Innovation And Access: Fission Or Fusion? Interview with David Taylor, Professor of Pharmaceutical and Public Health Policy, University College London, UK 18/05/2016 by Guest contributor for Intellectual Property Watch Leave a Comment Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) The views expressed in this article are solely those of the authors and are not associated with Intellectual Property Watch. IP-Watch expressly disclaims and refuses any responsibility or liability for the content, style or form of any posts made to this forum, which remain solely the responsibility of their authors. In the light of the UN High-Level Panel on Access to Medicines, this series of sponsored articles challenges experts to give their views on the policies that best support the development of solutions to societies’ greatest challenges and how enabling policy environments, including IP systems, influence the development and flow of new technologies and services in different sectors, fields of technology, and jurisdictions. The views expressed in the articles are those of the authors. Below is an interview with David Taylor, Professor of Pharmaceutical and Public Health Policy, University College London, UK. Evolution of the light bulb – from Thomas Edison to energy saving bulb. Image Source/Getty Images Is there a need for a global system of intellectual property protection, and if so why and what should it look like? TAYLOR: Before further reforms are introduced we need a rigorous, well-informed and intellectually robust international debate on defining the global public’s interests in IP, and how they can best be protected in poor as well as in more advantaged environments. Otherwise there will be a danger of causing more harm than good. Both intellectual property rights and individual and collective rights to life saving health care should be recognised, and not cynically traded off against each other. Access to essential medicines should be improved in many areas of the world. But this will not be achieved simply by weakening the intellectual property rights enjoyed by the developers of more effective medicines and vaccines, and it should be recognised that the existing research funding system is already delivering medium to long term important gains for everyone on earth. Both intellectual property rights and individual and collective rights to life saving health care should be recognised, and not cynically traded off against each other. The world public could arguably benefit from a more coherent approach to Intellectual Property Law formation and enforcement, although that does not mean to say that such laws should be the same in all settings. The World Trade Organisation’s TRIPS flexibilities (which including compulsory licensing provisions, data protection restrictions and various exceptions to patentability) already provide examples of the ways in which governments and other agencies can address issues relating to medicines affordability within a legal framework that serves to assure the ongoing funding of biopharmaceutical and wider medical innovation. Do you believe that IP is a barrier to medicines and vaccines access? TAYLOR: Last year, the United Nations set up a High Level Panel ‘to review and assess proposals and recommend solutions for remedying the policy incoherence between the justifiable rights of inventors, international human rights law, trade rules and public health in the context of health technologies.’ I will be very interested to see this group’s recommendations and comment on them after they have been published. The ways we seek to achieve affordable universal care should not risk undermining the ongoing funding of further therapeutic progress – we need dynamic rather than static solutions. For the moment, I think it is worth emphasising that as the global human development process continues it is good that there are building pressures for everyone on the planet to have early access to new life saving and significantly life improving technologies and the professional and allied services needed to use them effectively. The next great challenge will probably be in cancer care, albeit at present even mature ‘off patent’ treatments for communicable diseases are not adequately supplied in many poor communities. I also believe that the ways we seek to achieve affordable universal care should not risk undermining the ongoing funding of further therapeutic progress – we need dynamic rather than static solutions. Granting intellectual property rights is integral to the funding of private sector research, even if additional provisions for incentivising and financing some forms of targeted activities may also prove vital. Accelerating antibiotic development is a point in question. …of HIV medicines and new vaccines supply, for example, the global community has now found a number of ways of addressing the challenge of protecting lives without harming ongoing innovation. Where inequalities in wealth mean that poor individuals and communities lack access to new health technologies that can reasonably be defined as essential, we need to find national and international mechanisms for funding universal care that do not cut off either the private or the public agency income streams needed for ongoing innovation. In the context of HIV medicines and new vaccines supply, for example, the global community has now found a number of ways of addressing the challenge