Multinational Monitor Editors blog

The nations of the world are currently debating how to design new medical research and development (R&D) mechanisms to serve the twin goals of promoting innovation to meet the particular needs of developing countries and ensuring that important medicines are accessible to people in the developing world, regardless of their income.

A successful conclusion to ongoing negotiations at the World Health Organization (WHO) — scheduled to conclude at the end of this week — could yield dramatic public health benefits in the years and decades ahead. Long-ignored research needs of poor countries might be addressed. Important new products might become affordable for all patients, not just those who live in rich countries or happen to be wealthy. New collaborative systems of conducting R&D might yield scientific breakthroughs for emerging public health threats that might otherwise be delayed, or never occur.

Big Pharma is watching the WHO talks with trepidation. The brand-name pharmaceutical companies are open to new government resources being invested to find treatments for diseases endemic to developing countries — this represents a new business opportunity, after all. But they fear losing their pricing prerogatives, including to charge exorbitant rich country prices in middle-income countries. The companies are also very concerned that new R&D mechanisms may displace the global patent-monopoly system around which they have built their business models — and which enable them to earn enormous profits.

In an effort to direct the WHO negotiations away from bolder measures that would advance public health objectives but might threaten its parochial interests, the industry is deploying the diverse set of instruments in its policy-influencing toolbox.

Predictably, Big Pharma is heavily influencing the positions of rich country governments in the WHO talks. Recent reports indicate disappointing intransigence from the United States, the European Union and Japan — a shift from earlier negotiating rounds.

Industry finagling managed to get the Biotechnology Industry Organization, the U.S. biotech trade association, designated as “experts” for the WHO negotiations — a designation that gives BIO representatives seats in the WHO negotiating room.

The global pharmaceutical industry confederation — the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) — has filled the corridors outside the talks with lobbyists. IFPMA has 59 persons officially registered to participate in the meeting.

More insidiously, the industry’s funded patient group and think tank allies have waged a propaganda campaign to discredit the WHO initiative — without revealing their financial entanglements with the industry.

An entity called Patients and Patents has circulated a “Patient Declaration on Medical Innovation and Access.” This declaration insists on the importance of patient group involvement in WHO negotiations before “recommending changes to international patent protection (IPP).”

Patients and Patents is governed by a seven-member advisory board. Six of the seven members of the advisory board are linked to the brand-name pharmaceutical industry, either directly as an individual or through their primary organization, and the seventh member has at least a weak tie to the industry.

One member of the governing advisory board, for example, is Durhane Wong-Rieger. Wong-Rieger is chair of the Consumer Advocare Network, which is funded by Canada’s pharmaceutical industry trade association Rx&D. Wong-Reiger is also president of the Canadian Organization for Rare Disorders, which is funded by Actelion Pharmaceuticals, Amicus Therapeutics, Apo Pharma, BioMarin Pharmaceutical, BIOTECanada, Debiovision, Genzyme Canada, Hoffmann-LaRoche (Roche), Merck Frosst Canada, Neurochem, Novartis, Orfagen, Ortho Biotech, Pfizer, Rare Disease Therapeutics, Shire Human Genetics Therapies, Sigma-Tau Pharmaceuticals and YM Biosciences.

A high proportion of the signers of the Patient Declaration are also connected to the brand-name pharmaceutical industry. A review by Essential Action (an organization I direct) found 61 of 110 of the signers of the Declaration have industry ties.

A global network of industry-affiliated — and frequently industry-funded — libertarian think tanks have placed misleading op-eds in news outlets around the globe, denouncing the WHO negotiations. The authors do not disclose their industry ties.

Tim Wilson, for example, placed op-eds in the Business Standard (India) and in the Times of India, arguing that the WHO talks would undermine innovation and hurt people in developing countries. These articles identified him as affiliated with the Institute of Public Affairs in Melbourne, Australia. They did not note that at least half of Institute of Public Affairs’ board of directors is comprised of individuals with financial ties to the pharmaceutical industry.

Other op-eds by industry-allied think tanks and academics have appeared in recent days in Malawi, Rwanda and Colombia. These followed a series of op-eds by industry-connected nonprofits and academics in the United States over the previous month. The U.S. op-eds focused on Thailand’s issuance of compulsory licenses — government authorizations of generic competition for products that remain on patent — to make cancer, heart disease and HIV/AIDS drugs available to poor people in Thailand.

Big Pharma’s effort to curtail or contain the WHO negotiations on medicine innovation and access is a comprehensive one. The industry is not at all shy about exercising its political power, and it is doing so. But Pharma execs also know that the industry suffers from enormous public relations problems that undermine its influence. Industry-funded or -connected organizations that trot out to propagate Big Pharma’s myths and deceptions can be far more effective in muddying policy debates.

