How to encourage research into neglected diseases

There a few things that infuriate me about the pharmaceutical industry: the obscene returns on investment it gets, how it games the patent system, and how it neglects some important infectious diseases. But the pharmaceutical companies just respond to a poor institutional setup, where patents are too generously given and governments favor them too much compared to consumers (and the government itself, as in the USA). As for neglected diseases there is simply no money to be made as these are limited to poor developing countries.

Frank Müller-Langer studies how the discovery and provision of drug preventing and treating currently neglected infectious diseases could be improved. He distinguishes push and pull subsidies. Push programs are those that subsidizes the inputs, such as lab equipment or manpower. Pull programs subsidize results. The question is what to use. Basic research should quite obviously be helped with push programs. This is typically done in an academic environment where rewards come from publication, all you need is the means to conduct research, the will is there. The next phase, development and implementation, should more be helped with pull programs. Incentivizing results is more important there and could lead to surprises. I am thinking here, in a very different context, about the Ansari X Prize that rewarded with $10 million the first non-governmental organization to successfully launch a space shuttle. The prize seemed low compared to the costs, yet 26 organizations participated. Something similar should work for malaria, yellow fever, etc.