Activists campaigning to get AIDS treatments and other critical medicines to poor people around the world propose radical changes in the financing of global pharmaceutical research and development. The activists suggest that the World Trade Organization (WTO) discard global intellectual property protections and replace them with incentive programs for scientists. The companies that research, design, and produce the drugs would no longer support large sales teams to persuade physicians to prescribe them.
New research would be financed through tax levies or other financing, which, proponents say, would bring greater efficiency and fairness to the research process. Opponents charge that such ideas represent a throwback to an era of slow-paced, government-orchestrated science.
ON A WORLD STAGE
Led by the nonprofit Consumer Project on Technology (CPTech) based in Washington, DC, the advocates want WTO members to reconsider its policy towards patents and poor countries. With WTO provisions set to take effect in many developing countries next year, poorer nations will now come into alignment with US and European policies on drug patents or face-trade sanctions. Known as the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the WTO provisions give drug makers patent protection for two decades and strong pricing power in return for their investment in new medicines. "The trade framework gives a 20-year marketing monopoly that leads to morally repugnant results and economic inefficiencies," says James Love, director of CPTech.
Love and other activists are developing models that would raise investment funds from countries around the world and then disperse the money through governments or other health-planning authorities to reward scientists who come up with breakthrough medicines. They concede that the proposals have a strong element of "blue sky." "Of course it is not as if in the real world you would go radically from a patent-based to a largely publicly financed system," says Michael Bailey, senior policy advisor at Oxfam, a UK lobbying group. "But by developing a new model it forces people to think out of the box and think of how we can manage an evolution of a research and development solution."
Courtesy of Tim Hubbard
Tim Hubbard, head of human genome analysis at the Wellcome Trust Sanger Institute in Cambridge, UK, says his experience in the Human Genome Project proved to him that the public sector could achieve scientific progress without excess bureaucracy. "I think there's been an acceptance of the dogma that academics do the academic thing, and if you want to get serious you've got to get involved with a company and have patents," Hubbard says. "The genome project's changed me. I just don't believe this anymore."
Under the current system, $430 billion (US) in global drug sales in 2002 returned 10% to 15% into research and development, according to CPTech research, based on data from industry trade associations, reports to investors, and income tax returns. Additional data from regulatory authorities imply that only approximately 2% to 3% of research spending is devoted to new medicines with therapeutic benefits over existing ones.
Scientists need strong incentives to pursue the risky business of drug discovery, Love says. Rather than use global trade rules to enforce the patent system, he proposes a regime that would levy funds from all countries participating in the trade accords to finance research. Most countries now spend about 1% of their gross domestic product (GDP) on pharmaceuticals, according to Love's research. If 10% of that is turned back into research, countries are already spending 0.1% of GDP on research.
Love suggests that money could instead go directly to reward innovative research on products that would then be manufactured and sold at low commodity prices, driving out the marketing and other administrative expenses of managing a branded pharmaceutical. The funds would be dispersed to innovators through a variety of mechanisms. A so-called prize model would encourage companies or groups of scientists to compete in developing new products that meet public health needs. The groups could still hold win regulatory approval, to protect the rights of investors who finance drug development and pay for costly clinical trials. "You could have competition. You could have venture capital," says Love. "If you get through the FDA, you cash in your chips and you're done."
This system would reward innovation without forcing companies to recoup their investment by marketing their products for the remaining years of patent protection.
INCENTIVE FOR INNOVATION
Innovators also could be paid through direct funding from governments or existing institutions such as the National Institutes of Health or nonprofit organizations. Another idea suggests the use of open-source public goods models, such as the Human Genome Project or the Linux software system, according to Love and Hubbard.
Still another way to structure the payout would be through the use of what Love and Hubbard call competitive "intermediators." These mechanisms would be similar to pension funds, except that intermediators would manage research and development assets. Consumers or employers could be required to make minimum contributions into the funds, and the intermediators would compete to attract the most funds and make successful investments, the way that mutual funds handle a 401(k) plan.
Courtesy of James Love
The pharmaceutical industry remains unconvinced. Mark Grayson, a spokesman for the Pharmaceutical Research and Manufacturers of America (PhRMA), says the proposals could set medical research back nearly 25 years to a time before the Bayh-Dole Act created intellectual property incentives for universities to commercialize government-financed research. Since then, he says, the entire biotech industry has grown up on the promise that investors would be rewarded for successful drug development.
"Government has not been very good at commercializing research," Grayson says. "Look at our arch-enemy, Russia, where there was a central planning authority. They had great science but not many new medicines."
The US government also remains skeptical of public interventions into what is now a private market. In a letter to the World Health Organization last fall, William Steiger, director of the Office of Global Health Affairs at the US Department of Health and Human Services, opposed a shift in trade policy that would focus on nonproprietary models that remove intellectual property protections.
Oxfam's Bailey points out that governments already fund a great deal of research through the National Institutes of Health in the United States and through research tax credits. Public universities also finance a significant level of research. In the United Kingdom, most academic research is still publicly funded. "The big pharmaceutical companies like to gloss over how much public funding there already is," he says. "The public sector already has a very active role in research."
In the end, Bailey predicts, frustration with the current system of research and development, even among drug companies, may give the new ideas traction. "The current system is extraordinarily inefficient," he adds. "There's a lot of duplication of research and when you boil it down, remarkably little innovation."