Confidential Documents From WHO R&D Finance Group, Industry, Raise Concern

Confidential documents related to the World Health Organization Expert Working Group on innovative financing for research and development surfaced today, revealing the group’s thinking as well as pharmaceutical industry thinking about the WHO process. The documents immediately raised concern about possible undue access to the process by industry, but the WHO told Intellectual Property Watch the industry group was not supposed to have them.

The documents appear to have come from the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA), and include draft reports on innovative financing mechanisms from the working group as well as an analysis by the IFPMA on the reports’ contents. They were released on Wikileaks, a website that anonymously publishes sensitive documents.

“IFPMA was not supposed to have working drafts of the expert working group in their possession and they were not given these documents,” said Precious Matsoso, director of Public Health Innovation and Intellectual Property (PHI) at the WHO, under whose auspices the expert working group falls. “It was understood by the working group that its report is intended for the director general and” WHO members, she added.

Public health advocates reacted strongly to the leaked documents. “The IFPMA document confirms much of what had been feared,” that there is “a larger WHO strategy to protect the status quo, particularly as it relates to intellectual property issues,” said James Love, the director of Knowledge Ecology International, a non-profit group focussed on transparency in policymaking and which has been advocating for prize funds, a biomedical R&D treaty, and other initiatives to fund R&D.

An introductory letter included with the documents addressed to the Public Health Advocacy Committee at IFPMA says “the overall result [of the working group’s report] is in line with most of the industry positions on this matter,” but says that “there is still room for them to introduce new language” as the documents date from before the final working group meeting concluded on 2 December.

The Expert Working Group’s “comparative analysis of innovative financing proposals for health R&D,” available from Wikileaks here [pdf], divides aspects of drug development into six categories and then lists the ideas from “least likely” to “most likely” to work.

The six categories are: fundraising, research and development capacity building in developing countries, basic research and product discovery, product development, manufacturing and distribution, and efficiencies.

The leaked documents are all available from Wikileaks here.

Expert Analysis

The draft reports available on Wikileaks do not contain final recommendations. These will be available only in the final report, expected to be released this week (IPW, WHO, 7 December 2009). Instead, it contains an analysis of all proposals made thus far, through two calls for advice from the public, and ranks them on efficacy and feasibility.

Within “fundraising,” proposals considered “least likely to work” include diverting existing resources to health, reducing tax evasion and havens, levying new charges on services or access rights. A proposal for a “Green IP” system (IPW, Inside Views, 27 June 2008) is currently “too hard to operationalise” but some elements could potentially be useful.

Most likely to work include new indirect taxes, for example on internet users; voluntary private contributions, new donor funds, and taxes on pharmaceutical profits. Taxing pharmaceutical profits is estimated to generate only USD 160 million versus, for example, a potential USD 2 billion from internet taxes.

On building research capacity, specific recommendations are not made, but the report says there is a lot of potential in this idea as innovative pharmaceutical development is often done in commercial ventures and, in developing countries, “commercial targets often have significant overlap with public health targets,” as local markets demand treatment for neglected diseases.

On basic research, prize systems and prize funds for completed drugs, as well as a “health impact fund,” are deemed least effective, as is the idea of a biomedical R&D treaty. “Endstage prizes” and the treaty were also seen as not particularly beneficial for product development. Prizes have been advocated as a solution to R&D financing problems by several health advocacy NGOs (IPW, Public Health, 12 February 2009).

Deemed more effective in incentivising research were funding for product development partnerships, grants to companies working on neglected diseases, and prizes for reaching “milestones” (such as those provided by Innocentive). Similar incentives were considered beneficial for product development.

Prizes were seen as possible incentives for manufacturing and distribution, though “likely only for diagnostics” as opposed to vaccines or medicines.

“Absolutely Fair Towards the Industry”

The draft report, the IFPMA said, is “absolutely fair” regarding industry concerns, using “real figures” on the cost of drug and vaccines developments and containing “many references to the importance of intellectual property … to achieve further innovation.”

As far as streamlining the current R&D system, which the report calls “unwieldy,” removing data exclusivity was seen as less effective compared to harmonising medicine regulatory systems and “pre-competitive platforms” for R&D.

The IFPMA analysis raised two major concerns.

The first relates to proposed taxes on the pharmaceutical industry, which the IFPMA document says “places the burden of the R&D … exclusively on industry and reinforces the negative image of pharmaceutical profits.”

“Operationalising this proposal may lead to companies increasing prices to compensate which would be counterproductive,” it adds. Further, it is not certain to be acceptable by all partners “as the tax should be imposed on the whole pharmaceutical sector, generic included.”

The second area of concern is drug-purchasing mechanism UNITAID’s proposed patent pool, and in particular its structure for royalty payments to IP owners. These payments would be determined based on the “therapeutic benefits and the affordability of royalities in particular countries,” the analysis says, adding that this “does not follow past or current patent pool structures” and emphasising that voluntary participation should be an “essential prerequisite.”

A UNITAID board meeting on 14-15 December will review an expert study on the patent pool, which the UNITAID board agreed in principle to establish in July 2008. In May 2009, the board instructed the organisation’s secretariat to prepare an implementation plan. An expert team analysed a range of issues and its report, completed in November, clearly recommends the implementation of the pool, sources told Intellectual Property Watch.

The IFPMA analysis also called for vigilance regarding the potential use of open source systems.

NGOs: Documents “A Step Backwards”

Love said the expert working group process was “a step backwards” and “evidence of a deeper problem in WHO regarding the influence of the pharmaceutical industry, and its philanthropic supporter, the Microsoft founder’s Gates Foundation.”

“This is a very disturbing set of documents,” said Sarah Rimmington, from non-governmental organization Essential Action’s Access to Medicines Project. She added that the report “embraces the status quo and rejects the feasibility of almost every single important proposal aimed at truly solving these complicated problems.”