assistance in the agricultural, dairy, and irrigation sectors. And, at a time when Modi was not welcome in many Western capitals, Israelis reciprocated: Businesses and government engaged with him, with Israeli ambassadors and consul generals from Mumbai meeting with him long before European and American officials did so. Thus, Modi’s elevation to prime minister was welcomed in Israel, as was the appointment as foreign minister of Swaraj, a former head of the India-Israel Parliamentary Friendship Group.

However, the Modi government’s response to the Gaza crisis in summer 2014 left many perplexed and some of its supporters disappointed. The Indian government initially sought to avoid a debate on the crisis in the Indian parliament, on the grounds that it did not want “discourteous references” to a friend (Israel). After opposition complaints, there was a debate but the government nixed a resolution. In its official statements, the Modi government consistently expressed concern about the violence in general—and, in particular, both the loss of civilian life in Gaza and the provocations against Israel—and called for both sides to exercise restraint and deescalate. Yet, it then voted in support of the U.N. Human Rights Council (UNHRC) resolution that condemned Israel, a move that left observers—including many in the BJP base—wondering why the government didn’t instead abstain. 

Since then, however, the Modi government has moved toward the expected approach. The first sign of this was Modi’s decision to meet with Netanyahu on the sidelines of the opening of the U.N. General Assembly in 2014—despite reported hesitation on the part of some in the foreign ministry. Since then, there have been a number of high-level visits and interactions (and Twitter exchanges), including a few “firsts.” This past October, Pranab Mukherjee, for example, became the first Indian president to travel to Israel, where he declared the state of the relationship to be “excellent.” 

The Israeli ambassador to India has observed the “high visibility” the relationship now enjoys. Also noticed more widely was India abstaining in a July 2015 UNHRC vote on a report criticizing Israeli actions in the 2014 Gaza crisis. Indian diplomats explained the vote as due to the mention of the International Criminal Court (ICC) in the resolution, but observers pointed out that India has voted for other resolutions mentioning the ICC. Israeli commentators saw the abstention as “quite dramatic;” the Israeli ambassador expressed gratitude. Palestinian officials, on the other hand, expressed “shock” and criticized the vote as a “departure.” 

In the defense space, cooperation is only growing: The Indian government moved forward on (delayed) deals to purchase Spike anti-tank missiles and Barak missiles for its navy; it recently tested the jointly-developed Barak 8 missile system, along with Israel Aerospace Industries; and an Indian private sector company has reportedly formed a joint venture with an Israeli company to produce small arms. Cooperation is also continuing in the agricultural sector, with 30 centers of excellence either established or planned across 10 Indian states. More broadly, the two governments are seeking to facilitate greater economic ties, as well as science and technology collaboration. 

There have been questions about why Modi hasn’t visited Israel yet, despite the more visible bonhomie. But, in many ways, it made sense to have the Indian president take the first leadership-level visit during this government. Mukherjee’s position as head of state, as well as the fact that he was a life-long Congress party member and minister, helped convey to both Indian and Israeli audiences that this is not a one-party approach. This point was reinforced by the accompanying delegation of MPs representing different political parties and parts of the country. For similar reasons, it would not be surprising if there was a Rivlin visit to India before a Netanyahu one. 

De-hyphenation? 

The deepening—and more open—relationship with Israel, however, hasn’t been accompanied by a U-turn on the Indian government’s policy toward Palestine. What the Modi government seems to be doing is trying to de-hyphenate its ties with Israel and Palestine. Previous governments have also tried to keep the relationships on parallel tracks—but the current one has sought to make both relationships more direct and visible, less linked to the other, while also making it clear that neither will enjoy a veto on India’s relations with the other. 

The deepening—and more open—relationship with Israel, however, hasn’t been accompanied by a U-turn on the Indian government’s policy toward Palestine.

