An overview of the ‘Health Impact Fund’ model for accessible medicines

A few quick facts before I jump into my post.

Recently, I raised some questions as to the viability of Patent Pools as a model for drug development – drugs for developing country diseases to be more specific. World over, policy makers, academics and scholars are trying to locate the best viable alternative to the inadequacies that the current patent system has shown. For this post, I’ll be reviewing another one that has been gaining much ground – the “Health Impact Fund”, put forward by Aiden Hollis and Thomas Pogge. [check here for some of their work on it] In fact, in January this year, the Expert Working Group of the World Health Assembly endorsed the HIF method as one of the few viable proposals for new ways to innovate and finance such drugs. 

The Health Impact Fund is essentially a prize system, which tries to make use of how the current drug development system is currently poised, and market economics. Stressing on the increasingly global nature of the problems of poverty and economic inequality, problematic conditions which are leading to almost 50,000 deaths a day, Pogge, states that it is vital that the terms for the ongoing globalization should be set with more input from the vast majority of the population and not merely by rich countries trying to enrich their coffers.

As I’ve brought up in previous posts (see 2nd para here, and latter half of this post), current drug development is geared towards diseases more prevalent in rich countries and is very inadequate for poorer countries. Common business sense tells pharmaceutical companies to focus on drugs which they can profit from, and not drugs for which customers cannot pay for.

Pogge also argues that the current payment structure pushes drug companies to focus on drugs which alleviate, but not cure diseases, giving them, essentially a customer for life. This is debatable of course, but it is something worth looking into. Added to these central issues, there are also issues such as huge wasteful litigation costs and the ‘last mile problem’ – the problem in many poor countries of simply insufficient health care infrastructure, physicians, diagnostics, etc which make it impractical for medicines to actually have an impact in those areas. A common example of this is the DOTS treatment for tuberculosis. It is an effective treatment, but needs to be given over 6-8 months and requires trained health professionals to be very regularly present. This simply isn’t possible for a vast majority of poor people. 

The central cog of their proposal is the assessment of the actual impact that a new treatment makes. This is measured through various measures on the global disease burden. The assessment would be made by looking at clinical trial data, practical trial data, audits to see how units are ultimately dispensed, and ‘before’ and ‘after’ population level studies, as well as look at “Quality Adjusted Life Years“. Based on these assessments, drug companies would receive payments to license out the treatment to the lowest cost manufacturer, or to simply distribute it at cost price. Then, annually, based on the impact that the drug is making on the global health burden, the company would be paid a reward. This ensures a low price for consumers, as well as sufficient rewards to the innovator.

Who would be giving out the ‘prize’ for this? The payments for these drug companies would come from a fund, which would be accumulated by global cooperation. Governments would give about 1% of their current spending on pharmaceuticals to this fund. Of course this would require co-operation at the global level to implement. This, as per his calculations, would come to about 6 billion dollars, and would be sufficient to fund at least 2 developing disease drugs per year. There may also be a stipulation that governments commit for a certain minimum number of years, so scientists and companies are confident of future funding while starting on a project. It is probable that many projects geared towards such diseases may have been started, but subsequently shelved due to unviability of developing it further, and thus initially, there may be a ‘rush’ of projects coming out, with this new system of finance available for it.

Critiques

As mentioned above, this seems to be one of the few viable models of drug innovation available, however, this is not without any problems.

Firstly, [and controversially, no doubt], I’m not completely sure of the grounds on which this is riding. There is much talk about the trouble that Big pharama is going to be in, in the next few years when their blockbuster patent drugs patent terms’ expire. Much of this is because there is simply not much major innovation coming out of Big Pharma anymore. Theories as to why this is so, include – that after years of not focusing on major innovation anymore due to monetary reasons, they are not able to now that they need to. In other words, maybe we need to look elsewhere, and not to Big Pharma to develop the drugs that we are looking for. Not because they don’t want to make the drugs, but because they can not.

Secondly, assuming that these drugs are developed, is the problem of actual assessment of impact. Who would be in charge of this? If it is left to the companies themselves, call me a cynic, but I’m pretty sure that sales figures will be exaggerated, statistics will be manipulated, and so on. Even if, these are all objectively looked at, the fact remains that it is extremely difficult to determine the impact of a drug, and due to this difficulty, the impact should be looked at with certain skepticism – and at least I personally, don’t see why any company with any business sense would put in the required skepticism to determine this.
But who else would be in a position to do so? The impact would be not limited to one country, and therefore governmental roles can only be minimal.

Thirdly, the time and assessment based payment structure, still would not effectively determine the impact that vaccines and other long term drugs would have. A vaccine given to one person, is effective for one person for his life. But a vaccine given to a whole region, ensures that that region is cured from that disease forever (external conditions aside). How is this ‘forever’ measured?
Unless an effective method of determining the impact that vaccines and the like, have, companies will be discentivised from making them.

Indeed, there are several pros and cons of the HIF which require deeper probing, such as, perhaps, the pricing structure of drugs – is it practical to have a one time price set for them at the beginning of the impact assessment? Or the problem that it doesn’t address the situation which caused the need for it to arise. It still relies on pharma patents and cannot work without them. Or simply, is the fact that at least there may be some useful drugs coming out of this structure, as opposed to no new drugs –  sufficient to outweigh the potential problems, for now at least? Of course, the definite pro, not only for developing countries but for the world at large, is that this is yet another step in the growing debate over the necessity for better innovation systems.
Readers comments are welcome as always.