Medicines are unusual commodities. Important drugs can save the lives and protect the health of millions. Their consumption can bring huge benefits, by helping patients to avoid infection and preventing serious damage to the economies of families, nations and even humanity at large. And the cost of research, development and testing of a new drug is vastly greater than the cost of each dose produced.
How should we pay for new medicines? Innovators should be rewarded according to the impact of their medicine, and people should contribute to these rewards according to their ability to pay. Such a system would allow even poor patients to benefit, by paying just for production costs, perhaps, or even less; and it would guide innovators to prioritise the research projects that stand to make the most cost-effective contributions.
Our current system is far from this ideal. New medicines are rewarded with temporary product patents that allow innovators to suppress competition and charge very large mark-ups. The system has two terrible consequences. It excludes many poor patients even though they could afford to pay what new drugs would cost in a competitive market; millions suffer and die on account of such extreme mark-ups (some as much as 50-fold). It also guides innovators to attend to minor ailments of the rich while ignoring life-threatening illnesses of the poor.
The current system is deeply entrenched in the World Trade Organisation's agreement on trade-related aspects of intellectual property rights (Trips). But reform can be achieved without revision. We can add to the Trips system a new mechanism: the Health Impact Fund. The HIF would offer pharmaceutical innovators the option to register any new drug or, under certain conditions, a traditional medicine or a new use of an existing medicine. By registering a product, the innovator would agree to make it available worldwide, during its first 10 years on the market, at no more than the lowest feasible cost of manufacture and distribution. The registrant would also commit to allowing, at no charge, generic production and distribution of the product after the 10 years have ended.
The registrant would receive, during that 10-year period, annual reward payments based on the product's health impact. The reward payments would be part of large annual pools, of which each registered product would receive a share equal to its share of the assessed health impact of all HIF-registered products in the relevant year. Affluent and developing countries would agree by treaty to contribute to these pools in proportion to their gross national incomes.
The HIF would fill a fatal gap in the Trips system by stimulating the development of high-impact medicines against diseases concentrated among the poor. Moreover, all HIF-registered products would be available everywhere at a very low price from day one, making them affordable to poor populations and bringing savings to more affluent populations who support the HIF through their taxes. Finally, any registrant would have financial incentives to ensure that even the poorest potential beneficiaries of its products have real access to them and can use them to optimal effect – in the HIF's accounting, health gains for poor people count exactly the same as health gains for the affluent.
Registrants can be confident of a reasonable return because an unlucrative reward rate would self-correct by discouraging new registrations. Conversely, taxpayers can be confident that innovators won't profit excessively because a high reward rate would self-correct by attracting new registrations.
Funded at initially £4bn per annum, the HIF might support about 20 to 30 important new drugs by attracting two to three new registrations annually on average. The £4bn is 1/100 of 1% of the global product and less than 1% of global pharmaceutical spending.
Despite this small cost, the HIF would bring massive gains for global health: by stimulating the development of new drugs with exceptionally great health impact and by ensuring that these drugs are cheap while giving their registrants strong incentives to ensure they are accessible everywhere and properly used for optimal effect. Should the HIF be found to work well, its annual reward pools could be scaled up to attract an increasing share of new medicines.
However, to create the HIF, formidable challenges must be overcome. We are working with some pharmaceutical companies to run small-scale pilots to explore how the actual health impact of a product can be reliably estimated and how companies and distributors respond to being rewarded on this basis. We have found enlightened supporters among politicians seeking ways to overcome the exclusion of the poor from the fruits of pharmaceutical research. On 11 April we will present the HIF idea in the European parliament, concluding a three-year research project funded under the European commission's Seventh Framework Programme.
It's easy to complain that pharmaceutical companies place profits over people and apparently care more about hair loss than TB. However, many in the pharmaceutical industry would be glad for the opportunity to reorient their research toward medicines that are truly needed, provided only that such research is financially sustainable. More important, billions of poor people would benefit if the HIF enabled pharmaceutical innovators sustainably to serve their urgent medical needs.
• Thomas Pogge is Leitner professor of philosophy and international affairs at Yale, adjunct professor at the University of Central Lancashire and author of Politics as Usual: What Lies behind the Pro-Poor Rhetoric