of protecting lives without harming ongoing innovation. Companies holding IPRs were in the past slow to act in the face of the emergent HIV pandemic and the human tragedies it brought, but so too were governments and many other public and private agencies. There is no single ‘magic bullet’ solution for avoiding future problems, but at least we are now better equipped to anticipate them. Recent experiences in the Hepatitis C treatment field bear this out, although this is not to say that the use of relevant products is as yet anywhere near globally optimal. The continuing under-use of vaccines to protect against HPV is another example of an area where much progress has been made, but much more remains to be done. What do you see as the main barriers to accessing well-established generic medicines in the poorer parts of the world? TAYLOR: One of the great advantages of most, if not all, forms of new pharmaceutical treatment is that once the IPRs needed to sustain ongoing R&D investment have expired they can and should become available at lower cost. Generic medicines by definition lack IPRs, except in the context of products sold in branded formats. However, even in countries as sophisticated and advanced as India, less advantaged individuals and communities may not have access to reliable and affordable modern generic medicines supply. Even in countries as sophisticated and advanced as India, less advantaged individuals and communities may not have access to reliable and affordable modern generic medicines supply. The reasons for this can range from local manufacturers being unwilling or unable to produce very low profit items through to the inadequate funding and/or management of health care systems. It is also worth noting that in very poor countries innovative medicines may not ever be patented – the poverty of their populations can preclude their supply and even that of generic drugs at virtually any price. This means that across the world a billion or more people are still having to forgo potentially affordable treatments for common conditions like hypertension and other cardiovascular complaints, as well as many infectious disorders. The latter still account for over a third of all deaths in many less developed communities. Assuring better basic drug supply demands greater investment in optimally cost effective forms of primary health care provision that offer minimal cost non-branded treatments that people can be confident in. This is affordable everywhere the necessary political will exists, but such commitment is still sometimes lacking. This is not something that the UN High Level Panel referred to earlier has been asked to address. Weakening or removing patent and allied forms of intellectual property protection for new medicines (only a proportion of which can according to the WHO’s definition be described as essential) would not help solve failures to provide low cost generic drugs. It might even draw attention away from genuinely effective approaches to supplying the best possible care. Assuring better basic drug supply demands greater investment in optimally cost effective forms of primary health care provision that offer minimal cost non-branded treatments that people can be confident in. This is affordable everywhere the necessary political will exists, but such commitment is still sometimes lacking. Could you explain how new medicines and vaccines are priced, and why the process is seen as lacking in transparency? TAYLOR: In ‘near perfect’ markets for commodity products like, say, wheat, prices are – subject to regulations and quality requirements – set by the forces of supply and demand. When there are shortages prices rise, while during gluts they fall. Scarcity defines the concept of ‘value’. Hence water is typically cheap while gold – which is most people would judge inherently less useful or vital for life – is costly. Yet products like new medicines and vaccines are not sold in simple markets. Often temporary monopolists are facing large monopsonistic (typically tax or insurance funded) purchasers. In such circumstances overt conflicts relating to pricing and allied issues are very likely to occur. Health care providers with fixed budgets may well argue that the opportunity costs of spending on new pharmaceuticals are too high, while public interests in sustainable therapeutic innovation and industrial development could be undermined if prices and profits are forced ‘too low’. Willingness to pay studies and/or the sorts of cost per QALY based research can help decision makers in companies and regulatory bodies identify prices that balance patients’ concerns relating to product or service innovation with the desire for optimal affordability. However, many uncertainties exist and there is no one ‘right’ theoretical approach, in addition to which a price which is acceptable and affordable in, say, Germany may be well above that which is viable in a less affluent setting. The fact that the marginal costs of producing medicines are typically low compared with their fixed development costs can also confuse understandings of this area. As with domestic taxes and the wages of foreign workers, it may often be unpopular to argue that the prices of any type of health care good or service should ever be above the minimal level achievable. But in the case of products like innovative medicines risk capital investment for the future in large part hinges