I excerpt below from an Investors Business Daily oped by Philip Stevens:
[A] powerful group of ideological nongovernmental organizations, or NGOs . . . abhor profit in medicine and are pushing the World Health Organization toward a global treaty that would completely change the way drugs are researched and developed…
This Medical Research and Development Treaty, proposed by Brazil and Kenya, would have a central U.N. bureaucracy deciding what diseases to research while allocating funds, contracts and prizes accordingly. Its expert scientists would ensure that all diseases are given appropriate resources, including the handful of “unprofitable” tropical diseases in poor counties…
When the WHO first mooted the treaty in May 2006, MSF called it a “breakthrough” that “would ensure that patients’ needs rather than profits drove innovation.”
If the aim is to punish Big Pharma’s stockholders, it will probably work. But as a way of producing cheap innovative drugs for the poor, it fails on several counts.
First, giving such discretionary power to bureaucrats would politicize R&D. In a centrally directed system — as in Britain’s health service — resources tend to go to the loudest pressure groups. Other diseases would be neglected in favor of politically high-profile diseases such as HIV/AIDS.
Neither is it clear how an unelected body in Geneva would be better at setting priorities than the thousands of scientists and businessmen whose livelihoods depend on getting these decisions right.
Second, using state-funded prizes as the major incentive for R&D is problematic. The prize committee can never know the true market value of the drug it is hoping to create. If the prize is too low, companies will be reluctant to compete for future prizes, leading to fewer new drugs. If the prize is too high, the new system will squander taxpayers’ money and divert effort from other areas of research.
Prizes were much favored in the Soviet Union, but they never resulted in much innovation.
Third, the treaty would turn drug manufacturers into utilities, living off government contracts. Removing the freedom to decide what to sell and at what price will discourage companies from risking capital to reap rewards, which is how innovation happens…Most fundamentally, the treaty does not solve the greatest health care problem in poorer countries: how to actually get the drugs to patients in the face of crumbling hospitals and chronic shortages of doctors and nurses.
In 2006, the director of the World Health Organization’s HIV division, Kevin De Cock, said “it is very obvious that the elephant in the room is not the current price of drugs. The real obstacle is the fragility of the health systems. You have health infrastructure that is dilapidated, and supply chains that don’t exist.”
Removing commercial incentives will make companies retreat from the difficult and expensive work on cures for cancer and the like, and try to regain lost profits in politically safe “lifestyle” ailments. And governments have yet to demonstrate that they can produce drugs themselves…The current patent-based R&D model has produced most of the drugs that exist. It has a few problems, but there is no point junking it for an ill-conceived NGO fantasy. The biggest losers will not be stockholders, but patients.
Stevens is director of policy at International Policy Network, a development think tank based in London.
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