One problem is that federal grants are awarded to offset the direct costs of development and manufacturing of medical countermeasures but not the true cost of risk-taking to develop novel approaches. The Bioshield grants, for example, are used by some small biotechs to offset the costs of existing drug programs. Many companies repurpose drugs they already have on the shelf toward biodefense uses, hoping that their product might eventually make it into government stockpiles, generating a bigger return.

The program doesn’t provide for market-based rewards for innovation and risk-taking. As a result, companies are still reluctant to make the substantial investments needed to develop new medical countermeasures. To take one example, as far back as 2000 the National Institutes of Health announced the development of “a novel vaccine that prevents Ebola virus infection in monkeys.” Yet the 2014 Ebola crisis struck without a vaccine available for humans.

The challenge is that there’s no natural market for therapeutics aimed at bioterrorism or rare diseases, other than government stockpiling. To these ends, the Biomedical Advanced Research and Development Authority should develop a more explicit, prize-based system to offer market-based rewards for programs that successfully develop new countermeasures to national security risks. Grants could offset the direct costs of research and manufacturing, with prizes providing the requisite return.