The UN Secretary General’s High Level Panel on Access to Medicines recently published its long awaited report Promoting innovation and access to health technologies. The report explores and proposes some solutions to the well recognised problem of under-investment in research and development for new treatments for diseases that afflict the global poor. In the pharmaceutical market, innovation is directed to the areas that generate the highest returns. These market incentives explain why no new anti-tuberculosis drug has been developed since the 1960s. As a result, some of the WHO’s sustainable development goals (SDGs), such as to eradicate TB and malaria by 2030, look fanciful. To increase investment in research and development new incentive structures would need to be put in place.
Interventions already take place in the market to encourage R&D. Patents granting temporary monopolies are already widely used to allow companies to recoup the high costs of drug development. However, reported R&D costs, as we have previously discussed, are likely to be inflated to justify longer patent lengths. The UN report identifies other methods of ‘evergreening’ such as filing multiple patents for small variations of various drugs or patents for multiple indications of the same drug. The World Trade Organisation enforces strict US-style patent rights around the world, but it permits significant flexibility for granting patents. The report recommends punitive action against companies that pressure countries to use these flexibilities in their favour.
Relying on market incentives also leads to other adverse outcomes. The academic medical literature has become distorted. Industry funded research is more likely to find favourable outcomes. In some cases significant harms are not reported as the Vioxx scandal demonstrated. We have also previously reported on how policy uncertainty reduces pharmaceutical R&D. Thus, state involvement in the industry seems to be warranted.
Joseph Stiglitz proposed an international multi-billion dollar fund to reward drug innovations that did the most to improve public health. Other solutions proposed in the UN report are to prohibit patents on innovations resulting from publicly funded research, forcing private companies in the medical sector to disclose the true costs of R&D, and the public financing of biomedical R&D through transaction taxes and other mechanisms.
Some may worry that such restrictions and market distortions may significantly reduce private spending on medical R&D. But it should be noted that only around 14% of the industry’s budget goes towards R&D; a greater share is spent on marketing. However, as an editorial in the Lancet notes, these recommendations would require endorsement and adoption quickly as new legislation such as the trans-Pacific partnership (TPP) is gaining momentum, which will exacerbate the situation further.