To anyone working in global health, the 10-90 gap is a familiar problem. Globally, approximately only 10 percent of spending on health goes towards treating diseases that affect 90 percent of the population. Adding to this disparity is that diseases that contribute most to global rates of morbidity and mortality, such as HIV/AIDS, tuberculosis, and diarrheal diseases, disproportionately affect the poor. What we need is more effective and affordable drugs for these diseases, but the current patent system enforced by TRIPS has proven to be a hindrance in this regard.
In 2001 the Doha Declaration took a step in the right direction, exempting least-developed countries (LCDs) from TRIPS until 2016. This however, does not address the crux of the problem, which is incentive. Without the proper incentives, pharmaceutical companies are not likely to invest the 1.8 billion dollars needed on average to bring a drug to market. Without a market able to pay for a drug, the company has no incentive, and no incentive means no product.
Enter the Health Impact Fund (HIF). Proposed by economist Aidan Hollis of the University of Calgary and philosopher Thomas Pogge of Yale University, the HIF would be complimentary to the patent system, and would give drugs for neglected diseases a fighting chance.
The premise is simple. Governments and other donors pay into the fund so that there is something to the tune of six billion dollars in the pot. Under the fund’s proposal, a company that develops a drug for, say, malaria must sell it at a pre-determined low price, affordable to most around the world. To re-coup the cost of development, companies are paid annually by the fund, based on the relative health impact their drug has on the world’s population. This will likely be measured based on the Quality Adjusted Life Years (QALY) effect that a drug has, which takes into account both effects of morbidity and mortality. The greater the health impact, the more the company gets paid.
This model is appealing as it offers something that is not included in the current drug-patent model – a way for businesses to justify to its stakeholders investing in products whose primary consumers are poor. Likewise, the model is advantageous to pharma as it opens up pipelines that were previously unprofitable. Hollis and Pogge have proposed paying out the company over a prolonged period of 10 years. The benefit of this is two-fold, as not only does it allow companies to retain a monopoly on their product for the first decade, but it also gives companies an incentive to promote and effectively distribute their product to regions in need.
Unlike Advanced Market Commitments (AMCs), another payment model touted by many global health advocates, the HIF model rewards based on the actual performance of the drug, rather than a pre-determined value. Under AMC agreements, governments pay a set amount up-front to a company, which then uses this money to develop the agreed upon product. In recent years, AMCs have become an attractive option for incentivizing research and development of vaccines. This system however, does not work as well with other pharmaceutical products as their behaviour in the population is harder to predict, and they tend to cause more frequent and severe adverse drug reactions. AMCs are also not effective when we take into consider the typical high drug product failure rates – approximately 8% of all investigational products ever reach the market, and so a system where payment is made preemptively does not place the burden of risk on the company. Using the HIF system, companies are incentivized to choose which drug they wish to develop wisely, placing the burden of the risk on the company, rather than the fund.
That being said, the HIF is still merely a proposal, and dissenters are quick to point out that the fund is far from perfect. While encouraging developing of drugs for neglected diseases, the HIF does nothing to promote the development of drugs for rare diseases, thus leaving some therapeutic indications without treatment. Furthermore, the HIF is somewhat counter-intuitive, as it works against the generics industry. Opening up patents to generic competition is one of the primary ways in which we currently provide access to drugs to developing countries at affordable prices. Under HIF, companies will still be able to maintain a monopoly on their intellectual property rights over a period of approximately 10 years, which can hinder the development of smaller pharmaceutical companies and stymie widespread distribution of the drug.
However, the most outstanding problem with the HIF is that of measurement. The use of QALYs to measure health outcomes is well vetted, although its application to worldwide use of pharmaceuticals presents new difficulties. One is that many drugs may offer long-term benefits that cannot be taken into consideration within one year. Drugs that treat disease targeting infants or young children are a good example of this. Another issue is the difficulty in associating the improvements seen in a population to one cause. For example, prevalence of HIV and tuberculosis are highly correlated, and if there were an HIV drug and a tuberculosis drug competing for shares of the fund, it would be difficult to determine which had a greater effect on QALYs worldwide.
Nonetheless, the HIF has garnered considerable attention since the authors’ first publication on the premise more than three years ago. The World Health Organization has the HIF on its radar, calling for more research on this “promising” mechanism, and the HIF board boasts several high profile names such as Noam Chomsky, Nobel Prize winner in Economics Kenneth J. Arrow, and several academic leaders in the field of global health. Most exciting of all is that the HIF has now begun work on a pilot project, collaborating with other assessment organizations to develop a method to measure the health impact of a product. Given that accurate and robust performance measurement of the health impact of a drug is the backbone of the HIF, this pilot will prove crucial as a proof-of-concept for this innovative model.
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