The Modi government doesn’t demure from referring to the “state of Palestine” rather than “the Palestinian Authority.” It held the first-ever Foreign Office consultations with the Palestinians last spring, and the Indian foreign ministry made it a point to release separate press releases for the president’s and the foreign minister’s trips to Israel and Palestine. The Indian president became the first foreign head of state to stay overnight in Ramallah. Modi met with Mahmoud Abbas, whom the Indian government refers to as the “president of the state of Palestine, on the sidelines of both the U.N. General Assembly meeting in New York and the climate change summit in Paris in 2015. The Indian foreign minister met with Abbas in 2014 in New York, and again in Ramallah on her visit. During their trips, both she and the Indian president also went to the mausoleum of Yasser Arafat (who the BJP in the past called “the illustrious leader of the Palestinian people”).

The government has reiterated India’s traditional position on a two-state solution, indicating its belief in an independent Palestinian state with East Jerusalem as its capital. It voted in favor of the resolution on raising the Palestinian flag at the United Nations, and has continued to sign on to BRICS declarations “oppos[ing] the continuous Israeli settlement activities in the Occupied Territories.” In Ramallah, Sushma Swaraj emphasized that India’s support for Palestinians remained “undiluted.” 

The continuity on this front is not just driven by historic and domestic political factors, but also by India’s broader balancing act in the region. Even as India’s relations with Israel have deepened, it has maintained—and even enhanced—its relations with Iran and the Gulf Cooperation Council (GCC) countries. Modi has welcomed the emir of Qatar, visited the UAE, and met with Iran’s Hassan Rouhani. The first-ever Arab-India Cooperation Forum ministerial meeting also took place in January. It would not be surprising if the Indian prime minister visited Saudi Arabia this year or there were high-level visits exchanged between Delhi and Tehran. The government has emphasized its “strategic intent and commitment to simultaneously enhance relations with the Arab world as well as Israel, without allowing it to become a zero sum game.” And, overall, the Israelis, Palestinians, and GCC countries have not pushed for Delhi to make a choice. 

The de-hyphenated approach, in turn, potentially gives Indian policymakers more space to take India’s relationship with Israel further. But, as was evident during the Indian president’s visit to the region, it hasn’t been problem-free and it has not been feasible to keep the two relationships entirely insulated. An upsurge in violence reportedly caused Israel to nix a proposal for Mukherjee to visit the Al-Aqsa mosque in Jerusalem. There was also some heartburn about the Israeli delay in clearing 30 Indians' computers destined for an India-Palestine Centre for Excellence in Information and Communication Technology at Al-Quds University in Ramallah, as well as its refusal to allow communications equipment to be transferred. In the Israeli press, there was criticism of the president’s lack of mention of Palestinian violence. The Indian president and the foreign ministry also found themselves having to explain the president’s remark in Israel that “religion cannot be the basis of a state.”

There have been other differences between India and Israel as well, notably on Iran (something officials have tended not to discuss publicly). There might be other difficulties in the future, stemming, for example, from: negative public and media reaction in India if there’s another Israel-Palestine crisis; the stalled free trade agreement negotiations; potential Israeli defense sales to China; renewed questions about defense acquisitions from Israel; or the behavior of Israeli tourists in India. But the relationship is likely to continue to move forward, and increase in visibility, including with visits by Rivlin, Netanyahu, and Modi—potentially before the 25th anniversary of the two countries establishing full diplomatic relations on January 29, 2017.

      

Editors’ Note: According to a new Pew poll, half of Israeli Jews have come to seek not only a Jewish majority but even Jewish exclusivity in Israel. That doesn’t bode well for Arab-Jewish coexistence in Israel, writes Shibley Telhami—even aside from what happens in the West Bank and Gaza. This post originally appeared on the Monkey Cage blog.

When U.S. leaders and commentators warn that the absence of a two-state solution to the Israeli-Palestinian conflict will make it impossible for Israel to be both a Jewish and democratic state, they generally mean that a Jewish democracy requires a Jewish majority; if Israel encompasses the West Bank and Gaza, Arabs will become a majority. What they may not have realized is that, in the meantime, half of Israeli Jews have come to seek not only a Jewish majority but even Jewish exclusivity.

That is one of the most troubling findings of a new Pew poll in Israel. And it doesn’t bode well for Arab-Jewish coexistence in Israel—even aside from what happens in the West Bank and Gaza.

