Replacing Marketing Monopolies

Size: px

Start display at page:

Download "Replacing Marketing Monopolies"

Erika Hubbard
6 years ago
Views:

1 Replacing Marketing Monopolies Tim Hubbard Commission on IPR, Innovation and Public Health Geneva, 5th April 2004.

2 Problem Access Innovation Biggest culprit Business Model based on Marketing Monopolies

3 World Wide Issue Even when developed substantially or even entirely with public funding, drugs are more expensive in US than elsewhere (unregulated monopoly). Essential Inventions petition for march-in rights under Bayh-Dole act to license patent to other producers (essentially compulsory license) Price of Abbott s Ritonavir (used as a protease inhibitor in AIDS treatments) was increased 5 times in US Price of Pfizer s Xalatan (used to treat glaucoma) 2-5 times higher price in US Proposed license includes compulsory payment into R&D fund to support innovation

4 Existing funding structures Belief: no drugs without commercial pressures Academic R&D Commercial R&D Patents Drug Production Marketing Generic Drug Production Push Tax breaks ( orphan drugs) Pull Global Fund APCs Public Research NIH, WT, MRC etc Payments by public Taxation, health insurance Drug purchases Information Money

5 Consequences of paying retrospectively for R&D via sales Requires monopolies (patents) Patent thickets inhibiting R&D Leads to lack of competition and high prices Only ~10% of drug sales goes towards R&D on new products Encourages the market to reward R&D that optimises profitability rather than therapeutic benefit 75% of new drugs have no therapeutic benefit Excludes many who would be able to afford prices based on marginal costs of manufacture We are paying for all of this (taxation, health insurance)

6 Justification for TRIPS is to prevent free-riding on others R&D Are there other ways of avoiding free-riding?

7 Global Treaty Each country commits a minimum % of GDP on healthcare related R&D Countries meeting R&D obligations are free of TRIPS and can choose their own policies:- buy generic medicines target their own health care issues build research capacity PLoS Biology, February 2004, Hubbard & Love

8 Existing funding structures Belief: no drugs without commercial pressures Academic R&D Commercial R&D Patents Drug Production Marketing Generic Drug Production Push Tax breaks ( orphan drugs) Pull Global Fund APCs Public Research NIH, WT, MRC etc Payments by public Taxation, health insurance Drug purchases Information Money

9 Funding structures Undirected Research Directed Research Academic R&D Commercial R&D Generic Drug Production Generic Drug Production Virtual Research Market National Directed R&D funds Sales based Product Market Public Research NIH, WT, MRC etc Payments by public Taxation, health insurance Drug purchases Savings Information Money

10 Plenty of ways to implement virtual research market Direct government grants Prize model rewarding innovators Open research models, cf open source, open access Which is best? Let them all compete with each other Establish competition between those evaluating research outputs - competitive intermediators

11 Evaluation of outputs Old if you can sell it New if it is evaluated to be of benefit

12 Image rather than substance Claimed Silver bullets to improve drug R&D ~ 1985: molecular modelling ~ 1990: xray crystallography ~ 1995: high throughput screening, combinatorial chemistry ~ 2000: genomics, mergers All have contributed something, but not as much as was claimed in advance As much about sustaining image with investors as substance

13 Image rather than substance Can be similar in academic research Protein folding problem unsolved for ~50 years 1980: comparative modelling 1985: folding pathways, lattice models 1990: fold recognition 1995: entropy based simulation Progress has been very slow - seems more about maintaining funding than making progress

14 Open, independent assessment Protein structure prediction field transformed by blind, independent assessment CASP prediction competition held every 2 years Has reached the point where everyone has to take part to maintain funding Competition to improve methods (substance) rather than sound convincing (image) International Human Genome Project Independent assessment of outputs by offshoot of funding agency Competition between different sequencing centres Has been repeated for Structural Genomics consortium: performance in pilot projects decided who got subsequent funding

15 Open models Already tested Open source software; Open access publishing Transparent competition If the data is open, anyone can evaluate outputs Just a different business model Adopted by IBM, many software developers, commercial open access publishers, generic drug manufactures

