To make important medicines available to all in a sustainable way, the renowned philosopher Thomas Pogge in this very interesting video clipping titled “Medicines For The 99 Percent” suggested the following three simple, yet critical, steps to effectively run the healthcare system of any nation with a cost-effective and patient-centric approach:
- Access to important medicines for all
- A robust drug innovation model to meet the unmet needs of patients
- Transparent and efficient systems to make medicines affordable to all, eliminating wastage of all kinds
To translate this process into reality Pogge proposed an out-of-box model, not just to incentivize companies for drug innovation, but also to produce those drugs in a cost-effective way . In his submission, Pogge recommended a US$ 6 billion ‘Health Impact Fund’ to revolutionize the way medicines are developed and sold. He strongly argued that the value of an innovative drug should always be ascertained by its differential “Health Impact” on patients over the equivalent available generics in the respective disease areas.
As you will see in the video, the model is interesting and deserves wholehearted support from all stakeholders, despite possible resistance from some powerful quarters prompted by vested interests.
Drug innovation and access to medicines:
As the good old saying goes, “Health is Wealth”. When a person falls sick, regaining health is all-important. Medicines play a very critical role there, for all. In the ongoing battle against various types of diseases, addressing unmet needs of the patients is also equally important. For this reason, drug innovation plays just as critical a role.
However, it is now a well-known fact that medicines, as such, are not very expensive to manufacture on a relative yardstick. Abundant availability of cheaper generic medicines, post-patent expiry, with as much as 90 percent price erosion over the concerned patented drug price, would vindicate this point.
Current R&D model:
Astronomical mark-ups on the cost of goods for the innovative-patented drugs coming out of the current R&D model, restrict access to these medicines mostly to rich people of both poor and rich countries of the world, depriving majority of the have-nots. Although in an ideal situation, all these medications should be accessible to those who need them the most.
Is the model sustainable?
Innovator companies attribute ‘astronomical’ high prices of patented drugs to hefty R&D expenditure, which probably includes high cost of failures too. Unfortunately, despite ongoing raging debates, R&D expense details are still held very close to the chest by the innovator companies, with almost total lack of transparency. Many experts, therefore, believe that this opaque, skewed and unsustainable drug R&D model of the global pharma majors needs a radical makeover now, as you would yourself see by clicking on the ‘video clipping’, as mentioned above
To ensure full access to important drugs for all, there are other R&D or innovation models too. Unfortunately, none of those appears to be financially as lucrative to the innovator companies as the one that they are currently following, thus creating a challenging logjam in the inclusive process of drug innovation.
Are Pharmaceutical R&D expenses overstated?
Some experts in this area argue that pharmaceutical R&D expenses are overstated, as the real costs are much less.
An article titled “Demythologizing the high costs of pharmaceutical research”, published by the London School of Economics and Political Science in 2011 indicated that the total cost from the discovery and development stages of a new drug to its market launch was around US$ 802 million in the year 2000. This was worked out in 2003 by the ‘Tuft Center for the Study of Drug Development’ in Boston, USA.
However, in 2006 this figure increased by 64 per cent to US$ 1.32 billion, as reported by a large pharmaceutical industry association of the United States, though with dubious credibility as considered by many.
The authors of the above article had also mentioned that the following factors were not considered while working out the 2006 figure of US$ 1.32 billion:
▪ Tax exemptions that the companies avail for investing in R&D
▪ Tax write-offs that amount to taxpayers’ contributing almost 40 percent of the R&D cost
▪ Cost of basic research should not have been included as those are mostly undertaken by public funded universities or laboratories
The article observed that ‘half the R&D costs are inflated estimates of profits that companies could have made, if they had invested in the stock market instead of R&D and include exaggerated expenses on clinical trials’.
“High R&D costs have been the industry’s excuses for charging high prices”:
In line with this deliberation, in the same article the authors reinforce the above point, as follows:
“Pharmaceutical companies have a strong vested interest in maximizing figures for R&D as high research and development costs have been the industry’s excuse for charging high prices. It has also helped generating political capital worth billions in tax concessions and price protection in the form of increasing patent terms and extending data exclusivity.”
The study concludes by highlighting that “the real R&D cost for a drug borne by a pharmaceutical company is probably about US$ 60 million.”
Should Pharmaceutical R&D move away from the traditional model?
Echoing philosopher Thomas Pogge’s submission, another critical point to ponder today is:
Should the pharmaceutical R&D now move away from its traditional comfort zone of expensive one company initiative to a much less charted frontier of sharing drug discovery involving many players?
