Health Impact Fund

The Health Impact Fund (HIF) is a proposed pay-for-performance mechanism that would provide a market-based solution to problems concerning the development and distribution of medicines globally. It would incentivize the research and development of new pharmaceutical products that make substantial reductions in the global burden of disease. The HIF is the creation of a team of researchers led by the Yale philosopher Thomas Pogge and the University of Calgary economist Aidan Hollis, and is promoted by the non-profit organization Incentives for Global Health (IGH).

Motivation

In the current system of development and distribution of medicines, millions of people in poor countries die from diseases because the patented medicines they need are unaffordable or because no medicine exists to cure their ailments. Little pharmaceutical research is concentrated on diseases specific to the poor. This is largely because it has been difficult for pharmaceutical companies to profit from research and development directed at products needed by the poor. The cost of pharmaceutical research and development is high and unlikely to be recovered from those in poor countries who cannot afford the medicines. Therefore, "the Health Impact Fund would give companies incentives to develop new products targeting the diseases and conditions for which existing systems have failed to produce results, which would especially benefit the poor." [1]

The distribution of pharmaceutical research and development is partly a result of the global patent regime established by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Prior to TRIPS, countries were free to not enact intellectual property laws covering medicines, leading to flourishing generic drug industries in countries such as India. Following TRIPS, all World Trade Organization members were required to institute strict, American-style intellectual property rights. As a result, the supply of generic medicines to poor countries has been sharply diminished.[2] According to Nobel Laureate Joseph Stiglitz, the pharmaceutical patent system needs an "alternative" that would "give large rewards for cures or vaccines for diseases like malaria that affect millions."[2]

Design of the Fund

The HIF is intended to address the problems with an uncomplemented pharmaceutical patent system. The HIF uses market forces to create incentives to develop medicines for typically neglected diseases and to distribute these medicines at low prices all over the world.[3] Pharmaceutical patent-holders would receive financial rewards by opting to register their new medicines, or new uses of existing medicines, with the Fund. By registering, a patent-holder agrees to distribute its medicine globally at cost and to cooperate in measuring the health impact of that medicine. In return, the firm receives an annual reward based on its measurable contribution to reducing the global burden of disease.[4]

Registrants of new drugs are eligible for reward payments for ten years starting at the date of marketing approval of their product. New uses receive rewards for five years. Following the reward period, registrants agree to allow generic manufacturing of their medicines, in order to prevent price spikes.[5] Registrants retain their rights to control follow-on innovation.[6]

Assessing the health impact of a registered product

When assessing the health impact of a registered product, “the HIF would essentially estimate the difference between (1) the actual health status of people who consumed the registered product and (2) the estimated health status of those people, had they not had access to the registered product.”[7]

The standard measure of health impact is the Quality-Adjusted Life Year (QALY). For example, if all registered products were in conjunction estimated to have saved 10 million QALYs, then a registered product that saved 1 million of those QALYS would receive ten percent of the available reward funds for that year.[8] The health impact assessment of a registered product would be conducted for each year of its registration with the HIF, and payments would be disbursed annually.

Funding

The HIF is to be financed by governments. Ideally, countries will commit a fixed amount of their gross national income (GNI) to the HIF (0.03 percent of a country’s GNI is the suggested minimum).[9]

Next step: an innovative pilot

As performance measurement is a core component of the HIF, it needs to be robust across different products and in diverse settings. Working with leading health care assessment organizations such as The George Institute for International Health, NICE International, and the Institute for Health Metrics and Evaluation, IGH will perform evaluations of the health impact of different products in a variety of countries. The HIF would expand assessment beyond pre-approval clinical trials, using epidemiological data from actual usage, practical trials, physician surveys, and patient demographics, as modifiers to the core health impact assessment. IGH aims to pilot the proposed HIF mechanism by rewarding a pharmaceutical manufacturer on the basis of measured health impact in a region. This will allow the pay-for-performance approach to be field-tested and refined before it is implemented on a wider scale.

Outcomes and Benefits of the Pilot: (1.) Create a comprehensive metric to evaluate the health impact of medicines based on the actual reductions in mortality and morbidity each achieves. (2.) Determine how to apply this metric reliably through a field-test that focuses on a new drug’s introduction into a specific area. No attempt has ever been made to measure the health impact of a newly introduced medicine. (3.) Benefit people in the field-test area by giving them access to an important new product at an affordable price and by rewarding the innovator promoting its wide and effective use by those who can benefit from it.

IGH is currently exploring opportunities for potential pilots.

Relationship to other proposals

The HIF can be seen as a kind of comprehensive Advanced Market Commitment, since it essentially is a way of incentivizing new research while ensuring access at low prices. However, compared to the Advanced Market Commitment, it is comprehensive because it could apply to any drug or vaccine, and it would operate in all countries. Alternatively, one can put it in the context of prizes, since it has prize-like characteristics in terms of incentivizing research while not enabling high prices. A third way of viewing it is as a supplementary global drug insurance system, in which the copayment made by consumers is equal to the cost of production.

The HIF staff has prepared a memo setting out their view of the intellectual history of the HIF.[10]

Reception

Criticisms

When the HIF was proposed in 2008, it attracted criticism from Professor Brook Baker and Knowledge Ecology International for not requiring open licensing of registered drugs.[11][12] Instead, it allowed drug manufacturers to maintain a monopoly, subject to regulated prices. The proponents modified the proposal in response, suggesting greater flexibility about this aspect of the HIF,[13] but this remains a controversial feature of the proposal, when compared to other prize fund proposals that feature open licensing of patents to generic manufacturers.

