1 / 20

Incentives for Innovation (Push and Pull)

Incentives for Innovation (Push and Pull). Andrew Alexandra Director Australian Research Council Special Research Centre for Applied Philosophy and Public Ethics University of Melbourne.

keefer
Download Presentation

Incentives for Innovation (Push and Pull)

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Incentives for Innovation(Push and Pull) Andrew Alexandra Director Australian Research Council Special Research Centre for Applied Philosophy and Public Ethics University of Melbourne

  2. Pharmaceuticals largely produced and distributed by large commercial organisations, protected by international IP regime.

  3. Two kinds of problems re drugs for (diseases of) the poor: • Accessibility - drugs too expensive • Availability - drugs not developed for needs of poor

  4. Solutions? • Donation • Differential pricing • Bulk buying • Compulsory licensing • Public/private partnerships (push) • Priority Review Vouchers (push) • Advance Market Commitments (pull) • Health Impact Fund (pull)

  5. Donation Eg Merck’s donation of drug against river blindness Pro: • Helps with accessibility problem

  6. Donation Con: • Donated drugs often (almost) expired, inappropriate, dangerous • Drugs unknown to locals may be difficult to administer • Dependent on financial state of donor - not predictable or dependable • Doesn’t help availability problem

  7. Differential Pricing Current huge ‘deadweight loss’ - difference btwn. amount earned at current prices and that which would be earned if drugs were sold more cheaply above ‘break-even’ price to those who can’t pay current prices. (Different prices in different markets.)

  8. Differential Pricing Pro: • Can helpwith accessibility problems. Con: • Difficulties of parallel trade and ‘external referencing’ cause resistance from pharma • Does not help with availability problems.

  9. Bulk Buying Drugs purchased cheaply in bulk by eg Clinton Foundation, then resold to developing countries at low price. Pro: • Helps resolve accessibility problems. Con: • Dependent on good-will and capacity of philanthropist. • Does not help resolve availability problem.

  10. Compulsory Licensing Requires patent holder to license another party to manufacture drug, where required to protect pubic health - previously only for domestic consumption, now also for export. Pro: Can help resolve accessibility problem in emergencies for countries with domestic manufacturing capacities.

  11. Compulsory Licensing Con: • Ad hoc short term solution to accessibility problem • Relies on domestic manufacturing capacity • Not only does not help availability problem, may be disincentive for development of products which may be subject to compulsory license.

  12. Publicly Funded Research (Push) Public provision commonly addresses market failures. Here research into drugs is publicly funded, so either can be marketed outside patent system, or conditions imposed on patent holder/licensee.

  13. Publicly Funded Research Pro: • Supplements market, contributes to resolving both accessibility and availability problems. Con: • Funding can go to unsuccessful, less urgent, research. • Dependent on changeable political priorities.

  14. Public Private Partnerships Eg Global Alliance for TB Drug Development funds development of new TB drugs. Pro: Can help resolve both accessibility and availability problems Con: • As with publicly funded research

  15. Priority Review Vouchers (Pull) When a pharma company registers a drug for a review in patent process that is directed at eg tropical disease, they can ask for expedited review of another, ‘blockbuster’ drug, saving large amounts.

  16. Priority Review Vouchers Pro: • Helps resolve availability problem, without use of public money. • Legislatively mandated Con: • Do not help resolve accessibility problem • Can delay other drugs awaiting approval

  17. Advance Market Commitments (Pull) Sponsors (NGOs, govts.) promise to buy quantity of product with given specification at fixed price. Pro: • Can help resolve both availability and accessibility problems

  18. Advance Market Commitments Con: • Need high level of specification. • Admin. costs will be spent even if specs. are not achieved. • May ‘crowd out’ research which would have been more efficacious.

  19. Health Impact Fund (Pull) Proposal to set up market-based, pay for performance reward mechanism for innovators alongside traditional patents. Payment from public funds according to impact of innovation. Innovators would not have to charge high monopoly prices to recoup R&D costs, wld.have incentive to sell product cheaply to achieve high impact.

  20. Health Impact Fund Pro: • Addresses both accessibility and availability problems. • Gives commercial incentives to Pharma to participate. Con: • Needs long-term, yet-to-be achieved commitment for governments.

More Related