This major study was conducted from October 14, 2014, to May 21, 2015, among 5,601 Israeli adults ages 18 and older. (Disclosure: I served as an adviser to the project). It found that 48 percent of all Israeli Jews agree with the statement “Arabs should be expelled or transferred from Israel,” while 46 percent disagreed. Even more troubling, the majority of every non-secular Jewish group, including 71 percent of Datim (modern orthodox Jews) agreed with the statement.

While age is not much of a factor when it comes to attitudes toward expelling Arabs from Israel, younger Israelis are slightly more likely to agree with the statement that Arabs should be expelled than older Israelis.

These attitudes are anchored in a broader view of identity and of the nature of the Israeli state. Overall, only about a third of Israeli Jews say their Israeli identity takes precedence over their Jewish identity, with the overwhelming majority of every group, except for secular Jews, saying their Jewishness comes first.

This view has consequences for citizen rights. Not surprisingly, the overwhelming majority of all Jewish Israelis (98 percent) feel that Jews around the world have a birthright to make aliya (immigration to Israel with automatic Israeli citizenship). But what is striking is that 79 percent of all Jews, including 69 percent of Hilonim (secular Jews) say that Jews deserve “preferential treatment” in Israel—so much for the notion of democracy with full equal rights for all citizens.

These attitudes spell trouble for Arab citizens of Israel who constitute 20 percent of Israel’s citizens. It’s true that attitudes are dynamic; they are partly a function of Jewish-Arab relations within Israel itself, but also outside, especially within the broader Palestinian-Israeli conflict. Like their Jewish counterparts, Arab citizens of Israel (mostly Muslim, but also including Christians and Druze), identify themselves with their ethnicity (Palestinian or Arab) or religion above their Israeli citizenship. And these ethnic/religious identities intensify when conflict between Israel and the Palestinians in the West Bank and Gaza intensifies. There is no way to fully divorce the broader Palestinian-Israeli conflict from Arab-Jewish relations within Israel.

In recent years, this latter linkage has become central for two reasons: loss of hope for a two-state solution, and the rise of social media that has displayed extremist attitudes that used to be limited to private space. In the era of Facebook and Twitter, Arab and Jewish citizens post attitudes that deeply offend the other: An Arab expresses joy at the death of Israeli soldiers killed by Palestinians, while a Jew posts a sign reading “death to Arabs.” Hardly the stuff of co-existence. Leave it to opportunist politicians, extremists and incitement to do the rest.

But there is also an American responsibility—not so much with regard to failure of diplomatic efforts, but with the very positing of the nature of the conflict itself, and the nature of the state of Israel. As President Obama considers steps he could undertake on the Israeli-Palestinian conflict before leaving office, he may contemplate addressing what has become a distorting and detrimental discourse that serves to give a pass to non-democratic attitudes, and diversion of attention from core problems.

First, there is something wrong with positing the possibility of Arabs as constituting a demographic problem for Israel. It legitimizes the privileging of Jewishness over democracy. It also distorts the reason why Israel is obligated to end occupation of the West Bank and Gaza; it has nothing to do with the character of Israel as such, but with international law and United Nations resolutions.

Second, while states can define themselves as they wish (and are accepted by the international community accordingly), the American embrace of the “Jewishness” of Israel, cannot be decoupled from the Palestinian-Israeli context, or from the overarching American demand that all states must be for all their citizens equally.

In part, this is based on the notion that the UN General Assembly (Resolution 181) recommended in 1947 dividing mandatory Palestine into an “Arab” and a “Jewish” State. In part, it’s based on the notion that the Palestinian-Israeli conflict is a political conflict that can be resolved through two states, one manifesting the self-determination of Jews as a people, and one manifesting the right of self-determination of Palestinians as a people. The two were bound together. An embrace of a Jewish state that excludes a Palestinian state defeats the principle.

If two states become impossible, America chooses democracy over Jewishness. In fact, this has been consistently reflected in American public attitudes across the political spectrum, most recently in this November 2015poll; in the absence of a two-state solution, 72 percent of Americans would want a democratic Israel, even if it meant that Israel ceases to be a Jewish state with a Jewish majority.