As the WHO talks began this week, Dr. Christophe Fournier, president of the International Council of Médecins Sans Frontières/Doctors Without Borders, said, “This week is not just about countries signing checks. It’s about changing the rules of medical innovation — coming up with new proposals that ensure the drugs we need are developed and are made affordable. But with so many vested interests involved, will governments be bold enough to take that step?”

Thanks to Big Pharma’s multi-faceted pressure campaign, that remains an open question.

Can the world settle on a medical research and development (R&D) system that develops medicines and other products to meet priority health needs and makes those products available on an affordable basis?

Developing a strategy to meet these twin goals is the task of World Health Organization (WHO) negotiations in their final phase this week.

The WHO Intergovernmental Working Group on Public Health, Innovation and Intellectual Property is finishing talks to create a global strategy and plan of action to spur medical R&D focused on the health needs of developing countries, and to ensure that poor populations get access to important pharmaceuticals and other medical technologies.

The world — and especially developing countries — needs more innovation. To have public health benefit, however, the fruits of the innovative process must be available to people who need them.

The current patent monopoly-based system of R&D has proven inefficient at advancing a needs-driven public health agenda. This is true for rich countries as well as poor, but the situation is much worse in poor countries. This has nothing to do with the ethics of Big Pharma. It is how the system is designed.

The current corporate sector system of R&D is driven by the prize offering of a patent monopoly. Patents are not worth much if they offer monopolies on sales to a population that — no matter how large — has little buying power. And if the prize incentive is too small, it will not induce R&D, no matter how much it may be needed as a public health matter.

Here’s what this means in practice: Developing countries comprise 80 percent of the world’s population but amount to only 13 percent of the global market for medical products. A review by Doctors Without Borders of new drugs introduced between 1975 and 2004 found that of 1,556 new drugs put on the market, only 21 were for “neglected diseases” — diseases endemic to developing countries.

The value of the patent monopoly is based on the holder using it to profit maximize as a monopolist. It is therefore no surprise that companies holding patent monopolies charge high prices. This is what the patent enables. High prices are an increasing problem in rich countries, but the brand-name pharmaceutical industry’s current pricing model — which commonly runs into the thousands of dollars a year for a single medicine, and may involve charges of more than $100,000 — leaves new medicines completely out of reach of the vast majority in developing countries.

How to respond to these problems? There are two basic alternatives. One is to rely on charity. Private foundations and companies seeking good will may contribute to R&D for products targeting diseases in developing countries. They may offer discounted versions of their drugs, or give some away. Charitable initiatives may accomplish quite a bit, but in general they suffer from being ad hoc, unsustainable, erratic, episodic, short-lived and insufficiently resourced. Charity may be helpful, but it is no solution to meeting public health priorities on a sustained basis.

The second option is to examine systemic approaches to support R&D that do not rely on patent monopolies or the prospect of charging high drug prices as a reward, and to identify mechanisms to make the fruits of R&D widely accessible.

There are a lot of good ideas, large and small, about how to do this. Notably at the WHO talks, Bolivia and Barbados have put forward a series of concrete proposals for non-patent prizes to incentivize R&D, with the resulting fruits of the innovation made available at competitive prices.

One of the Bolivia/Barbados proposals is for a Priority Medicines and Vaccines Prize Fund. The fund would offer large cash prizes to entities developing new products for neglected diseases, antibiotics or products for emerging public health threats (like avian flu or SARS). It would offer smaller prizes to parties that made advances toward these goals, meeting benchmarks short of bringing new products to market. It would also offer separate prize money to parties that openly published and shared their research. A condition of receiving the prizes would be licensing all resulting patent, data and know-how so that end products could be made available immediately on a competitive basis. In other words, there would immediately be generic competition and low-cost pricing.

There is no guarantee that the prize fund would work in creating innovation where now there is none or much too little. But it is an interesting and provocative proposal.

There is no legitimate rationale, on the merits, to oppose ongoing discussion of this prize proposal. Remember, in keeping with the focus of the WHO talks, the Bolivia/Barbados proposal focuses on health problems specific to developing countries. It involves areas where there is no effective market (or, in the case of antibiotics, special market problems) to incentivize R&D. So, there is nothing for Big Pharma to lose here.