on the levels of return presently achieved. In the richer nations it is untrue to argue that medicines are unaffordable at the community level, should political and other decision makers wish to pay for them. For instance, despite all the controversy surrounding cancer drug spending and hopes for better outcomes in the coming decade, no OECD nation spends more than 0.2 per cent of its GDP on all anticancer medicines combined. World-wide, the pharmaceutical sector is one of the most heavily regulated and scrutinised areas of industry. Even so, because of the complexities and fears involved, medicine and vaccine pricing may always seem non-transparent and unfair to non-specialised observers. However, it is worth stressing again that IP protected medicines are not like gold. Their value and pricing normally relates not to any unavoidable scarcity but more to their intellectual substance and the ‘worth’ of successful research, together with the certain long term benefits to humanity to be derived from encouraging investors to go on putting ‘risk capital’ into bio-pharmaceutical research projects that carry a high individual chance of failure. Should new or established medicines and vaccines be less expensive in poor countries than in richer ones? Can we expect the latter to go on subsidising the costs of developing innovative treatments for low and middle income nations? TAYLOR: I take issue with the way the word subsidy is used in this question – it threatens to trivialise and distort a very important issue. Some people also say that rich-world governments ‘subsidise’ the research based pharmaceutical industry by spending on fundamental research in organisations like Universities. This too is in my view a misguided and potentially destructive interpretation of the concept of subsidy. Once they have been developed and licensed, most new medicines and vaccines can normally be produced at a relatively low marginal cost, as compared to that needed to continue the innovation process… The concept of Ramsey pricing (the logic of which is predicated on the collective benefits to be derived from richer consumers paying more for goods of many types) ought to be accepted by all sides of the improving global access to medicines debate. The truth is that, once they have been developed and licensed, most new medicines and vaccines can normally be produced at a relatively low marginal cost, as compared to that needed to continue the innovation process in the OECD nations. Although it can be difficult for non-economists to understand, this means that failures to supply essential treatments at relatively low prices to poor people would merely reduce the total welfare gained for no real saving to better-off communities that continue to want new treatments. However, having said this, there are a variety of valid concerns and hazards to address. If, for instance, entrepreneurs move low cost drugs intended for poor communities into wealthier areas in ways that undermine research and employment in regions like Europe this is clearly undesirable. If in poor countries the richest people (living on real incomes that are as great as, or greater than, the average levels enjoyed in North America) benefit from low cost drug supply while poor people reliant on public services do not receive treatment, this too would be perverse. With regard to the US there is also a danger that Americans are contributing an unfair share of the world’s biomedical R&D costs as compared to people in countries such as the UK. The latter may be seen as adopting policies ultimately intended to unfairly curb their research and development cost inputs. Pharma industry groups have disavowed Turing Pharmaceuticals for its ‘price hike’ on the mature drug Daraprim. How do you view the issue, and what makes that case exceptional? TAYLOR: Contrary to much popular prejudice, total spending on medicines as a proportion of world health outlays has stayed relatively constant in recent decades at around 15 per cent, albeit figures vary between national settings. Because pharmaceutical IPRs typically last for limited (10-15 year) periods, innovations which are initially expensive soon become – unlike professional labour –relatively cheap. This is not to deny that medicine costs can impose strains on health care budgets, or that abusive pricing practices can be found, but it is important to stress that pharmaceutical costs have not been a central driver of increased health spending. Contrary to much popular prejudice, total spending on medicines as a proportion of world health outlays has stayed relatively constant in recent decades at around 15 per cent The recent outcry relating to the cost of 60-year-old drug pyrimethamine in the US is related to American regulatory requirements which do not apply elsewhere in the world. Some medicines that were on the US market before 1962 were ‘grandfathered’ after legislation which increased safety testing requirements. They were allowed to remain on sale, but any generic copies would have to be trialled like new drugs before they could compete with the original brand. The recent outcry relating to the cost of 60-year-old drug pyrimethamine in the US is related to American regulatory requirements which do not apply elsewhere in the world. This historical anomaly in effect gave some products perpetual regulatory data protection in the US. Turing Pharmaceuticals saw this regulatory distortion, and