More centrally, even with two states—one manifesting Jewish self determination and one Palestinian self-determination—an overarching, principled American position takes precedence: If Israel is a state of the Jewish people, it must also be above all a state of all its citizens equally; (and if Palestine is to be a state of the Palestinian people, it must also be a state of all its citizens equally). This democratic principle, highlighted front and center in a reformulated American position, can help avoid legitimizing undemocratic attitudes in the name of Jewish identity.

      

For the last several years, the US government has been negotiating a free-trade agreement known as the Trans-Pacific Partnership (TPP) with 11 other countries across the Asia-Pacific and Latin American regions, which could have major impact on the pharmaceutical market.  When finalized it will be the largest free-trade agreement in history, impacting up to one-third of world trade and roughly 40 percent of the global gross domestic product. The deal has attracted a fair share of criticism from a wide range of groups, including concerns over proposed regulations for biologic drugs in participating countries. Specifically, critics are concerned about the length of data exclusivity granted to the companies that hold the patents on these drugs. Below is a primer on biologics and how they are being addressed in the TPP.

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What are biologics and biosimilars?

Biologic drugs include any therapy derived from a biological source; a group which includes vaccines, anti-toxins, proteins, and monoclonal antibodies. Because they are typically much larger and more structurally complex than traditional ‘small-molecule’ drugs, they are also more difficult—and much more costly—to develop and manufacture. Biologics are also among the most expensive drugs on the market, costing an average of 22 times more than nonbiologic drugs. Avastin, a cancer drug, can cost more than $50,000 a year, while the rheumatoid arthritis drug Remicade can cost up to $2,500 per injection.

Given these high costs, there is substantial interest in encouraging the development of biosimilars, a term used to describe follow-on versions of an original biologic. Estimates of the potential cost savings vary substantially, but some have predicted that competition from biosimilars could reduce US spending on biologics by $44 to $66 billion over the next ten years.  In the European Union, biosimilars have been on the market since 2006, and a 2013 analysis found that, for the 14 biosimilars on the market, the average price discount was about 25 percent. By 2020, the overall cost savings are projected to total $16-$43 billion.

After the Affordable Care Act (ACA) was passed in 2010, the US Food and Drug Administration (FDA) developed an accelerated approval pathway for biosimilars, modeled after the pathway used for the approval of small-molecule generics. In order to meet the criteria for biosimilarity, the drug must share the same mechanism of action for the approved condition of use, and there must be no clinically significant differences between the two drugs in terms of purity, safety, or potency. FDA recently approved its first biosimilar, Zarxio, which is a copy of the oncology drug Neupogen.

What issues are being raised over data exclusivity in the US?

Under current FDA regulations, biologic drugs are granted 12 years of data exclusivity following approval. During this period of exclusivity, the FDA may not approve a biosimilar application that relies on the data submitted as part of the original biologic application. This form of temporary monopoly is distinct from patent protection, which is granted well before approval and is not related to clinical data.  Data exclusivity does not prevent another company from generating the data independently, but drug companies are unlikely to go to the considerable (and costly) effort of replicating a full course of clinical trials for a drug that is already on the market. (Though biosimilars may need to undergo some additional clinical testing under current FDA regulations, the amount of data required to support approval would certainly be less than what is required for an original biologic approval.)

The 12-year exclusivity period for biologics was established in the ACA following intense debate, and has continued to attract criticism. (By contrast, the period of data exclusivity is just five years for small-molecule drugs.) Supporters argue that given the greater cost and difficulty of bringing a biologic to market a longer period of exclusivity is necessary to incentivize innovation. Others argue that the resulting restrictions on competition keep drug prices unnecessarily high, inevitably putting a strain on the health system and keeping potentially life-saving drugs out of reach for many patients.

How would the TPP affect data exclusivity?

For the 11 countries besides the U.S. that are involved in the TPP, current data exclusivity protections range from zero (Brunei) to eight years (Japan). Under the Obama Administration’s current proposal, participating countries would increase those periods to match the US standard of 12 years. Curiously, this proposal directly contradicts the administration’s ongoing domestic efforts to lower the period of data exclusivity. Since the ACA passed, the Obama administration has repeatedly proposed reducing it to seven, arguing that this would save Medicare $4.4 billion over the next decade. Some have noted that, once the 12-year period is enshrined in the TPP, it will become significantly more difficult to change it through the US legislative process. Furthermore, imposing US standards on the 11 member countries would inevitably restrict competition at the global level, and many patient advocacy and international humanitarian organizations have argued that doing so would undermine the efforts of US global health initiatives like the Vaccine Alliance and the Global Fund to Fight AIDS, Tuberculosis and Malaria, which rely on price competition to manage program costs.

