ANALYSTS have, for long, referred to the “10/90 gap”, according to which only 10 per cent of investment in R&D of new drugs is aimed at the so-called “orphan diseases,” which afflict 90 per cent of the world population who live in the developing South. Given such concerns and the background of an ongoing international debate concerning the relationship between Intellectual Property Rights, innovation and public health, the World Health Assembly decided in May 2003 to give an independent Commission the task of analysing this key issue. The Report of this Commission – the Commission on Intellectual Property Rights, Innovation and Public Health – was finally published in April, 2006.
CONTRASTING IMPACT OF INTELLECTUAL PROPERTY RIGHTS
The Report reflects deep seated concerns about the impact of Intellectual Property Rights on the direction of research concerning public health. Much of the Report emphasises on the gross differences that exist among developed and developing countries, and the contrasting impact that Intellectual Property Rights have, given such glaring differences. It notes, for example, that while just 5.6 per cent of the disease burden among the income-rich in the world is caused by communicable diseases (i.e. infections of different kinds), it accounts for 53.5 per cent of the disease load in the case of the income-poor.
The Report, while commenting on the huge impact of HIV-AIDS infections in the last two decades, also notes that in the same period there has been a resurgence of diseases such as tuberculosis and malaria in the developing world. However, such diseases do not represent a priority for pharmaceutical companies when they research new products, given that those who suffer from these diseases are unlikely to be able to afford the huge costs of new drugs that are patented by large pharmaceutical companies. The priorities are set, based on the reality that developing countries, accounting for more than 80 per cent of the world’s population, are responsible for only about 10 per cent of global sales of medicines (see table).
World Pharmaceutical Market By Region
(US$ billion, ex-manufacturer prices)
Region Global share of sales 2005 (%)
North America 44.4
South-East Asia 4.6
Latin America 4.4
Indian subcontinent 1.2
Middle East 0.8
The Report acknowledges that: “The fundamental problem is the lack of effective demand in the market for products that are required to prevent, treat or cure illnesses that affect poorer people in developing countries. On the one hand, this is evidence that poor people in developing countries are simply not getting the treatments they need, in spite of a much higher disease burden. On the other hand, it is also an indicator of how existing incentive structures encourage companies to invest in the creation of products targeting those with purchasing power, mainly in developed countries”.
ACKNOWLEDGING THE FAILURE OF TRIPS
It is thus argued in the Report that because the market fails to induce adequate investment in products needed by developing countries, it is necessary that other measures be put in place to promote relevant innovation. In other words, it acknowledges that the present system of innovation driven by Intellectual Property Rights is incapable of directing research for the benefit of those who require medicines the most. The Report thus admits that, “the monopoly costs associated with patents can limit the affordability of patented health-care products required by poor people..”.
Drawing from several studies the Report admits that the patent system not only inhibits access to medicines due to high prices but can also limit technological progress. The claims of the pharmaceutical industry that patent protection is key to innovation is contested by several findings of the Report. Clinical trials of new products, designed to test the efficacy and safety of new products are the key to new drug development. The Report finds that 65 per cent of clinical trials are being conducted today by contract research organisations – i.e. small entities who do sub-contract work for large pharmaceutical companies. The Report also admits that, “at a global level the overwhelming bulk of early stage research is funded by governments ..”. Investment priorities are particularly skewed in the case of research that targets diseases that afflict the poor. In the case of research on anti-malarial drugs, for example, 56 per cent of research funding was provided by the public sector, 32 per cent by not-for-profit institutions, and 12 per cent by the for-profit sector (i.e. pharmaceutical companies).
FOR A NEW SYSTEM OF INNOVATION
The Report, however, – especially when it makes recommendations – fails to question the validity of the TRIPS agreement. This should have been the logical conclusion, given that the TRIPS agreement today is the principal paradigm that drives Research on drugs. Reflecting the diverse pulls within the Commission, nowhere does the Report attempt to go beyond the parameters of the TRIPS agreement. Instead, in many places, it appeals to the “good sense” of the pharmaceutical industry. However the fact that the Report emphasises on the need for governments to play a more proactive role in ensuring that health R&D addresses real health needs, is a tacit admission of the failure of the present system of innovation promoted by the TRIPS agreement.
An important fallout of the Report was the adoption by the World Health Assembly, of a resolution on May 27, 2006, that established a working group to come up with a global strategy on intellectual property, health research and development, and new medicines for diseases that especially affect developing countries. The WHA resolution mandates the working group to: “draw up a global strategy and plan of action in order to provide a medium-term framework based on the recommendations of the Commission. Such a strategy and plan of action aims at, inter alia, securing an enhanced and sustainable basis for needs-driven, essential health research and development relevant to diseases that disproportionately affect developing countries, proposing clear objectives and priorities for research and development, and estimating funding needs in this area”.
The resolution is being seen by many as the biggest achievement of this year’s World Health Assembly. The WHA resolution, in fact, is a combination of the Report’s recommendations and a parallel initiative that was started by Brazil and Kenya demanding that the WHO take cognizance of the inherent inequity that prevails today when priorities for research on new drugs are decided upon. The latter proposal, initiated in January, 2006, proposed a new WHO initiative to create a framework for essential health R&D. The United States and the European Commission had opposed the proposal, but at the WHA agreed to go along with the compromise resolution.
The WHA resolution falls short of the original proposal by Brazil and Kenya, which had challenged the framework of TRIPS as the only framework for promoting innovation. But even in its present form the resolution is important. It has the potential to develop a system of innovation that does not depend on the monopoly power of patents. There is now the possibility to push for new open source methods of conducting research, and new incentive systems that reward innovations that improve health outcomes in developing countries, which are not tied to marketing monopolies or high drug prices. The outcome of this new initiative by the WHO will ultimately depend on the ability of developing countries to withstand pressure from Northern country governments, who reflect the interests of their pharmaceutical companies. What, however, can be said as of now is that at least we finally have a global initiative that could contest the TRIPS framework.