Brita Pekarsky (2010) has argued that the cost of the HIF may be too high, if it is taking money away from other valuable development aid or health related activities.[14]

Paul Grootendorst (2009) states that the primary drawback of the HIF is the difficulty of measuring health impact accurately.[15] He notes particularly the problems of trying to attribute health impact to drugs that have long latency periods in their effectiveness (such as vaccines and anti-hypertensives); the problems of consistency across different therapeutic areas; and the technical difficulty of disentangling the effect of the drug from confounding factors.

Jorn Sonderholm (2009) argues that there is a lack of evidence that patents create a barrier to access, so that the HIF may fail to address a real problem.[16]

Sakiko Fukuda-Parr and Proochista Ariana (2011) criticized the HIF on a variety of grounds, including its approach to the distribution of benefits and costs, the impact on generic competition and the role of the HIF in strategic negotiations on intellectual property rights,[17] leading to a response from IGH.[18]

Support

The Health Impact Fund is supported by a distinguished Advisory Board.

In June 2010, the Social Democratic Party of Germany officially endorsed the HIF and called on the German government to actively support a HIF pilot.[20]

The World Health Organization Expert Working Group on Research and Development Financing (related to Public health, innovation and intellectual property) described the HIF as one of a few "promising" proposals deserving further examination.[21] A new WHO Consultative Expert Working Group (CEWG) has noted that the HIF proposal would benefit from a pilot to demonstrate feasibility.

Carl Nathan (2009) suggests that the HIF could help to overcome obstacles to the control of tuberculosis such as development and distribution of vaccines and medicines to the poor.[22]

John J. DeGioia, President of Georgetown University, has complimented the HIF for bringing moral imperatives and pragmatic market principles together. He states, "that this is the beauty of the Health Impact Fund . . . it translates idealism into innovation."[23]

Christian Barry and Matt Peterson favour the HIF as a mechanism for providing innovators with incentives to develop new medicines that have significant health impacts rather than significant sales impacts.[24]

James Orbinski states that the HIF is an innovative policy proposal that "should be implemented."[25]

References

  1. ↑ S.J. Hoffman, T. Pogge. 2011. “Revitalizing Pharmaceutical Innovation for Global Health,” Health Affairs 30(2):367. doi:10.1377/hlthaff.2011.0103.
  2. 1 2 Joseph Stiglitz, "Scrooge and Intellectual Property Rights," British Medical Journal 333, no. 7582 (2006), pp. 1279.
  3. ↑ Aidan Hollis and Thomas Pogge, The Health Impact Fund: Making Medicines Available for All (New Haven, CT: Incentives for Global Health, 2008), p. 3.
  4. ↑ Aidan Hollis and Thomas Pogge, The Health Impact Fund: Making Medicines Available for All (New Haven, CT: Incentives for Global Health, 2008), ch. 2.
  5. ↑ Aidan Hollis and Thomas Pogge, The Health Impact Fund: Making Medicines Available for All (New Haven, CT: Incentives for Global Health, 2008), pp. 13-14.
  6. ↑ Aidan Hollis and Thomas Pogge, The Health Impact Fund: Making Medicines Available for All (New Haven, CT: Incentives for Global Health, 2008), p. 17.
  7. ↑ Aidan Hollis and Thomas Pogge, The Health Impact Fund: Making Medicines Available for All (New Haven, CT: Incentives for Global Health, 2008), p. 9.
  8. ↑ Aidan Hollis and Thomas Pogge, The Health Impact Fund: Making Medicines Available for All (New Haven, CT: Incentives for Global Health, 2008), pp. 3-4.
  9. ↑ Aidan Hollis and Thomas Pogge, The Health Impact Fund: Making Medicines Available for All (New Haven, CT: Incentives for Global Health, 2008), pp. 10-11.
  10. ↑ HIF intellectual history memo
  11. ↑ Baker criticism
  12. ↑ Knowledge Ecology International criticism
  13. ↑ Modified proposal in response to Baker and KEI criticism
  14. ↑ Brita Pekarsky, “Should Financial Incentives be Used to Differentially Reward ‘Me-Too’ and Innovative Drugs,” Pharmacoeconomics 28.1(2010): 1-17.
  15. ↑ Paul Grootendorst, “How Should We Support Pharmaceutical Innovation?,” Expert. Rev. Pharmacoeconomics Outcomes Res. 2009: 9(4) – 313-320.
  16. ↑ Jorn Sonderholm, “A Reform Proposal in Need of Reform: A Critique of Thomas Pogge’s Proposal for How to Incentivize Research and Development of Essential Drugs,” Public Health Ethics 0.0 (2009): 1-11.
  17. ↑ Sakiko Fukuda-Parr and Proochista Ariana, "Health Impact Fund – Raising Issues Of Distribution, IP Rights And Alliances," IP-Watch.Org, September 26, 2011.
  18. ↑ Response to criticism by Fukuda-Parr and Ariana
  19. 1 2 A philosopher with a plan
  20. ↑ German Social Democratic Party, "Germany's responsibility to fight for health in developing countries - neglected diseases, reduce child and maternal mortality and a strong Global Fund," Drucksache 17/2135, June 6, 2010.
  21. ↑ "WHO Working Group Endorses HIF", Incentives for Global Health. 17 January 2010.
  22. ↑ Carl Nathan, “Taming Tuberculosis: A Challenge for Science and Society,” Cell Host and Microbe 5(2009): 222.
  23. ↑ John J. DeGioia, “Making New Medicines Available to All: The Health Impact Fund,” Georgetown University, Gonda Theater. 1 December 2008.
  24. ↑ Christian Barry and Matt Peterson, “Shallow Cuts: GSK’s Voluntary Price Reductions and Patent Pooling Are Not Enough,” Public Ethics Media, 4 March 2009.
  25. ↑ James Orbinski, “Are Patents Impeding Medical Care and Innovation?”, PLoS Medicine 7.1(2009): 3.

Further reading

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