It is unclear whether the US will be successful in its efforts. There have been reports that the issue of data exclusivity has become a significant point of contention, and the US delegation may seek to compromise on its demands. It may, for example, negotiate exceptions for the poorer countries involved in the negotiation, as the Washington Post notes. However, the details of the negotiations are largely confidential, which makes it challenging to assess the possibilities, their relative advantages, or how the US Trade Representative (which is leading the US negotiations) is balancing the need to ensure adequate incentives for innovation with the need to control drug costs and facilitate patient access to potentially life-saving therapies.

Editor's note: Elizabeth Richardson, a research associate in the Center for Health Policy, contributed to the research and writing of this post. 

       

Event Information

Strategies for facilitating biomarker development

The emerging field of precision medicine continues to offer hope for improving patient outcomes and accelerating the development of innovative and effective therapies that are tailored to the unique characteristics of each patient. To date, however, progress in the development of precision medicines has been limited due to a lack of reliable biomarkers for many diseases. Biomarkers include any defined characteristic—ranging from blood pressure to gene mutations—that can be used to measure normal biological processes, disease processes, or responses to an exposure or intervention. They can be extremely powerful tools for guiding decision-making in both drug development and clinical practice, but developing enough scientific evidence to support their use requires substantial time and resources, and there are many scientific, regulatory, and logistical challenges that impede progress in this area.

On October 27th, 2015, the Center for Health Policy at The Brookings Institution convened an expert workshop that included leaders from government, industry, academia, and patient advocacy groups to identify and discuss strategies for addressing these challenges. Discussion focused on several key areas: the development of a universal language for biomarker development, strategies for increasing clarity on the various pathways for biomarker development and regulatory acceptance, and approaches to improving collaboration and alignment among the various groups involved in biomarker development, including strategies for increasing data standardization and sharing. The workshop generated numerous policy recommendations for a more cohesive national plan of action to advance precision medicine.  

Event Materials

• 1027 Brookings biomarkers workshop agenda
• 1027 Biomarkers workshop backgrounderfinal
• 1027 Biomarkers workshop slide deckfinal
• 1027 Biomarkers workshop participant listfinal

       

In a recent analysis, I highlighted how employment and disconnection among young people vary by age, race, and place. In this podcast, I dig deeper into the data on the Washington, D.C. region. Although the area generally performs well on employment measures, not all young people are faring equally well.

Listen to the full podcast segment here: 

       

       

       

       

Jonathan Rauch describes the concept of honest graft in Washington politics and policymaking. Politics needs good leaders, but it needs good followers even more, and they don’t come cheap. Loyalty gets you only so far, and ideology is divisive. Political machines need to exist, and they need to work.

       

Walk Score®, a new Web site popular with urbanists and environmental advocates (www.walkscore.com), rates neighborhoods by their walkability--basically the ease of meeting daily needs on foot. The higher the Walk Score®, the more walkable a place is.

Beyond its utility, however, the rise of Walk Score® is another indicator that how the American Dream lays out on the ground has been fundamentally changing over the past 10 to 15 years. Dallas in general and downtown Dallas in particular is well on its way to accommodating this new version of the American Dream, but more needs to be done.

The Ozzie and Harriet drivable suburban vision of the American Dream is being supplemented by the Seinfeld vision of "walkable urbanism." Led by late-marrying young adults and empty-nester baby boomers, many households are looking for the excitement and options that living and working in a walkable urban place can bring. Current demographic trends promise continued demand.

A recent Brookings Institution survey of the largest 30 metro areas in the country identifies the 157 walkable urban places that play a regionally significant role, such as concentrations of employment, education, professional sports, entertainment and housing. It ranked these metros on their per capita number of walkable urban places. Washington, D.C., was first, followed by Boston, San Francisco, Denver and Portland.

