A right time to shift pharma gears-THE HINDU-06-06-2020
Medicines are among humanity’s greatest achievements. They have helped attain dramatic improvements in health and longevity as well as huge cost savings through reduced sick days and hospitalizations.
The global market for pharmaceuticals is currently worth Rs110 crore lakh annually, 1.7% of the gross world product . Roughly 55% of this global pharmaceutical spending, Rs60 lakh crore, is for brand-name products, which are typically under patent.
Commercial pharmaceutical research and development efforts are encouraged and rewarded through the earnings that innovators derive from sales of their branded products. These earnings largely depend on the 20-year product patents they are entitled to obtain in WTO member states.
R&D and concerns:
While we should evidently continue funding pharmaceutical R&D, it is worth asking whether our current way of doing so is optimal. Merely 0.12% of this R&D spending is devoted to tuberculosis and malaria, which kill 1.7 million people each year.
Second, thanks to a large number of affluent or well-insured patients, the profit-maximising price of a new medicine tends to be quite high. Consequently, most people around the world cannot afford advanced medicines that are still under patent.
Every year, millions suffer and die from lack of access to medicines that can be mass-produced quite cheaply.
The Health Impact Fund could start with as little as Rs20000 crore per annum and might then attract some 10-12 medicines, with one entering and one exiting in a typical year. The Health Impact Fund would get pharmaceutical firms interested in certain R&D projects that are unprofitable under the current regime – especially ones expected to produce large health gains among mostly poor people.
Such projects would predominantly address communicable diseases, which continue to impose devastating disease burdens mainly upon the poor.
With the Health Impact Fund in place, there would be much deeper and broader knowledge about such diseases, a richer arsenal of effective interventions and greater capacities for developing additional, more targeted responses quickly.
Pharmaceutical innovators would thus have been much better prepared to supply or develop suitable medicines for containing the COVID-19 outbreak. The Health Impact Fund would make an important difference also by rewarding for health outcomes rather than sales. For selling a medicine, it helps, of course, if this medicine is known to be effective.
In sum, a reward mechanism oriented towards health gains rather than high-markup sales would lead to a sustainable research-and-marketing system that is better prepared for fast and effective responses to outbreaks of unknown diseases, such as COVID-19.
Issue of state risk:
Participation of commercial pharmaceutical firms is crucial for tackling global pandemics. Nowhere is this focus on results, which the Health Impact Fund would encourage in innovators, more important than in the domain of communicable diseases. If it succeeds in year seven, it can enjoy the world’s gratitude and collect three additional handsome reward payments for investment in its other research projects.
Still, despite the roughness of such a modelled baseline, the Health Impact Fund would give innovators the right incentives. Felicitas Holzer is a researcher in the Bioethics Center and Bioethics Network of the World Health Organization at the social science faculty of FLACSO in Buenos Aires, Argentina, and a Coordinator for governmental relations at Incentives for Global Health .
Thomas Pogge is Leitner Professor of Philosophy and International Affairs and founding Director of the Global Justice Program at Yale.