16 Which way for the 21st Century? TRIPS in context of Globalization Is this about development? Is this about protecting the status quo? IP that prevents access to essential medicines will be rightly seen as WMD

17 Intellectual Property Intellectual Property Rights Patents, copyrights, trademarks

19 Intellectual Property Intellectual Property Rights Patents, copyrights, trademarks

20 Knowledge Resources Knowledge Resources Legislation Patents, copyrights, trademarks

21 Knowledge Resources Legislation Not the only way to simulate innovation Not necessarily in the best public interest Law should act to protect the public interest by ensure fair contribution to costs of innovation, rather than the encouragement and protection of monopolies

22 WIPO s role WIPO vision of itself (web site statement) maintenance and further development of the respect for intellectual property throughout the world WIPO became specialist agency of UN in 1974: agreement with UN states mandate to WIPO is to stimulate creative intellectual activity.

23 Leading scientists and economists write to WIPO regarding open models for innovation Nature, 424, 10th July 2003

24 Ideas from experience as a scientist [1] Knowledge based products can be delivered in absence of IP

25 Human Genome Project: Half way to corporate structure Finished human genome sequence was achieved early, under budget and at a higher quality than originally planned. Yet: Academic salaries, no profit motive Strong structure of line-management; goals; planning meetings Weekly conference calls of grant holders with funders Funder s provide performance stats for discussion Competitive/Collaborative Competitive atmosphere between Sequencing Centres Framework of open data, information exchange

26 Ideas from experience as a scientist [1] Knowledge based products can be delivered in absence of IP [2] Openness has benefits is less hassle reduces duplication drives progress forwards exposes errors even companies agree - SNPs consortium

27 Data Release Policy Human genome sequence released under 1996 Bermuda rules Sequence is deposited in public database every 24 hours No patents are filed Bermuda principles reaffirmed at January 2003 NIH/WT meeting* leading to new NIH/WT policy to divide funding into two classes: R01 projects: Competitive Release data on publication Community Projects Non-competitive Managed Release data in real time Open Data Access supported by OECD report ( *Nature 421, 875 (2003)

28 Academic and commercial partnership The SNPs consortium (TSC): WT and 12 companies $3 million membership >1 million SNPs data freely accessible, August 2000 Mouse Sequencing Consortium $6.5M each from SKB, Merck; $3.5M from Affymetrix $34M from NIH; $7.75M from Wellcome Trust Draft mouse genome sequence freely available, April 2001 HapMap consortium: UK, US, Japan, China, Canada Data will be released under a GNU like licence which prevent users from patenting assemblies (haplotypes) of intermediate SNP data

29 Effect of restrictions on access to biological data Biology is too complex for any organisation to have a monopoly of ideas or data When company starts a new project: Most research is being done elsewhere If blocks of biological data are held privately, even if they pay for access, companies miss out on the analysis that would be published by other scientists, if they too had access to this data. The more people analysing a block of data, the more valuable it is.

30 open verses closed Biological data: Public/Private Scientific Databases: Public/Private Software: Open Source (GNU/LINUX)/Closed

31 open verses closed Biological data: Public/Private Scientific Databases: Public/Private Software: Open Source (GNU/LINUX)/Closed Literature: Open Access/Commercial Journals NLM open access to all medical abstracts (PubMed) PLoS Biology: from Oct 2003 (Nature/Science level) How much has medical research been delayed because full text data mining of research publications is not possible? Heathcare R&D: Public based/patent based

32 Ideas from experience as a scientist [1] Knowledge based products can be delivered in absence of IP [2] Openness has benefits [3] Patents have fewer benefits to society in today s scientific age and can have negative side effects Disclosure less important: Many scientists: ideas occur to many; credit results from disclosing them first Patents are mainly being as an industrial regulation to enforce the payback of upfront research

33 Consequence of Patents for medicine Breast cancer International patents granted to Myriad genetics covering BRCA1 and BRCA2 breast and ovarian cancer genes Myriad test is expensive Euros 990 ($869) Cheaper tests have been developed, ranging from Euros 122 ($107) to Euros 689 ($605), but are blocked by Myriad patent Much of work carried out in public domain Studies have concluded that patents can have harmful side effect on research and access Royal Society, 14th April 2003 Keeping science open: the effects of intellectual property policy on the conduct of science Commission on Intellectual Property Rights, 12th September 2003