The top 15 metro areas had the vast majority, 85%, of these walkable urban places, though only two-thirds of the surveyed population. This showed that the top 30 metros are dividing between haves and have nots: metropolitan areas that have many walkable urban options and those that are lagging. Additionally, two-thirds of these 157 places had rail transit, demonstrating the importance of rail transit to the emergence of walkable urbanism.

A surprising finding of the survey is that while downtowns are a major location of walkable urbanism, downtown adjacent places are exploding in number and size. Places like Lincoln Park in Chicago, Dupont Circle in Washington, D.C., and the Pearl District in Portland, Ore., are booming alongside their resurgent downtowns.

A major benefit of walkable urban development is that its keeps and attracts young adults to the metro area, many of whom willingly trade crushing car commutes for walkable places to live and work. Walkable urban places seem to attract the well educated, the so called "creative class." Even the nascent revival in downtown Detroit has seen 83% of new residents arriving with a college education, compared to 26% of the national population.

While the Dallas metro ranked only 25th of 30 in the Brookings' survey, there are reasons to believe your destiny is to become a major concentration of walkable urban places. That reasoning starts with your investment in Dallas Area Rapid Transit light rail and the Trinity Railway Express commuter rail. This is being followed by aggressively encouraging high-density zoning around rail stations and in downtown adjacent locations. The combination of rail transit and high density zoning is essential to allow the private real estate community to respond to the pent-up market and economic demand of walkable urban development.

Finally, it is crucial to manage the various walkable urban places that either exist or are evolving. The role model in the Dallas area is the DowntownDallas organization, which provides security, signage and strategic direction for downtown.

The future of the Dallas metro area is linked to your ability to provide both more walkability options and expanded offerings of existing walkable urban places. There should be 15-20 more places like downtown Dallas, downtown Fort Worth, Uptown, Plano Town Center and Addison Circle for the region to meet the pent-up demand for walkable urbanism.

Building those additional walkable urban places will continue the economic development miracle that has been Dallas metro for so many years and it will increase your Walk Scores® as well.

       

An economic analysis of a sample of neighborhoods in the Washington, D.C. metropolitan area using walkability measures finds that:

• More walkable places perform better economically. For neighborhoods within metropolitan Washington, as the number of environmental features that facilitate walkability and attract pedestrians increase, so do office, residential, and retail rents, retail revenues, and for-sale residential values.

• Walkable places benefit from being near other walkable places. On average, walkable neighborhoods in metropolitan Washington that cluster and form walkable districts exhibit higher rents and home values than stand-alone walkable places.

• Residents of more walkable places have lower transportation costs and higher transit access, but also higher housing costs. Residents of more walkable neighborhoods in metropolitan Washington generally spend around 12 percent of their income on transportation and 30 percent on housing. In comparison, residents of places with fewer environmental features that encourage walkability spend around 15 percent on transportation and 18 percent on housing.

• Residents of places with poor walkability are generally less affluent and have lower educational attainment than places with good walkability. Places with more walkability features have also become more gentrified over the past decade. However, there is no significant difference in terms of transit access to jobs between poor and good walkable places.

The findings of this study offer useful insights for a diverse set of interests. Lenders, for example, should find cause to integrate walkability into their underwriting standards. Developers and investors should consider walkability when assessing prospects for the region and acquiring property. Local and regional planning agencies should incorporate assessments of walkability into their strategic economic development plans and eliminate barriers to walkable development. Finally, private foundations and government agencies that provide funding to further sustainability practices should consider walkability (especially as it relates to social equity) when allocating funds and incorporate such measures into their accountability standards.

The Great Recession highlighted the need to change the prevailing real estate development paradigm, particularly in housing. High-risk financial products and practices, “teaser” underwriting terms, steadily low-interest rates, and speculation in housing were some of the most significant contributors to the housing bubble and burst that catalyzed the recession. But an oversupply of residential housing also fueled the economic crisis.

