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point / counterpoint
Providing Medicines For The Poor Two views on how the PHARMACEUTICAL INDUSTRY can best meet the medical needs of impoverished people around the globe
CARING FOR THE POOR,
PFIZER
HÆGE HÅTVEIT
throughout the world, he says, provide millions especially their medical of people with lifesaving needs, seems an eternal medicines at little or no quest. In countries rich cost.—WILLIAM SCHULZ and poor around the globe, untold millions of people need lifesaving drugs and other medical treatments. POGGE POINT This need often goes unTreatments for met, particularly in the HIV illustrate developing world where the dilemma tropical diseases most of between acthe rest of us will never cess to and innovation in encounter ravage lives and medicines: Second-line communities. HIV/AIDS therapies have dramatically continues to be an especial reduced the burdens of HIV burden there. infection in affluent counIn recent years, a growtries, but at a price of $800 DEBATERS Pogge (left), Leitner Professor of Philosophy & International Afing chorus has called for to $1,500 per year, they are fairs at Yale University, contends that an option called the Health Impact Fund the removal of patent out of reach for the majority could provide medicines to the poor and improve global health; Hedger, execprotection on some drugs of people until the 20-year utive managing director of international affairs at Pfizer, argues that today’s as a means of providing afpatents run out. We could intellectual patent system is providing solutions for global health needs. fordable treatments to the insist on lower prices, but poor. Generic versions of that would undermine the provide medicines for the poor, reward patented medicines can be produced and incentives for pharmaceutical companies innovation, and allow drug companies to sold for a fraction of the cost. The counto develop new medicines. By facilitating recoup their costs. A counterargument, terargument is that removing intellectual access we strangle innovation, and by stimuin favor of the intellectual property rights property rights will stifle innovation by lating innovation through strong patents system in place in most of the developed taking away the monetary reward for riskwe obstruct access for many people to new world, comes from Philip Hedger, execubased R&D. Pharmaceutical companies, medicines they urgently need. tive managing director of international like all funders of innovation, must have a This terrible dilemma can be avoided affairs at Pfizer. He argues that there is mechanism by which they recoup the enorby introducing a new option: the Health demonstrable flexibility within the extant mous R&D costs that go into each new drug Impact Fund (HIF). This publicly funded system to work on models and mechanisms and other medical treatments. pay-for-performance mechanism would that apply state-of-the-art technologies Now, Thomas W. Pogge, a professor of give pharmaceutical innovators the option to tropical and other neglected diseases. philosophy at Yale University, presents anto register any new product. They would The private sector, in concert with govother approach, which he calls the Health promise to make it available at marginal ernments and charitable organizations Impact Fund. Such a fund, he claims, will cost wherever it is needed in exchange W W W.CE N - O N L IN E .O RG
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After years of unusually high concern for global health, we still lack many of the innovations that matter most. for annual reward payments based on the product’s global health impact during its first 10 years. The reward payments would be a share of a massive annual payout, with each registered product receiving a share equal to its share of the assessed health impact of all registered products. HIF would foster innovation, especially against diseases concentrated among the poor: tuberculosis, malaria, and other tropical diseases. Such diseases are now neglected because innovators cannot recover their R&D costs from sales to the poor. But with the option of an alternative reward based on health impact, heretofore neglected diseases would become some of the most lucrative R&D opportunities. The fund would promote access to new medicines by limiting the price of any registered product to the lowest feasible cost of production and distribution. It would motivate registrants to ensure that their product is widely available, perhaps at even lower prices, and that it is competently prescribed and optimally used. Registrants are rewarded not for selling their product, but for making it effective toward improving global public health. HIF will provide optimal incentives only if potential registrants are assured that the
rewards will actually be there in the decade following market approval. Core funding of HIF is therefore best guaranteed by a broad partnership of countries. If governments representing one-third of global income agreed to contribute just 0.03% of their gross national incomes, HIF could get started with $6 billion annually. This is a reasonable minimum because the high cost of developing new medicines requires large rewards and because the cost of health impact assessment should not consume too much of the annual budget. If HIF works well, it could be scaled up through increased allocations and accession of new funders. Governments would have the option of phased withdrawal over a 10-year period. HIF can be seen as an annual competition among innovators that ranges over all countries and diseases, with firms earning more money if their product has a larger impact on health. Health impact can be measured in terms of the number of quality-adjusted life years saved worldwide. The QALY metric is already extensively used by private and state insurers in determining prices for new drugs, so employing it in calculating HIF rewards is not a big leap. Taking as a benchmark the pharmaceutical arsenal before the registered medicine was introduced, HIF
HELPING OTHERS
would estimate to what extent it has added to the length and quality of human lives. This estimate would be based on data from clinical trials, including pragmatic trials in real-life settings, on tracking randomly selected medicines to their end users, and on statistical analysis of sales data as correlated with data about the global burden of disease. These estimates would necessarily be rough, at least in the early years. But so long as any errors are random, or at least not exploitable by registrants, HIF incentives would be only minimally disturbed. With HIF so designed, innovators would register products that can reduce the global burden of disease most cost-effectively. Filipino volunteer medical workers distribute free medicine to the poor.