But the industry and its allies are viewing this and similar proposals very cautiously. Some ideologues oppose any tinkering with the patent monopoly system. The industry is concerned that tinkering in the case of health problems related to developing countries will eventually threaten the patent monopoly system in the rich world, or interfere with its ability to expand sales to the wealthy in middle-income countries. (More on the role of Big Pharma and its proxies in my next column.)

Will country negotiators at the WHO talks ignore those who would subordinate public health to patent veneration or commercial concerns? Will they instead advance experiments with new institutional arrangements to promote the complementary public health objectives of innovation and access? We will know by the end of the week.

For 30 years, the International Monetary Fund (IMF) and World Bank have remade much of the developing world according to a market fundamentalist ideology.

The results — measured by lost wealth, stunted social indicators, depletion of natural resources and trashing of the environment, rising inequality and concentration of income, damage to indigenous communities, or many other standards — have been catastrophic.

Can the ongoing harm be undone?

Yes.

Consider one very small example, with not-so-trivial consequences: the case of school fees in Kenya.

In the 1980s and 1990s, the IMF and particularly the World Bank told developing countries to adopt user fees for education. The institutions have enormous power to impose conditions on developing countries eager to get loans, especially heavily indebted countries that need new loans to pay off old debts and keep their economies functioning.

Why should families be charged for sending children to school? The idea was that school fees can help pay for the cost of schools, especially as the Bank and Fund demand government spending cutbacks.

In practice, and predictably, school fees proved a disaster.

Mary Njoroge has recently retired after 31 years in the Kenyan educational system. Her final post was Director of Basic Education in the Ministry of Education.

Njoroge says that, “even as the fees were introduced, poverty levels were rising in most of the country, and the parents were not able to pay the fees. That led to many, many children dropping out of school — just because of the inability of parents to pay the fee.”

In Kenya, Njoroge says, school fees were a very important revenue source. They became an inadequate substitute for lost federal revenue — and the existence of school fees became a rationale for further federal spending cuts.

“It was from the fees that the schools could buy books, buy chalk, buy exercise books and any readers that they were going to use,” Njoroge says. “Fees also paid for the running of the school, the overhead of the school. That money was very important. The schools were not going to be able to run without it.”

Not surprisingly, the poorest families were hit the worst by this policy, and girls worst of all. There were no exemptions for the poor, though exemptions have proven an utter failure in other places.

For poor families, says Njoroge, “Initially, the choice was if children have to go to school, which children would go? And boys were the ones sent to school in the very poor communities and girls were left at home. Eventually, even that became difficult and for the very poor communities both boys and girls dropped out of the school system. Only those who were able to afford the school fees were left to continue.”

By the start of the 2000s, spurred by outside pressure, the World Bank came to recognize that school fees were a failure. But Kenya and other countries had come to rely on fees, and it wasn’t obvious how to do away with them.

Then, something transformative happened.

In the 2002 presidential elections, Mwai Kibaki ran on a platform that highlighted a commitment to eliminate user fees for education. This promise helped Kibaki get elected. And then he delivered on the promise. Njoroge oversaw the initiative to get rid of school fees.

“When the new government came in and announced that in the new year [2003] children could attend school without paying fees,” says Njoroge, “we witnessed an additional 1 million new children in our schools, over and above the 5.9 million who had already been in the school system.” An additional million came soon thereafter.

User fees had locked the schoolhouse doors to a quarter of Kenyan children. Abolishing fees opened the doors.

Njoroge says that improved tax collection and better systems for financial accountability paid for most of the additional costs — both the lost school fees money, and the money needed to teach so many more kids. The excitement around the initiative also attracted donor funding.

This surge of new students into classrooms created significant transitional problems, says Njoroge, but now teachers have been trained how to handle bigger classes, and how to teach multi-grade classrooms.

Eliminating school fees has been a grand success. “When the fees were lifted, says Njoroge, “we immediately saw the kids at school. It led to investment of resources by the government into the education system. It led to developing new strategies to finance the education program in a transparent and accountable manner, which also has attracted international donors.” And the Kenyan example has inspired many other countries to follow suit, including more than a dozen nations in Africa.

Everything is not perfect. Fees are still in place for secondary schools.

And the system needs to hire more teachers. Which brings the story back to the IMF and World Bank.

Teaching the additional 2 million kids in primary school requires at least 40,000 new teachers, Njoroge says. Kenya has about 60,000 trained teachers who are unemployed, but Njoroge says that Kenya cannot hire new teachers, because agreements with the IMF restrict its ability to increase budgetary outlays for teachers.

But just as user fee policy was changed even though it once seemed un-reformable, so too shall IMF policies that directly and indirectly block countries from undertaking desperately needed investments in healthcare and education soon come to an end.