However, a closer look at the post-recession housing numbers paints a more nuanced picture. While U.S. home values dropped steadily between 2008 and 2011, distant suburbs experienced the starkest price decreases while more close-in neighborhoods either held steady or in some cases saw price increases. This distinction in housing proximity is particularly important since it appears that the United States may be at the beginning of a structural real estate market shift. Emerging evidence points to a preference for mixed-use, compact, amenity-rich, transit-accessible neighborhoods or walkable places.

Download » (PDF)

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Editor's Note: In this blog, Vera Songwe introduces the African Leadership Transitions Tracker, a new interactive that aims to start a broader conversation about leadership transitions and what they mean for the region and beyond.

On March 28, Nigerians voters will go to the polls to participate in their nation’s fifth election since the military handed over power to civilians in 1999. As Africa’s largest economy and an important oil exporter, this election comes at an important time for Nigeria and for the continent as a whole.

Events around this election have generated significant debate around electoral and voting processes on the continent such as the importance of a constitution, the cost, the frequency and level of contestability, and the power of incumbency in African elections. However, amid this dialogue, much less consideration has been devoted to where this election stands within the continuum of leader transitions Nigeria has experienced since it first gained independence in 1960. Nigerians have, in fact, gone through 18 leadership transitions in the last 55 years, including the untimely death of former President Umaru Masu Yar’Adua in May 2010, the multiparty elections that brought President Olusegun Obasanjo to power in 1999, and the first presidential elections that brought President Shegu Shagari to power in 1979. Nigeria’s high rate of leadership changeover should not, however, be considered illustrative of Africa’s overall story. On the contrary, a high level of diversity exists among countries in the region on this measure, with countries like Angola having had only one leadership transition since it achieved its independence in 1975, and Benin, on the other hand, undergoing an election, coup, or other type of leadership transition nearly every two years in the country’s 55-year post-independence history. However, overall in Africa today there are more peaceful and competitive leadership transitions than there have been over the last six decades. This contestability process is gaining ground across the continent, and while coups d’etat appear to be fading revolutions are gaining ground where competition has not taken hold.

The recent passing of Singapore’s 30 year-long leader Lee Kwan Yew credited with having taken Singapore from a third world country to a fully developed country in less than a generation, has brought the question of leadership and leadership transitions back to the fore. A 2010 report by Michael Spence’s Growth Commission heralds Lee Kuan Yew as the hero of Singapore’s growth story. The African Leadership Transition Tracker hopes to launch a dialogue on what the frequency, nature, and scope of leadership transitions mean for African countries’ growth, stability, and development trajectory overall. Moreover, how have transition trends in the region changed from the time of the African founding fathers and the tumultuous years of the 1960s to the present day?

As an initial step towards thinking this question through, Brookings’s African Growth Initiative is today launching the African Leadership Transitions Tracker as a resource both to inform readers about African political history and a tool to initiate analysis on what leadership changeover might mean (or not mean) for development. The Transitions Tracker specifically records all changes that have occurred at the head-of-state level in every African country between the end of the colonial period and the present day. We are hoping that recording this information and presenting it visually (and as a downloadable data set) will help start a broader conversation and support additional work on these issues. Brookings will update this data on a regular basis, and we welcome your feedback as we further refine this interactive. Moreover, the information we present today is by no means the full story—key variables are needed to complement this study, including, for example, the various political party affiliations of leaders within a country or cross tabulations with resources that seek to measure the level of citizen participation and engagement in these transitions. However, as further analysis takes place, we are hoping that the African Leadership Transitions Tracker will enrich dialogue about developments occurring in the region and place current news on elections or other types of changeover events within the broader context of the continent’s leadership story overall.  Over the next few months, we will be running a series of articles based on this data.  

Special thanks to Ehui Adovor, graduate student at George Washington University and the many AGI research assistants, analysts, and program staff that have supported this project, including Jessica Pugliese, Brandon Routman, Christina Golubski, Andrew Westbury, and Amy Copley.

      

President Paul Kagame of Rwanda has been a very effective leader for his small Central African nation. First, he led the Rwandan Patriotic Front when it ended the 1994 genocide and brought a measure of stability to a land that had just suffered a terrible holocaust. Then as vice president until 2000, and president since then (being formally elected under the current constitution twice, in 2003 and 2010), he has helped usher in remarkable economic growth and human development. Many Western leaders have personally offered high praise for Kagame—calling him a “visionary” and among “the greatest leaders of our time”—and have marshalled considerable resources to aid in Rwanda’s post-genocide development.

