US, EU Consumer Group Releases Resolution Calling To Delink R&D From Monopoly Incentives

The Trans Atlantic Consumer Dialogue (TACD), a forum of United States and European Union consumer organisations, yesterday released a resolution calling on policymakers “to break out of the current dysfunctional and harmful trade-off between innovation and access,” and to delink research and development (R&D) from monopoly pricing.

The TACD Resolution on delinking the incentives to invest in biomedical R&D from the prices of products and services [pdf] identifies the “profound area of policy incoherence regarding the conflict between incentives to stimulate innovation and the need for affordable access to new technologies.”

The resolution notes that in “many countries, policy interventions designed to control costs are based upon withholding coverage for products that are too expensive … and/or imposing costly co-payments on patients. In such cases, the patient rather than the monopoly is put at risk when there are price disputes.”

The TACD resolution addresses this asymmetry by calling for new incentive mechanisms that position R&D as a public good to facilitate affordable access to health technology. To this end, the resolution presents a set of recommendations to policymakers, included below.

Recommendations:

“In order to progressively delink R&D incentives from high prices, governments need to first acknowledge that incentives can be provided without granting monopolies and begin to propose and consider the feasibility of mechanisms that provide such non-monopoly incentives. The most important of which are market entry rewards and innovation inducement prizes, where the incentive directly involves money rather than indirectly through a temporary monopoly. These reforms should also evaluate the benefits of the open source dividend proposals to provide incentives to openly share upstream knowledge, data, materials and technologies.

To be most useful, such proposals and feasibility studies should identify the means of financing the non-monopoly incentives. One promising approach is for the incentives (market entry rewards and other innovation inducement prizes) to be financed by public and private sector health care insurance/reimbursement entities, as an alternative to paying the high prices associated with temporary monopolies.

There is also a need for global norms to address the appropriate sharing of the costs of funding R&D as a public good. To this end, we urge governments to support discussions at the World Health Organization (WHO) on new agreements on the funding of biomedical R&D as a public good, and to consider chapters in trade agreements to expand and otherwise enhance the supply of public goods.”