Stimulating medical R&D when inventions enter the public domain

1. Stimulating medical R&D when inventions enter the public domain James Packard Love CPTech _________________ CIPP Workshop on Intellectual Property, Biotechnology Capacity and Development Buenos Aires 25 September 2006

2. Basic ideas • Separate markets for innovation from markets for products • Allow generic competition for products, driving prices closer to marginal costs of manufacture and distribution • Create new systems of finance for innovation, including (1) rewards for successful product development that are not tied to product prices, and (2) new methods of financing open collaborative science projects • Create new global trade framework to address free rider problems, and to raising funding for global health care priorities

3. Current focus • Promote use of prizes to reward innovations that improve health care outcomes • The United States market for prescription medicines • Rewarding inventions for health care problems of patients and communities with low incomes • Countries with large internal markets: India or Brazil • Investigate possible role of competitive intermediaries to support open collaborative research projects • Change focus of trade agreements from specifying IPR regimes to addressing minimum levels of support for R&D • Inclusive in terms of mechanisms. All systems to support R&D addressed, including traditional public sector funding, rewards for success innovations, competitive intermediaries, etc.

4. Some key dates • September 18, 2002, Ottrott-le-Haut, France. Aventis Radical IP scenarios • January 26, 2005, Rep. Sanders introduces HR 417 • February 24, 2005, Request to Evaluate Proposal for New Global Medical R&D Treaty • May 27, 2006. WHA resolution: Public health, innovation, essential health research and intellectual property rights: towards a global strategy and plan of action • December 4-8, 2006, 1st meeting of WHO Intergovernmental working group (IGWG) • May 2008, WHA considers global strategy and plan of action

5. Medical Innovation Prize FundHR 417 - 109th Congress • Annual funding of .5 percent of US GDP -- approximately $60 billion per year • Developers of medicines are rewarded for impact of invention on health care outcomes • 10 year participation in rewards • All products are open to generic competition • Set-asides • 4 percent (2.4b) for global neglected diseases; • 10 (6b) percent for orphan drugs; and • 4 (2.4b) percent global infectious diseases and other global public health priorities, including research on AIDS, AIDS vaccines, and medicines for responding to bio-terrorism

6. Relationship between Medical Innovation Prize Fund and Patent System • Patent owners would not have rights to prohibit or authorize use and sale of products • However, • Patents would be factor in establishing ownership of inventions. • Ownership of invention would create claims against Prize Fund (Prize fund payments are far higher than current royalty payments)

7. Supply of QALYs Size of prize fund more elastic supply less elastic supply .75% of GDP .50 % of GDP QALYs supplied QALYs_50 QALYs_75

8. Next steps on US prize fund • New bill introduced in 2007. Some technical issues will be addressed, such as treatment of inventions that are developed at roughly the same time, or treatment of rewards for new uses of older medicines. • Emphasis on expanding community of technical experts working on the proposal (economists, lawyers, research community, various stakeholders, etc). • Fall of 2007. Begin serious effort to promote public debate on proposal.

9. Essential Patent Pool Proposal • Create pool for downstream use of patents on essential medical technologies. • Create fund to provide rewards for inventions licensed to pool that improve health care outcomes. • Possible extensions • Agreement that developing countries that support reward fund can seek more liberal exceptions to IPR rules

10. 2005 Medical R&D Treaty proposal • New paradigm for trade negotiations -- focuses on R&D rather than mechanisms to raise prices. • Inclusive: Recognizes the importance of public and private sector R&D funding, and different mechanisms to stimulate R&D • For example • Strong IP, high prices • Weak IP, low prices, public sector funding • Alternative incentives systems • Focuses on capacity of country to support R&D costs • Flexibility in terms of mechanisms • Creates global system of tradable credits as incentives to fund R&D in areas of priority.

11. Committee on Priority Medical Research (CPMRD) Assembly for Medical Innovation (AMI) Treaty parties Committee on Open Public Goods (COPG) Council Medical Innovation (CMI) Committee on Exceptionally Useful Projects (COEPUP) Committee on open Access publishing (COAP) Report of treaty Qualifying projects Committee on Technology, Transfer and Capacity (CTEC) Committee on TraditionalKnowledge (CTK) Country B Another country’s project PrizeFund International Projects e.g. PPPs Buy out Approved drugs Purchase of patented drugs Directed research Treaty mechanisms overview Treaty Secretariat Country A 13%

12. Treaty Supporters