34 thicket effects of patents Example: more than 100 patents related to a single antigen that is a possible candidate for a malaria vaccine Possible solutions: Make compulsory licensing easier and less costly Create pools of essential patents to which all have access Solutions elsewhere: aircraft patent pool of beginning of 20 th century (fee per aircraft was lowered from $1000 to $200 then $100 with $2million ceiling)

35 Ideas from experience as a scientist [1] Knowledge based products can be delivered in absence of IP [2] Many benefits of Openness [3] Many disadvantages of Patents

36 Market distorts research priorities

37 Industry revenues $430 billion 2002 Marketing /admin 35% Profit 20% R&D 14% Company annual reports, SEC filings Cost of goods 24% Tax 7%

38 1,035 new drugs approved by FDA ( ) No therapeutic benefit over existing 76% Neglected Diseases 1% Therapeutic benefit 23% Changing Patterns fo Pharmaceutical Innovation, National Institute for Health Care Management Research and Educational Foundation, May 2002, ww w.nihcm.org

39 R&D spending norms By adopting TRIPS countries have moved to purchasing drugs at international prices no longer considered to be free-riding on the R&D of others Countries are currently contributing 0.1% GDP to directed drug R&D via drug purchases Sales are 1% of GDP 10% of sales supports R&D Countries that maintained this R&D contribution by any other means would also not be free-riding

40 Separate the Market for Products from the Market for R&D

41 PLoS Biology, 17th February (public library of science)

42 Benefit of not paying for R&D via sales Removes need for monopolies (patents) Removes restrictions on other research Allows competition in drug production, reducing prices and allowing greater access Decentralises support for R&D, allowing world wide capacity building Gives freedom to design incentive structures to encourage R&D that addresses public health priorities and optimise therapeutic benefit

43 Implementation: What is the best approach? Prizes Grants OpenSource

44 DNDi - Drugs for neglected diseases initiative Médecins Sans Frontières and partners

45 Existing Direct Funding Initiatives Medicines for Malaria Venture (MMV) Global Alliance for TB Drug Development (TB Alliance) International AIDS Vaccine Initiative (IAVI) Drugs for Neglected Diseases Initiative (DNDi)

46 Competitive Intermediators R&D fund supports intermediators Intermediators free to choose between different models (Prize, direct funding, open source) Continued funding of intermediators depends on their performance Support of intermediators could be decentralized Health insurance companies are given responsibility to contribute to R&D by picking an intermediator.

47 Where to go from here May 2003 WHA resolution IPRs, Innovation and Public Health Apr 2004 WHO report to EU on Priority Medicines (Dutch presidency, Jun-Dec 2004) Nov 2004 Mexico Summit on Health Research 2004 G8 USA R&D on the agenda 2005 World Health Report on Health Research

Workshop on Access to Medicines and the Financing of Innovations in Health Care December 4, 2003, Colombia University, New York Hosted by: Jeffrey Sachs, Richard Nelson and

48 Workshop on Access to Medicines and the Financing of Innovations in Health Care December 4, 2003, Colombia University, New York Hosted by: Jeffrey Sachs, Richard Nelson and William Masters The Program on Science, Technology, and Global Development The Earth Institute at Columbia University, New York The Consumer Project on Technology Washington, DC

49 Acknowledgements for these ideas Developed at World Business Council for Sustainable Development Project dialog on Intellectual Property Rights 2002 Aventis scenarios workshop on Sustainable Health Care Rockefeller Foundation workshops on Collective Management of Intellectual Property Developed with Jamie Love, Director, Consumer Project on Technology (CPTECH), Washington Discussions with many in Médecins sans Frontières (MSF), OXFAM, Health Action International (HAI) and Third World Network (TWN)

Pills and pocketbooks: Equity pricing of essential medicines in developing countries

Pills and pocketbooks: Equity pricing of essential medicines in developing countries Ellen t Hoen, LLM, Suerie Moon and B Pecoul (Adapted by B Pecoul from a presentation made by Ellen t Hoen, Médecins