If this overall collaborative approach gains broad acceptance and then momentum sooner, with active participation of all concerned, it could lead to substantial increase in R&D productivity at a much lesser expenditure, eliminating wastage by reducing the cost of failures significantly, thus benefiting the patients community at large.
Choosing the right pathway in this direction is more important today than ever before, as the R&D productivity of the global pharmaceutical industry, in general, keeps going south and that too at a faster pace.
Making drug innovation sustainable:
Besides Thomas Pogge’s model with ‘Health Impact Fund’ as stated above, there are other interesting drug R&D models too. In this article, I shall focus on two examples:
A July 2010 study of Frost & Sullivan reports: “Open source innovation increasingly being used to promote innovation in the drug discovery process and boost bottom-line”.
The concept underscores the urgent need for the global pharmaceutical companies to respond to the challenges of high cost and low productivity in their respective R&D initiatives, in general.
The ‘Open Innovation’ model assumes even greater importance today, as we have noted above, to avoid huge costs of R&D failures, which are eventually passed on to the patients again through the drug pricing mechanism.
‘Open Innovation’ model, as they proposed, will be most appropriate to even promote highly innovative approaches in the drug discovery process bringing many brilliant scientific minds together from across the world.
The key objective of ‘Open Innovation’ in pharmaceuticals is, therefore, to encourage drug discovery initiatives at a much lesser cost, especially for non-infectious chronic diseases or the dreaded ailments like Cancer, Parkinson’s, Alzheimer, Multiple Sclerosis, including many neglected diseases of the developing countries, making innovative drugs affordable even to the marginalized section of the society.
Android smart phones with huge commercial success are excellent examples of ‘Open Source Innovation’. So, why not replicate the same successful model of inclusive innovation in the pharmaceutical industry too?
Example II - “Accelerating Medicines Partnership (AMP)” initiative:
This laudable initiative has come to the fore recently in he arena of collaborative R&D, where 10 big global pharma majors reportedly decided in February 2014 to team up with the National Institutes of Health (NIH) of the United States in a ‘game changing’ initiative to identify disease-related molecules and biological processes that could lead to future medicines.
This Public Private Partnership (PPP) for a five-year period has been named as “Accelerating Medicines Partnership (AMP)”. According to the report, this US federal government-backed initiative would hasten the discovery of new drugs in cost effective manner focusing first on Alzheimer’s disease, Type 2 diabetes, and two autoimmune disorders: rheumatoid arthritis and lupus. The group considered these four disease areas among the largest public-health threats, although the span of the project would gradually expand to other diseases depending on the initial outcome of this project.
“A Social Brain Is a Smarter Brain”:
As if to reinforce the concept, a recent HBR Article titled “A Social Brain Is a Smarter Brain” also highlighted, “Open innovation projects (where organizations facing tricky problems invite outsiders to take a crack at solving them) always present cognitive challenges, of course. But they also force new, boundary-spanning human interactions and fresh perspective taking. They require people to reach out to other people, and thus foster social interaction.” This articulation further reinforces the relevance of a new, contemporary and inclusive drug innovation model for greater patient access.
Taking these points into perspective, I reckon, there is a dire need to make the process of offering innovative drugs at affordable prices to all patients absolutely robust and sustainable as we move on.
Philosopher Thomas Pogge, in his above video clipping, has also enunciated very clearly that all concerned must ensure that medications get to those who need them the most. He has also shown a win-win pathway in form of creation of a “Health Impact Fund’ to effectively address this issue. There are other inclusive, sustainable and cost effective R&D models too, such as Open Innovation and Accelerating Medicines Partnership (AMP), to choose from.
That said, a paradigm shift in the drug innovation model can materialize only when there will be a desire to step into the uncharted frontier, coming out of the comfort zone of much familiar independent money spinning silos of drug innovation. Dove tailing business excellence with the health interest of all patients, dispassionately, would then be the name of the game.
Bringing this transformation sooner is extremely important, as drug innovation would continue to remain as critical as access to important medicines for all, in perpetuity.
However, to maintain proper checks and balances between drug innovation and access to medicines for all, the value of an innovative drug should always be ascertained by its differential ‘Health Impact’ on patients over equivalent available generics in that disease area and NOT by how much money, including the cost of R&D failures, goes behind bringing such drugs to the market, solely driven by commercial considerations.
By: Tapan J. Ray
Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.