Innovation And Access: Fission Or Fusion? Interview With Tim Wilsdon, CRA Vice President

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 Tim Wilsdon, Vice President, Charles River Associates (CRA).

Abbott Fund and Direct Relief project at Angkor Hospital for Children

1. What policies can foster innovation of medicines and vaccines in low- and middle-income countries? What is the potential for future biopharmaceutical innovation in LMICs?

We have looked at the different factors that can encourage innovative activity in middle income countries (MICs).[1] Drawing on the experience of markets such as Brazil, China, Colombia, India, Malaysia, Russia, and South Africa, it is clear that there are different approaches that can be successful and the policy needs to be tailored to the country in question. However, there are some common themes that apply across markets: (1) To develop innovative activity (particularly early stage research), governments must have a consistent long-term policy that is implemented effectively. The innovative process is long and difficult to predict. It takes about 10 to 12 years from proof of concept to global commercialisation. Therefore a supportive and predictable environment is important. (2) The policy priorities need to be tailored to the types of innovative activities the country is seeking to encourage. Early stage research and preclinical research needs the best academic and research capabilities, whilst clinical development relies on considerable expertise and experience to manage and supervise trials to international standards. (3) There needs to be coordination between industrial and health policy. Even for early stage research, although it is often argued that the ultimate purchase by the domestic market is less important; certainty regarding the environment is likely to be higher if the country values the innovative output, and this will benefit their citizens, (4) Sustainable innovation requires coordination between public, private and academic sectors. Partnerships between academic and private companies, small and large, local and international are often vital to sustaining innovation (5) Intellectual property is a necessary but not sufficient condition for developing indigenous research and to develop a domestic innovative industry. Based on our research, if the objective is to develop an innovative biopharmaceutical industry (either by domestic companies or investment by international companies), intellectual property is a necessary building block. If these policies are applied consistently over time, there is a significant opportunity for middle income countries.

2. What can we learn from the access to antiretroviral drugs (ARVs) over the last 10 years in low- and middle-income countries, the factors that have contributed to progress, and the lessons that these offer for the future?

The history of HIV/AIDS provides many insights into how access can be improved in low- and middle-income countries.[2] We have drawn a number of important lessons (from markets as diverse as Botswana, Brazil, India, Mexico, Rwanda, South Africa, and Thailand) and in our view these remain applicable to HIV/AIDs in the future and equally, can be applied to other therapeutic areas. In particular, we would highlight the importance of establishing political commitment at the international and national levels. This was clearly encouraged by civil society and NGOs and has played a significant role in changing attitudes, committing domestic resources and encouraging the industry to increase its contribution. More so than in other therapy areas, international funding has been a key part of increased access for the lowest income countries. This needs to be maintained if further progress is to be achieved, particularly in the poorest countries. A holistic programme addressing barriers to patient’s seeking treatment (particularly stigma) and encompassing prevention and treatment (as complements not substitutes). The pharmaceutical industry has played an important role, with the generic industry and the innovator industry contributing in different ways to addressing the AIDS epidemic. Generic companies are able, in some cases, to supply low-income countries more efficiently and more cheaply than innovating companies. Innovators have been responsible for all of the significant new medicines treating HIV over the last decade and have improved access through voluntary licensing and differential pricing (which emerged as a common practice at the beginning of the decade).

3. What other factors than the cost of R&D, marketing and manufacturing biopharmaceutical medicines influence the price that patients may spend on innovative medicines and vaccines?

The prices of innovative medicines reflect many factors. In order for prices to encourage future innovation, it is important that prices reflect the value that medicines deliver to different markets and are sustainable. The value of medicines should take into account the clinical benefit to patients, the impact upon health system costs and wider societal benefits. Our research has shown that the full range of benefits can be achieved in both high income (HICs) and middle income markets (MICs) and for some therapy areas a wider variety of benefits is achieved in MICs than HICs. The case of rotavirus vaccination provides a good example of a therapy area for which innovation has brought value to patients but also wider benefits. After the introduction of the rotavirus vaccine into the immunisation programs of Brazil, not only was there a reduction of child mortality rates due to gastrointestinal diseases but also a reduction of healthcare-related costs was achieved as the hospitalisation rates related to gastrointestinal diseases were reduced significantly.

To fully understand prices it is also necessary to consider the application of pharmacy and wholesaler margins and different forms of tax that are commonly applied to pharmaceutical products. For example, in the past a 10% duty on HIV medicines imported into some African countries has been imposed.[3] Recently, India has re-imposed tax on imports of HIV drugs adding 22% to the cost of supplying a drug.[4]

However, the price of medicines also needs to be put into context. The price of medicines is only one element of health care expenditure. The main barrier to treatment is often the diagnosis of patients suffering from these diseases. The health system needs to ensure there is a clinical infrastructure for diagnosis, treatment and the follow-up needed. The availability of specialist doctors per patient population is significantly smaller in MICs than in HICs. In addition, some diagnosis protocols require advanced equipment that is only available in larger cities and for a particular set of patients.[5]

4. Can you give examples showing how innovative medicines developed to treat non-communicable diseases can benefit LMICs? For example, what is the value of innovative treatment for diabetes in China?

