Transcript Remuneration

Donors, prize funds and patent pools.
Michelle Childs , Head of European Affairs
Knowledge Ecology International
KEI & UNU- MERIT Maastricht Workshop on Medical
Innovation Prizes
January 28th-29th 2008
Background: donor driven market
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Example: UNITAID, Global Fund and PEPFAR: focus on
HIV/AIDS, TB and Malaria
Existence of donor market contingent on low prices
Prices at marginal costs maximize number of patients who
receive treatment
Market threatened by rising costs e.g ‘second line’ treatments for
HIV /AIDS
Donor’s dilemma : How to reconcile innovation and access:
cheap second line treatments plus incentives for R&D for new
AIDS drugs
Patent Barriers to access and availability
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New WHO guidelines for a first line and second line
regimen fixed dose combinations raise price and
availability issues. Recommended combinations are
patented in many countries. Monopoly prices act as
barrier to access.
Patents restrict innovation and adaptation for diseases
specific and country specific settings e.g differing viral
strains, heat stabilized products.
The complexity of identifying,tracking and obtaining
licenses for patented technologies together with fear of
potential claims for infringement, act as barriers to
generic competition.
Uncertainty over size of market/export potential also
inhibits generic scale up and prevents economies of
scale .
Donors: UNITAID
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UNITAID is an international drug purchase facility, established to
provide long-term, sustainable and predictable funding to increase access
and reduce prices of quality drugs and diagnostics for the treatment of
HIV/AIDS, malaria and tuberculosis in developing countries.
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These funds come largely from a sustainable and innovative source: an
airline ticket levy.
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The UNITAID budget will exceed $320m in 2007 and could be as high as
$500m in 2009. ( source UNITAID)
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Countries: France, Brazil, Chile, Norway and the United Kingdom
founding donors. As of May 2007, nearly 30 additional countries have
joined or committed to join UNITAID, more than half from Africa.
Donors: Global Fund
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The Global Fund was created to finance a dramatic turnaround in the fight against AIDS, tuberculosis and malaria.
These diseases kill over 6 million people each year, and the
numbers are growing.
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Since 2001, the Global Fund has attracted US$ 4.7 billion in
financing through 2008. In its first two rounds of grantmaking, it has committed US $ 1.5 billion in funding to
support 154 programs in 93 countries worldwide. ( source: Global
Fund)
Donors: PEPFAR
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The President's Emergency Plan for AIDS Relief
(PEPFAR).
At the inception of PEPFAR, the U.S. developed a five-year
strategy that devoted $15 billion to programs in the
following way:
$10 billion for the 15 focus countries;
$4 billion for other PEPFAR countries and for additional
activities including HIV/AIDS research;
$1 billion over five years for the Global Fund to Fight
AIDS, Tuberculosis, and Malaria. (source: PEPFAR)
Background: UNITAID Patent Pool
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On June 2006, Médecins Sans Frontières (MSF) and
Essential Inventions/KEI presented a proposal to
UNITAID for the creation of a UNITAID Medicines
Patent Pool for patented medical technologies relevant for
the treatment of HIV-AIDS.
Incentives for patent owners to voluntarily license to pool:
Licensing terms: including reasonable and transparent
remuneration rules, measures to ensure products are of
good quality, and access to other patents in the pool,
including patents acquired through grant back clauses.
Pool collects (tiered) royalties from the generic
manufacturers, and distributes to the patent owners
Patent Owners
Generic
manufacturers
UNITAID
Medicines
Patent Pool
Potential benefits of a Pool
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Offers practical way to overcome patent barriers, which
encourages competition and leads to lower prices
‘One stop’ licensing so reduced licensing transaction costs.
Elimination of blocking patents
Management of multiple owners and staking of royalties
Potential to facilitate downstream innovation and
development
Potential to facilitate technology transfer and sustainable
scale up of capacity an access to the developing world.
Background: UNITAID Patent Pool
1. Linking the pool to prize swould cre ate a stronge r ince ntive to provide a
VL
UNITAID could provide additional incentives t o patent holders to license patents t o the
Pool. We recommend that UNITAID create a significant fund t o reward parties who
voluntarily license patents t o t he UNIT AID Medicines P atent Pool, with the prize
payments linked t o the impact of the inventions on improved health care outcomes.
Proposal: Create a prize fund to reward patent
owners who license their patents to a patent pool
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Donors commit to set aside a fixed proportion of their budget for
drug purchases to fund the prize
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E.g 10% of budget - similar % to private market (2005 total private
investments in R&D approx 8.5%).
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Reward to patent owners in proportion to positive impact of
inventions on health care incomes.
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First to license incentive: first to license receives full 10% even if
patents only used for 1% of products.
Proposal: benefits/ issues
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Patent owners rewarded for licensing
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If refuse run risk of loss of market/ compulsory license c/f cl royalty
rates .5%
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Licensing allows availability of products at marginal cost.
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Donors reconcile innovation and access
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Issues
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Which budget? Global Fund? UNITAID?
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Size of fund
More Information:
Knowledge Ecology International
www.keionline.org
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Michelle Childs
[email protected]