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Products with the largest health impact would make the most money, thereby creating exactly the right incentives for innovation. And because HIF would be an optional system, the rate of reward is certain to be reasonable. If rewards were too high, new registrants would enter and dilute the payments to all registrants. If profits were too low, the reward rate would naturally increase as firms would choose, for more of their new products, to exploit their patent-protected pricing powers instead of registering them with HIF. Competition would ensure that registered products are rewarded at a rate that is profitable for innovators and maximizes the effect of HIF. To be certain that HIF is cost-effective relative to other public health expenditures, one can stipulate a maximum reward rate; if one year’s funds are not fully used, the remainder can be rolled over into future years. To reassure potential innovators, one can also add some protection against unreasonably low rewards. By creating incentives to provide important pharmaceutical innovations at low prices, HIF would easily pay for itself. Through lower drug prices, taxpayers would realize offsetting savings in national health systems,
insurance premiums, and direct pharmacy purchases. They would benefit from reductions in counterfeiting, wasteful litigation, and excessive marketing. By stimulating development of important but currently unprofitable medicines, making new highimpact medicines much more widely accessible, and encouraging efforts to ensure that medicines are optimally used, HIF would greatly reduce the global burden of disease and thereby produce large medical cost savings and gains in economic productivity. For a much fuller account of how HIF would work and why it is needed, visit healthimpactfund.org.
HEDGER POINT How can we stimulate innovation in the pharmaceutical industry without excluding the poor? Pharmaceutical innovation is benefiting patients in all socioeconomic environments. As new pharmaceutical and vaccine discoveries and innovations become available it is very important to find ways to ensure that patients the world over continue to benefit from such medical advances. The very high investment risk and funding required to support and stimulate this innovation is dependent on a system that can help ensure the prospect of a fair return on that investment. This assurance is largely provided through the intellectual property rights (IPR) system and patents in particular. Three questions arise. First, what is the
evidence that the IPR system is benefiting the poor? And we can define “the poor” as those who are unable or almost unable to afford health care, including medicines, and who also often suffer from additional diseases that do not afflict populations in wealthy nations. Second, are there gaps in the innovation pipeline and research for diseases that especially afflict the poor? And third, is the IPR system mutually exclusive to other potential complementary sources of financial, regulatory, and legal stimulations that may promote further research into diseases that especially affect the poor? For the first question—What is the evidence that pharmaceutical innovation is reaching the poor?—three key perspectives are important. The first is the extent to which there is access to existing medicines and vaccines for a wide range of diseases and medical conditions. That access is mostly evidenced by the World Health Organization’s Essential Drugs List of more than 300 safe, effective, and inexpensive medicines and vaccines. Most of these interventions were initially discovered or developed by the pharmaceutical industry and were patented products. The second perspective is the availability of interventions for diseases that mostly or exclusively affect the poor. There are, for example, treatments currently available for onchocerciasis, leprosy, trachoma, lymphatic filariasis, Guinea worm disease, schistosomiasis, malaria, and HIV/AIDS. These pharmaceutical inventions and developments are available notwithstanding the
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poor include differential or tiered pricing mechanisms for drugs and vaccines by the private sector, voluntary licensing arrangements with generic drug companies in the developing world, advanced funding instruments, and technology-transfer agreements. And that is not the entire list. Often these initiatives involve academia, the private sector, NGOs, government institutions, foundations, and the public sector. This is society operating to protect the poor in a mutually supportive and unified way, as it should. The pharmaceutical sector is engaged directly or indirectly in virtually all these mechanisms and initiatives. And all of these initiatives are feeding off and supported by the essential innovation that is propelled by the basic intellectual property system, especially patents. Is the IPR system mutually exclusive to other, potentially complementary sources of stimulation for diseases that especially affect the poor? Of course not. Most of the mechanisms and initiatives outlined above are relatively new, and many complement and draw upon the technology, expertise, and innovation of the pharmaceutical sector. For example, Pfizer has provided its new class of HIV/AIDS entry inhibitor technology to the International Partnership for Microbicides under a royalty-free agreement. Under this agreement, Pfizer has provided the technology for the entry inhibitor and technical assistance so that it could be developed into a microbicide that would protect women from HIV infection. Pfizer also has an agreement with the Special Programme for Research & Training in Tropical Diseases under which Pfizer, TDR, and African scientists are analyzing compounds in Pfizer’s molecular library to assess their utility for treating some of the tropical diseases that need better or new interventions. These are but two examples of many direct and partnering approaches that private, research-based biomedical companies are working on. There is debate, too, about potential new funding models and other types of fiscal and legal instruments and incentives that may support, accelerate, or sustain R&D for diseases that mainly affect the poor. Some believe that these would add even N EWSCOM
