Monash University

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Monash University

• Intellectual Property Rights and Access to
  Essential Medicines
• Thomas Pogge
• Professor of Political Science, Columbia
  University
• Centre for Applied Philosophy and Public Ethics,
  Australian National University
• Centre for the Study of Mind in Nature,
  University of Oslo

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Our Shared Commitment

• Everyone has the right to a standard of living
  adequate for the health and well-being of himself
  and of his family, including food, clothing,
  housing and medical care and necessary social
  services, and the right to security in the event
  of unemployment, sickness, disability, widowhood,
  old age or other lack of livelihood in
  circumstances beyond his control Article
  25(1).
• Universal Declaration of Human Rights

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Human Cost of Poverty Today
 
 

• Among 6630 million human beings (2006), about
• 800 million are undernourished (UNDP 2007, p.
  90),
• 2000 million lack access to essential drugs
  (www.fic.nih.gov/about/plan/exec_summary.htm),
• 1085 million lack access to safe drinking water
  (UNDP 2007, p. 254),
• 1000 million lack adequate shelter (UNDP 1998, p.
  49),
• 2000 million have no electricity (UNDP 2007, p.
  305),
• 2600 million lack adequate sanitation (UNDP 2007,
  p. 254),
• 774 million adults are illiterate
  (www.uis.unesco.org),
• 211 million children (aged 5 to 17) do wage
  work outside their household often under
  slavery-like and hazardous conditions as
  soldiers, prostitutes or domestic servants, or in
  agriculture, construction, textile or carpet
  production (ILO The End of Child Labour, Within
  Reach, 2006, pp. 9, 11, 17-18).

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One Third of all Human Deaths

• some 18 million per year or 50,000 daily are
  due to poverty-related causes, cheaply
  preventable through food, safe drinking water,
  rehydration packs, vaccines or other medicines.
  In thousands per year
• diarrhea (1798), malnutrition (485),
• perinatal (2462) and maternal conditions (510),
• childhood diseases (1124 mainly measles),
• tuberculosis (1566), meningitis (173), hepatitis
  (157),
• malaria (1272), tropical diseases (129),
• respiratory infections (3963 mainly
  pneumonia),
• HIV/AIDS (2777), sexually transmitted diseases
  (180)
• (World Health Organization World Health
  Report 2004, 120-5).

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Millions of Deaths
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Shares of Global Income2005 poorest households
versus richest countries
Calculated in terms of market exchange rates so
as to reflect the avoidability of poverty. Per
capita Pie chart rich/poor ratio over 2001.
(Decile inequality ratio 3201, Milanovic 2005,
pp. 111-12.)
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Global Income Inequality

• At current exchange rates, the poorest half of
  world population, some 3,400 million people, have
  less than 2 of world income ? as against 6
  received by the most affluent one percent of US
  households consisting of 3 million people.

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Shares of Global Wealth2000 poorest versus
richest households
Calculated in terms of market exchange rates so
as to reflect the avoidability of poverty. Decile
Ineq. 28371. Quintile Ineq. 851. Year 2000,
125 trillion total. (James B Davies et al.
WIDER 2006)
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Global Wealth Inequality

• At current exchange rates, the poorest half of
  the worlds population, some 3,400 million
  people, have about 1 percent of global wealth ?
  as against 3 percent owned by the worlds 946
  billionaires.

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Intranational Increases in Income Inequality

• In the US, 1979-2005, the income share of the
  bottom half declined from 26.4 to 12.8 ? while
  that of the top one percent rose from 9 to
  21.2.
• In China, 1990-2004, the income share of the
  bottom half declined from 27 to 18 ? while that
  of the top tenth rose from 25 to 35.

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How do such huge intranational and (especially)
global inequalities accumulate?
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• Global Institutional Order

4 privileges
Governments of the More Powerful (G-7) Countries National Institutional Schemes of the Various Developing Countries
Citizens of the More Powerful (G-7) Countries Poor and Vulnerable Citizens in the Developing Countries
Protectionism Pharmaceuticals
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Rules Governing Medical Research

• Under the TRIPs agreement part of the WTO
  Treaty inventors of new medicines must be
  granted 20-year monopoly patents in all WTO
  member states.

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Seven Problems

• 1. High Prices Impeding Access by the Poor
• 2. Neglected Diseases (90/10 Problem)

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Distribution of Pharma Research

• Diseases accounting for 90 of the global disease
  burden receive only 10 of all medical research
  worldwide. Pneumonia, diarrhea, tuberculosis and
  malaria, which account for over 20 of the global
  disease burden, receive less than 1 of all
  public and private funds devoted to health
  research. Of the 1556 new drugs approved between
  1975 and 2004, only 18 were for tropical diseases
  and 3 for TB.

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Are Patents Just?

