benefits of a treaty on r&d session on alternative frameworks to finance r&d james love the...
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Benefits of a treaty on R&D
Session on alternative frameworks to finance R&D
James Love
The Drugs for Neglected Diseases (DND) Working GroupRio de Janerio, Brazil
3 December 2002
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How do we fund R&D?
● Public and Donor Funds– Direct– Indirect
● Research Mandates● Intellectual Property Rights
– Patents – other exclusive marketing rights
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TRIPS is limited and problematic framework for addressing global R&D
● TRIPS does not address the problem of free riding for the creation of global public goods, such as research that enters the public domain.
● Small return for non-profit and educational institutions
● There are insufficient private incentives to invest in many important R&D projects.
● Exclusive rights on R&D may not be the most efficient mechanism to finance R&D.
– Patent can be barriers to conducting research
– Private benefits are not equal to social benefits
– Excessive investment in drugs with incremental benefits, insufficient investments in many areas.
● Strong IPR protection can and does lead to access problems
– HIV, Glivec/Leukaemia, Singulair/Asthma
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Tim Hubbard’s demand curve problemCost
People treated
Free
Cost + Profit
+ Marketing
+ R&D
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Global thinking on new models for IPR
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Global brainstorming on intellectual property
• Open Source/GPL models for software development
• Peer to peer technologies and social organization models
• UK Commission on Intellectual Property Rights
• TACD IP agenda
• Royal Society brainstorming on IPR
• OECD IPR studies
• US National Academies of Science
• US Federal Trade Commission / Department of Justice hearings on competition and intellectual property.
• MSF Working groups on IPR/DND
• IETF working group on IPR• UNDP Human Development Report
2001• Blur/Banff discussions on music• Rockefeller Bellagio meetings /
collective management of intellectual property rights
• World Business Council for Sustainable Development Project on Intellectual Property Rights
• Aventis Radical IPR scenarios• Ransom / Matching Funds model• WIPO access to genetic resources /
traditional knowledge and folklore• WHO/Harare proposal
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What are the benefits of initiating discussions on an R&D treaty?
● Shift in responsibility from Trade and Industry ministers to health and finance ministers.
● Multilateral framework (compare to G8 or World Bank)● Overcome sense of powerlessness on R&D issues.● Creates a mechanism to offset reduced incentives from weaker
IPR regimes.● Stimulate critical thinking
● Motivates proactive thinking for policymaking on health care R&D.● Provides explicit framework for technology transfer● Transparency● Research priorities
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Models for R&D treaties● The Treaty of Europe: R&D as a development tool● Landmine treaty: Humanitarian de-mining technologies● Koyto Climate Treaty: Energy efficient technologies● G8: Negotiations over funding vaccines and drugs for
neglected diseases● John Barton: Vaccines, public domain, technology
transfer ● Discussions on access to scientific journals● Human Genome Project: Clinton/Blair Agreement
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Possible approaches
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Aventis Radical IP Scenarios
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Decentralized decision making on R&D
● Treaty requires minimum national contribution to R&D, and transparency of investment flows
● Countries free to fund R&D in a variety of ways.● Range of options allowed
● Strong IPR, high prices● Research mandates● Weak IPR regimes (non-exclusive rights liability models)● Public Funding● No IPR open source development regimes, marginal cost pricing
● Each country’s system is without prejudice to claiming IP in other countries regimes, subject to non-discrimination
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Aventis Radical IPR Scenario #1
● No intellectual property rights● Every product is marketed as a generic drug.
– $178 billion in US market falls to $45 billion or less, freeing up $134 billion in resources
● A portion of the $134 billon in savings is transferred to R&D funds, replacing and expanding the $27 billion in private sector investments
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Use Intermediators to invest in projects
● Version 1.0. – Create several competing intermediators, that spend
money, but don’t do R&D directly– evaluate performance, and – New allocations based upon performance
● Version 2.0– Intermediators compete to raise funds from employers
or persons managing funds on behalf of groups of patients
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Benefits of Aventis Radical Scenario # 1
● Fewer resources spent on lawyers● Reduces incentives for expensive and harmful marketing
practices● Marginal cost pricing or products● No need to address parallel trade or create complex
tiered pricing schemes● Consistent with decentralized decision making and
economic incentives● Enables open source development models● Probably far cheaper way to fund R&D
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Challenges with this scenario
● Need to prevent countries from eliminating budgets for innovation
● Need to create management structures that are decentralized and which avoid wasteful spending and have accountability, while taking risks.
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Less radical, incremental approaches
● Address research gaps – DND
– Vaccines
– Funding of public goods
● Research mandates● Agreement on transparency of investment flows● Transfer of technology
– Good practices for licensing government funded inventions
– Affirmative allocations of funds in developing countries
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Strategy to get to a treaty
● Think radical scenarios for long run. – Big ideas sometimes easier to attract attention.
● But start with incremental approaches, and build confidence in mechanisms
● Learn to walk before trying to run the marathon
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Parallel trade and pricing issues
– Parallel trade● TRIPS rules on exhaustion of patent rights need to be
changed to allow selective exhaustion based upon country income or level of development
– Pricing as an R&D issue● Reference pricing
– World Health Organization or other non-WTO body for treaty or resolution on restrictions on the use of reference pricing.
● US/Korea agreement on pricing– Korea must use average of G7 Prices
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WTO type issues for R&D treaty
– Subsidies– National Treatment– Performance Requirements– Market Access– Investment
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Strategies to move the debate forward
– Get R&D Treaty on agenda of NGO and Academic meetings on IPR, access to medicine or drugs for neglected diseases.
– Organize meetings that exclusively deal with the structure of an R&D treaty.
– Find an official fora of have discussions about an R&D Treaty
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How fast could things move?
● Minimalist resolution at World Health Assembly Executive Board meeting on January 26, 2003, to be approved by full WHA in May.
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For more information
Consumer Project on Technology
http://www.cptech.org
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