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Medicines for the World

A global R&D treaty could boost innovation and improve the health of the world’s poor—and rich.

By | October 1, 2012

image: Medicines for the World © studiovision/istockphoto.com

Evidence is mounting that the existing global system for pharmaceutical R&D is badly out of tune with the needs of society. Recently, national health systems in the United Kingdom and the Netherlands shied away from providing certain recommended medicines due to price. In the United States, waiting lists for state HIV drug assistance are lengthening due to the high cost of drugs (frequently more than US$20,000 per patient per year)—a painful irony as evidence rapidly mounts that earlier treatment of HIV not only benefits the patient, but also reduces the risk of transmission. Medicine prices are often just as high in developing countries, though incomes are far lower and social safety nets much weaker. In India, a year’s supply of the patented kidney cancer drug sorafenib is priced at more than US$60,000 per year, though the average annual income is less than $1,500. Governments, insurers, and households everywhere are struggling to afford new medicines.

At the same time, illnesses that primarily affect populations with little purchasing power, such as Chagas disease or malaria, are “neglected” because they offer little return on investment for industry. It is not only diseases of the poor that get neglected, but also those with small patient populations, such as ALS, and any other area of research that fails to generate sufficient market returns. For example, the empty pipeline for antibiotics has raised concern in rich and poor countries alike. These drugs are generally given to patients for a few days, and thus tend to be less lucrative than long-term treatments for chronic diseases such as diabetes, HIV, and heart disease. We are saddled with an R&D system that suffers from declining rates of innovation, unaffordable prices for end products, and a misalignment between research investments and the medical needs of society.

Patents are a blunt policy tool: they require trade-offs between innovation and the high prices that restrict patient access to medicines.


No single country can manage this problem alone. Pharmaceutical R&D is increasingly a global endeavor, undergirded by global rules. Today, research advances produced anywhere can benefit people and contribute to scientific progress everywhere. But financing knowledge production is tricky. Some countries may be tempted to benefit from the knowledge contributed by other countries, but not make commensurate investments. Such “free riding” could, in turn, result in global underinvestment in R&D or limitations on knowledge sharing. A set of rules is needed both to ensure that countries contribute fairly and to create norms and incentives to share knowledge as widely as possible.

 

This past April, a group of international experts convened by the World Health Organization (WHO), known as the Consultative Expert Working Group on Research and Development (CEWG), recommended just this solution—that countries begin negotiations over a binding treaty on medical R&D.

Better than patents


At the moment, the main set of global rules shaping R&D is the 1994 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which requires countries to provide patent protection for drugs and other health technologies. Patents allow pharmaceutical firms to recoup their investments by charging a monopoly price (higher than the cost of production) for new medicines. All countries purchasing patented medicines are thus making contributions towards R&D through these higher prices.

 

But patents are a blunt policy tool: they require trade-offs between innovation and the high prices that restrict patient access to medicines. Such trade-offs can be deadly and are neither morally acceptable nor politically sustainable in a world where 85 percent of the population lives in low- and middle-income countries (with annual per capita incomes from $230–$12,000). Patent rights are also insufficient for directing R&D activities to those areas most needed by society, as the examples of neglected and rare diseases and the shortage of new antibiotics make clear. Finally, by erecting walls of property rights around bundles of information, patents can impede the aggregation of knowledge that powers innovation.

A global R&D treaty could encompass a number of measures that would improve the existing system. For example, countries could commit to making sustainable contributions to an international R&D fund. This fund, analogous in some ways to the US National Institutes of Health, could pay the full costs of R&D so that there would be no need to recoup investments and medicines could be sold at cost, making treatments much more affordable and health systems more sustainable.

The system could also drive research into priority diseases, either through traditional grant funding or through novel incentive mechanisms such as prizes for the successful development of products. Furthermore, the treaty could establish norms for open innovation and create incentives to share research findings quickly in order to accelerate the R&D process. Finally, it could codify obligations for the ethical conduct of clinical trials, which are taking place in more and more countries but may not always be overseen by strong, experienced regulatory institutions. All of these measures are geared toward a global R&D system that would deliver both innovation and equitable access to medicines.

While crafting such a system may seem ambitious, it is not such a radical departure from existing initiatives. For example, an interesting precedent was set by UNITAID, an international organization funded by 29 countries that has raised $2.1 billion dollars over 5 years, primarily through a tax on air travel. The funds are used to make drugs and diagnostics for HIV, tuberculosis, and malaria more affordable or better adapted for use in resource-poor settings. The lower prices and new products generated through this effort are global public goods that provide potential benefits for everyone. UNITAID demonstrates that a critical mass of countries can come together to address global system failures that affect them all. The broken R&D system is ripe for such a collaborative effort.

Since the CEWG report was issued, many questions have arisen regarding the treaty proposal: How much would countries contribute? How many countries would be needed to make the system work? How would priorities be set, and how would progress be monitored? These all remain open questions. While the CEWG made some specific recommendations, such as for financing, incentives, and monitoring, these remain proposals that governments will now need to debate and negotiate—the onus now rests on them to build a better system for drug R&D. (See the full report at bit.ly/CEWGreport.)

Next month, government representatives will convene at the WHO in Geneva to decide how to move forward. When they do so, they should not forget the urgency of fixing a system that fails to meet the needs of the majority of the world’s population. While a treaty won’t solve every health challenge or all the woes of industry, building a system of global norms, rules, and incentives that makes public health the key driver of pharmaceutical research would move us towards a more equitable, healthier world.

Suerie Moon is research director of the Forum on Global Governance for Health at the Harvard Global Health Institute. Ellen ’t Hoen is a lawyer and a research fellow at the IS Academy HIV/AIDS School for Social Science Research at the University of Amsterdam, the Netherlands.

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