But his leadership has not been without controversy. There have been some excesses and allegations of abuses of political opponents during the Kagame years. And his abuses of power have arguably increased in recent years—suggesting that, whatever his past accomplishments, his real motives for wanting to stay in office may have less to do with a call to service and more with his increasingly autocratic tendencies.

On balance, though, he has been an effective leader who has saved countless lives. Does that legacy justify his seeking what would be a third seven-year term in the nation’s 2017 presidential elections? Rwandan voters choose today whether to approve a constitutional amendment—already passed by the Senate—that would allow President Kagame another stint in power.

Murky waters 

Kagame has been for his nation arguably what Franklin D. Roosevelt was for our own, given the nature of the emergencies facing Rwanda that led to his ascent to power. And we elected FDR four times. To be sure, after the fact, we thought better of it and decided never to allow that again. But we did it. George Washington chose not to run for a third term, but he was blessed with a legion of founding fathers of remarkable ability all around him, and was succeeded by Adams and Jefferson. Lincoln never had the chance to consider a third term—and maybe we would have been better off in the day if he could have served for many years. 

I am not comparing Kagame with Washington, Lincoln and Roosevelt to assert that he belongs in their league. But to dramatize the issue, suppose that he is just as important to his nation as those three gentlemen have been to ours. Would that justify another term? Putting the question this way muddies the waters, but I think it is the only fair way to address the issue. 

More often than not, of course, two terms is more than a given leader deserves. Witness President Hamid Karzai in Afghanistan, or Pierre Nkurunziza in Burundi who just garnered a third term amidst much violence, or Joseph Kabila next door in the Democratic Republic of Congo who is due to step down next year. Indeed, Kabila may or may not do so—and it would be unambiguously bad for his country and American interests if he stayed past that date. All the more reason that, for consistency, we should want Kagame to step down—otherwise leaders like Kabila could use his behavior to excuse and justify their own attempts to hold onto power indefinitely. 

But is it really so simple in his case, and is it really such an easy call? Another tough case is President Yoweri Museveni of Uganda, who has brought a degree of peace and development to his nation after the Amin and Obote periods—but who is now in his sixth term. Perhaps once in a blue moon, a nation can benefit from multiple terms in office for a particularly gifted leader at a particularly fraught and important period in a country’s history.

Mr. Kagame: Prove us wrong 

Ultimately, institution building and the establishment of solid democratic procedures are the only sure guarantor of long-term national stability. Kagame is only 58, but he will not live forever. At some point, Rwanda really will need a succession strategy. 

So I hope Kagame chooses not to run again. But if he does run, we need to pressure him to justify it in terms of the legacy he is helping to create so that Rwanda will have future leaders and institutions that can keep the country moving forward.

Ultimately, institution building and the establishment of solid democratic procedures are the only sure guarantor of long-term national stability.

Thus, if Kagame does persuade the public to change the constitution and does win a third elected term, we should cut aid (though not impose stronger measures like trade sanctions) to show our disapproval. That is, we should cut aid unless he uses the third term—which must certainly be his last—to show his countrymen and the world that in fact his rule is about improving his country, not turning it into another fiefdom run by an African strongman. 

For us, taking this approach will necessitate creating a method for evaluating whether Rwanda’s institutions gradually move closer to true democracy in the years ahead so that, whatever might happen with a third term, a fourth term becomes entirely unjustifiable. Presidents for life are bad for their countries while they are alive, and they are dangerous for their countries when they die. Kagame needs to understand this basic fact before he becomes the next world leader who starts out a noble man and then allows power to corrupt him.

More than two decades after the genocide, Rwanda is ready for a more vigorous democratic process—and any responsible leader should be building up the institutions to prepare for that eventuality. Stronger political parties that do not have exclusive ties to just one ethnic group, clear laws constraining and regulating the nature of political competition so that it is inclusive and nonviolent, strong courts—these are the essence of an established democracy, and Rwanda needs them.