• A natural right of the inventor?
• Libertarian worries
• Fair opportunity worries (tainted inequality)
• The Argument from Rational Consent
• Not plausible from PV of present global poor
• The Argument from General Utility
• Interests of present global poor outweigh
• There may be a superior alternative

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Seven Problems

• 1. High Prices Impeding Access by the Poor
• 2. Neglected Diseases (90/10 Problem)
• 3. Bias toward Symptom Relief
• 4. Waste Litigation, Deadweight Losses
• 5. Counterfeiting
• 6. Diff Cost/Price ? Excessive Marketing
• 7. Last-Mile Problem, perverse incentives

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The root of the evil lies not in how
corporations do business, but in how we regulate
and incentivize them. If we structure markets so
corporations can earn billions by getting people
to smoke, then corporations will work hard to get
people to smoke. If we structure markets so
corporations can earn billions by getting people
to stop smoking, then corporations will work hard
to get people to stop smoking. It is our
responsibility to restructure the patent regime
so that pharmaceutical innovators lose the
financial stake in the proliferation of their
target diseases and gain a financial stake in the
destruction and eradication of these diseases. If
we can reverse present incentives, the immense
powers of free enterprise will be marshaled
against the great diseases that bring so much
misery and premature death to poor people
everywhere.
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Solutions

• 1. Differential Pricing
• a. Status Quo before TRIPS
• b. Voluntary Tiered Pricing
• c. Compulsory Licenses
• 2. Public Good Strategies
• a. Push Programs
• b. Pull Programs (Prizes, APCs, AMCs)
• (i) FULL PULL (Health Impact Fund)

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Health Impact Fund

• Comprehensive Advance Market Commitment promising
  to reward any new medicine (upon registration) on
  the basis of its global health impact
• Innovator must give up either claims to market
  exclusivity, allowing generics to be produced and
  sold immediately, or all revenues from sale of
  the new medicine
• Voluntary for the innovator

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Problems Solved?

• 1. High Prices Impeding Access by the Poor
• 2. Neglected Diseases (90/10 Problem)
• 3. Bias toward Symptom Relief
• 4. Waste Litigation, Deadweight Losses
• 5. Counterfeiting
• 6. Diff Cost/Price ? Excessive Marketing
• 7. Last-Mile Problem, wholesome incentives

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Measurement Reward

• Fixed term of payments, ca. 10 years
• Fixed annual HIF pools
• Metric variant of QALY
• The /QALY exchange rate / Funding
• Data clinical, sales, clusters
• Interfering factors baseline projections
• Phase-in
• Allocation Rules
• Corruption and Gaming

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Funding by Willing Governments I

• 15-year commitment by willing governmnts
• d total reward dollars for the year
• q total number of QALYs that same year
• r rate at which QALYs are rewarded in s
• Low-yield ? Ceiling on the reward rate r
• High-yield ? Government-Company Risk Sharing
• d qe and r q-e, with 0 lt e lt 1,
  preserving the constraint d rq

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Funding by Willing Governments II
yield QALYs achieved in millions (q) Reward Rate per QALY in (r) Reward Expense in b (d)
low-yield 1 1000 1
low-yield 3 1000 3
border low-high 4 1000 4
high 6.25 800 5
high 10.24 625 6.4
high 16 500 8
high 25 400 10
high 64 250 16
high 100 200 20









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Allocation Rules

• Because pharmaceutical companies negotiate under
  a virtual veil of ignorance with respect to as
  yet uninvented medicines, their collective
  interests will shape their negotiating strategy.
  They will want to design the allocation rules so
  as to maximize their collective harvest of
  rewards. In particular, they will want these
  rules to be clear and transparent so as to reduce
  uncertainty. They will want the incentives to be
  shaped so as to foster efficient collaboration
  and synergies among themselves. They will want to
  set up a cheap and reliable arbitration mechanism
  so as to avoid costly disputes.

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Rules Governing Medical Research 2

• One obvious alternative is a regime under which
  inventor firms can choose to be rewarded in
  proportion to the impact of their invention on
  the global disease burden.
• This solution would end the morally untenable
  situation of the drug companies, which must now,
  to recover their costs, price life-saving
  medications out of the reach of vast numbers of
  poor patients. The solution would align the
  interests of inventor firms and the generic drug
  producers. The former would want their inventions
  to be widely copied, mass-produced, and sold as
  cheaply as possible, because this would magnify
  the health impact of their inventions. If new
  drugs were sold at the competitive price, near
  the marginal cost of production, many poor
  patients would gain access to drugs they now
  cannot afford. And affluent patients would gain
  as well, by paying substantially less for drugs
  and medical insurance.
• This solution would also greatly expand research
  into diseases that now attract very little
  research dengue fever, hepatitis, meningitis,
  leprosy, trypanosomiasis (sleeping sickness and
  Chagas disease), river blindness, leishmaniasis,
  Buruli ulcer, lymphatic filariasis,
  schistosomiasis (bilharzia), malaria,
  tuberculosis, and many more.
• In time, this one rule change alone would
  easily halve the number of annual poverty deaths.