Malaria Venture. This nonprofit organifact that there is little or no commercial rezation focuses on developing new treatturn on these products. The two exceptions ments for and access to drugs for malaria. are drugs to treat malaria and HIV/AIDS. It is funded by a mix of nongovernmental Malaria treatments have a modest “travelorganizations (NGOs), foundations, and er’s market”—that is, prophylaxis for Westgovernments. ern visitors to malaria-endemic countries, Another example is the Drugs for Neand HIV/AIDS treatments are reimbursed glected Diseases Initiative. This drug develin industrialized nations. However, the vast opment organization was initiated by the majority of patients who need both antimacharitable group Doctors Without Borders larials and antiretrovirals reside in countries five years ago. It now attracts funding and where either the price of these drugs is very technology from a range of public and prilow or the drugs are provided free. vate players and focuses on four neglected The third perspective asks, What is the tropical diseases: human African trypanopipeline for new treatments and cures for somiasis, visceral leishmaniasis, Chagas diseases that mostly afflict the poor? In this disease, and malaria. category, pharmaceutical companies curMuch of the funding for diseases of the rently have R&D in Chagas disease, dengue developing world is genuinely new and fever, human African trypanosomiasis, incremental, coming from governments, leishmaniasis, leprosy, malaria, HIV/AIDS, NGOs, and foundations. There are also new onchocerciasis, and various soil-transmitmechanisms aimed at more sustained acted helminths. cess to funding, such as additional revenue For the second question—Are there from airline taxes. gaps in the innovation pipeline and reThere are also new models of R&D for search for diseases which especially afflict these diseases set up by private pharmathe poor?—the answer is yes. Despite the ceutical companies in developing counwork cited above, there are some diseases tries. These are stand-alone for which the existing treatments research facilities dedicated to are not optimal and a few for which IN REACH A diseases of the poor. interventions are nonexistent or child in Haiti Other varied and innovainadequate. And these diseases grips a bottle tive approaches to ensuring a pose additional and particular of antimalaria focus on diseases that affect the challenges to discovery and devel- medicine. opment of medicines and vaccines. Among them is designing and conducting clinical trials in less regulated environments because clinical trials can only be done where these diseases exist. These diseases are deserving of focus, resource, and sustained advocacy. Society has recognized that it cannot expect the pharmaceutical sector to have all the answers to these challenges. The need is too urgent, the cost is too great, the science is too complex. Recent years have therefore witnessed more funding, more focus, more advocacy, more innovative mechanisms and models, and the creation of various initiatives to add to the research pipeline for such diseases. Among these innovative mechanisms are disease-specific organizations that provide advocacy, access to medicines and vaccines, and product development, as well as research initiatives probing new interventions for tropical diseases. An example is the Medicines for
timately funded by taxpayers and, disproportionately, by the better-off. These same people are now funding different rewards for new medicines through high insurance premiums and high drug prices. So for them it makes little difference whether a new high-impact medicine is HIF-registered or rewarded through high prices. But this makes all the difference to
commercial pharmaceutical innovation is simply unsustainable. HIF can help solve this dilemma. It would ensure that all HIF-registered drugs are available everywhere at the lowest feasible cost of production and distribution. And it would amply reward the development of such drugs on the basis of their global health impact. Such rewards are ul-
more to the arsenal of instruments and funding already laid out here. These may well have merit but need further careful analysis. This debate will continue, as it must, so that no one institution or government becomes complacent or ambivalent about the need for patient equity in receiving the benefits of biomedical innovation. However, the critical focus of the private sector is to continue to listen and consider additional viable, innovative ideas to ensure that existing medicines and technologies are available to the poor.
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POGGE COUNTERPOINT In discussing his third question, Philip Hedger agrees that the existing IPR system is compatible with adding a supplementary reward mechanism such as HIF, which is optional for innovators. Focusing on Hedger’s first and second questions, I will here substantiate the urgency of such an addition. On the first question, I agree that the poor have better access to medicines under the IPR system than if pharmaceutical innovation were not incentivized at all. But I argue that there would be much better access still if HIF were added to the IPR system. There is much room for improvement. Today, some 30% of all human deaths are from poverty-related causes. Many of these deaths could be averted through better access to better medicines that are routinely available to the affluent. For most people in the world, price is a serious obstacle to getting needed medicines. This problem is not confined to the developing world. Some 50 million Americans, mostly poor, lack health insurance, and many of them face painful choices when prescribed an expensive medicine. Increasingly, even the insured in affluent countries find that their insurer does not cover important, but expensive, medicines, or that insurance covers only a fraction of the cost. The British National Health Service recently caused an uproar by refusing to fund, at an annual cost per patient of $34,000–$60,000, four kidney cancer drugs, including Pfizer’s Sutent. It is awful, of course, that lifesaving medicines cost so much, especially when they can be manufactured for a tiny fraction of this amount. But Hedger is right: Pharmaceutical innovators must make a sizable profit on marketing their medicine because they must cover the costs and risks of their R&D. Without such profits,
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