Diabetes is one of the most common non-communicable diseases (NCDs) in the world, with similar prevalence rates in HICs (high income countries) and MICs (middle income countries). However, the number of individuals suffering from diabetes is significantly larger in MICs (around 100 million in China alone) compared to HICs (52 million in Europe) simply due to relative size of populations.[6] To look at the benefits these medicines deliver, we compared to evidence in China to that in high income markets.  We found that diabetes therapies have brought value to HICs in terms of clinical benefits and reduction of healthcare costs, as well as wider socio-economic benefits such as the avoidance of disability adjusted life years (DALYs) lost. Diabetes treatments also yielded clinical benefits in China when they were used, and there is evidence that effective treatment results in savings to the health system. Treatment has also been shown to reduce lost productivity among diabetics in China, although indirect costs were a smaller portion of the societal cost of diabetes in China compared to HICs.

5. Do you believe the current IP model is a barrier to access to medicines and vaccines in LMICs?

To investigate this we were asked to compare different therapy areas coronary heart disease (CHD), depression, diabetes type II, HIV/AIDs, and rotavirus infections across a range of different countries. Based on the case studies chosen for this project, we found that the current status of patent protection does not inhibit the value of the innovation to society. We found value was being delivered to society by both patented and off-patent medicines. Indeed, in the therapy areas where we found the strongest evidence that treatments have brought value, rotavirus and HIV/AIDS, many of the medicines used are still protected. In contrast, in therapy areas where the existing treatment has been on the market since the ‘80s and is now off-patent, and many low-cost drugs are available – depression and CHD – limited benefits have been realised and there is still significant value to be extracted.

Returning to HIV/AIDS, we have conducted a statistical analysis to understand the determinants of access. We find that a country’s prioritisation of HIV (represented as the start of ART programmes) is correlated to the level of ART coverage and the substantial increase in resources from national governments and the international community (through Global Fund, PEPFAR, the Gates Foundation and UNAIDS) that has been dedicated to promoting health over the last several years has changed the trajectory of the HIV/AIDS epidemic in the poorest countries. We do not find intellectual property (as proxied by whether a country has used compulsory licensing) to be an important determinant of access to ART.

6. There are many discussions ongoing on access to health technologies and R&D – including at WHO and UN level. Talking aside, based on your experience, what should policy-makers in low and middle countries focus on in order to achieve the vision of SDG3?

The goal of SDG3 is ensure health and well-being for all, including a commitment to end the epidemics of AIDS, tuberculosis, malaria and other communicable diseases by 2030. It also aims to achieve universal health coverage, and provide access to safe and effective medicines and vaccines for all. It is clear that significant improvements in access to medicines remain a priority. Recent reports have shown that the availability of essential medicines at public health facilities is often limited. Recent data show that, for selected essential medicines, median availability was only 60% and 56% in the public sector of low-income and middle-income countries respectively. To achieve the aims of SDG3, it will be important to draw on the successful lessons (particularly those on political prioritisation, funding, investment in healthcare infrastructure, alignment between health and industrial policy) over the last fifteen years and work in partnership with all of the different stakeholders who can contribute to improving access.

Tim Wilsdon

Charles River Associates is a leading global consulting firm that offers economic, financial, and strategic expertise to major law firms, corporations, accounting firms, and governments around the world. Tim Wilsdon is a Vice President in the Life Sciences practice in CRA’s London office. Tim leads CRA’s Public Policy assignments in the life sciences area and has over 15 years experience working on the economics of health care reform. Mr Wilsdon has completed many studies for the Life Sciences industry (through EFPIA, PhRMA, IFPMA and country associations), national governments and international organisations (such as European Commission) on how pharmaceutical markets could be reformed.

[1] http://www.charlesriverassociates.com/publication/key-factors-foster-biopharmaceutical-innovation-middle-income-countries

[2] http://www.charlesriverassociates.com/sites/default/files/publications/Access-to-HIV-medicines.pdf

[3] Liang, R & Oclay M (2005), “Pharmaceutical tariffs: What is their effect on prices, protection of local industry and revenue generation.” Available at: http://www.who.int/intellectualproperty/studies/TariffsOnEssentialMedicines.pdf

[4] Taylor N (2016), “Asia regulatory roundup: India taxes Cancer, HIV drug imports.” Available at: http://www.raps.org/Regulatory-Focus/News/2016/02/09/24276/Asia-Regulatory-Roundup-India-Taxes-Cancer-HIV-Drug-Imports-9-February-2016/

[5] http://www.ifpma.org/wp-content/uploads/2016/01/CRA-2013_key_findings_web.pdf

[6] http://www.charlesriverassociates.com/sites/default/files/publications/CRA_Value_of_Treatment_for_Diabetes_China_November_2015.pdf

Image Credits: Abbott Fund and Direct Relief project at Angkor Hospital for Children