bought the rights to supplying Daraprim (which can today be used to benefit a proportion of HIV patients) in the US with a view to raising its price to $750 a tablet. Yet in the UK Glaxo still supplies pyrimethamine for about £13 for 30 tablets. In countries like India and Brazil it is even less expensive. This case illustrates the reality that examples of poor practice exist. But (as with different but in some ways parallel case of access HIV care in the 1990s) exceptions do not by definition reflect normal circumstances. In most instances market forces are enough to ensure that the prices of medicines which have lost patent protection are kept close to the commodity cost level. Do you think the modern bio-pharmaceutical industry’s claims to support good universal access to medicines is credible, when its decisions about R&D and drug supply areas on which to focus depend on the size of the market and not the global public’s health needs? TAYLOR: I believe that despite some continuing problems with leadership and commitment to public as well as shareholder value, the research based international pharmaceutical industry has moved forward positively since the start of this century. Both company Boards and many individuals who I know are increasingly committed to not only facilitating better essential medicines supply but supporting the provision of effective universal health care across the world. Of the twenty-plus targets underpinning the delivery of the eight Millennium Development Goals (MDGs) established by the United Nations in 2000, only the access to affordable medicines target was dropped. It can be observed that although collecting ‘across the board’ data on access to basic essential (typically off-patent) medicines is difficult, the resulting figures would be a useful indicator of the overall quality of health care available in poorer localities. As such the availability of these statistics could be challenging for government and allied high level local interests in settings where the availability of such information would open the way to charges of under-investing in affordable forms of health care. Monitoring access to items such as IP protected HIV treatments may not carry such local political risks. Hopefully, the UN will in the new era of Sustainable Development Goals move on and become more effective in supporting good quality world-wide access to essential and other affordable medicines. This cannot be achieved by attempts to undermine the current system of intellectual property law. Hopefully, the UN will in the new era of Sustainable Development Goals move on and become more effective in supporting good quality world-wide access to essential and other affordable medicines. This cannot be achieved by attempts to undermine the current system of intellectual property law. It will rather require the UN and other international agencies to work in constructive partnership with both well-intended governments and well-motivated private sector organisations, including research based pharmaceutical companies that are working sincerely to improve world-wide health. Rights to both universal health care and for responsibly held intellectual property should be respected if the pace of human development is to be optimised. Further changes in the way the world community as a whole seeks to ensure that its poorest members can gain fair access to good quality health care are needed. But this will require much more than moves aimed merely at curtailing or diluting the patent and allied rights available to pharmaceutical innovators. Further changes in the way the world community as a whole seeks to ensure that its poorest members can gain fair access to good quality health care are needed. But this will require much more than moves aimed merely at curtailing or diluting the patent and allied rights available to pharmaceutical innovators. For instance, one possibility is that all nations wishing to benefit from international trading laws should be required to spend a minimum amount of their GDPs, such as 5 per cent, on publicly funded health services for the poorest halves of their populations. David Taylor David Taylor is Emeritus Professor of Pharmaceutical and Public Health Policy, University College London. David’s current work includes studies on public health and pharmaceutical policy formation and the future development of pharmacy, the pharmaceutical industry and globally accessible health care provision The International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) is the sponsor of this series. IFPMA advocates for solutions that take a holistic view of access to medicines, underpinned by strong innovation frameworks that provide incentives for investments in R&D and sustainable access to new health technology solutions for the long term benefits of patients.  Agreement on Trade-Related Aspects of Intellectual Property Rights  quality-adjusted life year or quality-adjusted life-year (QALY) is a generic measure of disease burden, including both the quality and the quantity of life lived. Image Credits: Image Source/Getty Images Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Related Guest contributor may be reached at email@example.com."Innovation And Access: Fission Or Fusion? Interview with David Taylor, Professor of Pharmaceutical and Public Health Policy, University College London, UK" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.