1150 Seventeenth Street, N.W., Washington, D.C. 20036
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The tragic problem of "neglected diseases" has been analyzed and decried for decades, with no solution in sight. Many of the poorest countries in the world are plagued by malaria, tuberculosis, and other diseases that are rarely
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found elsewhere, and the new drugs needed are too expensive for poor nations as long as the patents are in force. At this event, Canadian economist Aidan Hollis, one of the creators of the proposed Health Impact Fund, will discuss his plan and explain why this publicly funded program could go a long way toward solving the problem by rewarding makers of the best new drugs while keeping prices low. Andreas Seiter of the World Bank and AEI scholar Roger Bate will comment.
| 9:15 a.m. | Registration | |
| Presenter: | Aidan Hollis, University of Calgary | |
| Discussants: | Andreas Seiter, World Bank | |
| Roger Bate, AEI | ||
| Moderator: | John E. Calfee, AEI | |
| 11:00 | Adjournment |
1150 Seventeenth Street, N.W.
Washington, DC 20036
Phone: 202-862-7183
E-mail: gabriel.sudduth@aei.org
American Enterprise Institute
1150 Seventeenth Street, N.W.
Washington, DC 20036
Phone: 202-862-5806
WASHINGTON, SEPTEMBER 22, 2010--Canadian economist Aidan Hollis presented the key ideas of his coproposed Health Impact Fund Wednesday at AEI. The fund is aimed at offering pharmaceutical manufacturers incentives to develop drugs targeting conditions afflicting poorer nations. Diseases such as malaria, sleeping sickness, and tuberculosis affect poor nations almost exclusively, giving pharmaceutical manufacturers in developed countries little economic incentive to develop drugs for these conditions. The Health Impact Fund would rely on a pool of at least $6 billion, collected from multilateral donors, which would be distributed to manufacturers of drugs that positively affect health in poorer countries. In exchange for a financial reward from the fund based on measured health impact, manufacturers would agree to sell the drugs near the cost of production. The World Bank's Andreas Seiter largely agreed with the fund's objectives and methods, though he expressed concern about the fund's governing body and decision-making mechanisms. AEI's Roger Bate also largely agreed with the proposal, but he voiced skepticism regarding the extent to which the plan will improve access to medicines because of corruption and poor health infrastructure.
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"So what's the health impact fund about? The basic idea is that you would have a fixed sum that would be paid annually for pharmaceutical innovators that register with the Health Impact Fund. Patentees would continue to get the usual intellectual property rights, so the patent system would be completely unaffected by this. A patentee could opt to register for the Health Impact Fund or not. And, if an innovator opted into the HIF for a given product, that product would have to be sold at around the cost of production globally, and then the innovator would earn profits through direct payments from the HIF. The key point: there are rewards, which are actually explicitly based on health impact."
--Aidan Hollis, Professor, University of Calgary; Vice President, Global Health
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"Just thinking in practical terms and the experiences in the World Bank, basically all countries are shareholders. Some are, of course, stronger than others in terms of the share they hold of overall capital. You see a lot of wrestling behind the scenes about country influence and so on. I would expect [for example] if France gives so and so much money to the Health Impact Fund, maybe they push for a French researcher sitting on the committee that defines the [health impact], and that person may be suspicious [for] having ties to the French industry. You have to shield that whole process very well from all kinds of political and commercial influences because there's so much money at stake. So that's my question: How in practice would you be able to do this? Are there models where this has been done successfully? . . . So look at that on a global scale with all the differences between political cultures and attitudes, and scientific, and schools of thought and so on. Is there a realistic way of actually solving these questions so that they don't end up in endless cycles? Where's the court where people can sue if they don't agree with the decision?"
--Andreas Seiter, Senior Health Specialist, World Bank
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"I like a lot of [the proposal]. I think that to get backing for this idea you obviously need to bring in concerns about access to medicines and how this would increase access to medicines. And, I'll discuss innovation, which I think has greater plausibility and is a stronger part of the proposal. I doubt very much whether this will have a significant impact on access to medicines in the countries where it's supposed to be most targeted. . . . As anybody who's spent any time in [developing] countries knows, you know very well that [the problem for lack of access is] largely down to poor infrastructure, logistics, and general poverty in developing countries that make it unlikely that drugs will get to where they're required. Also . . . over time we see donors not doing enough oversight, and one of the things I love about your proposal is that there is data generation so we know where things are going."
--Roger Bate, Legatum Fellow in Global Prosperity, AEI
--GABE SUDDUTH
Speaker biographies
Roger Bate is a resident fellow at AEI. He researches aid policy in Africa and the developing world, evaluating the performance and effectiveness of the U.S. Agency for International Development, the World Bank, the Millennium Challenge Corporation, NGOs, and other aid organizations and development policy initiatives. He writes extensively on topics such as endemic diseases in developing countries (malaria, HIV/AIDS), taxes and tariffs, water policy, access and innovation in pharmaceuticals, and international health agreements. Mr. Bate's writings have appeared in publications including the Wall Street Journal, the Financial Times, the Lancet, and the British Medical Journal. His most recent book is The Excellent Powder: DDT's Political and Scientific History (Dog Ear Publishing LLC, April 2010).
John E. Calfee is an economist who studies the pharmaceutical industry and the Food and Drug Administration (FDA), along with the economics of tobacco, tort liability, and patents. He previously worked at the Federal Trade Commission's Bureau of Economics. He has also taught marketing and consumer behavior at the business schools of the University of Maryland at College Park and Boston University. While Mr. Calfee's current writings are mostly on pharmaceutical markets and FDA regulation, his academic articles and opinion pieces have covered a variety of topics, from patent law and tort liability to advertising and consumer information. He is the author of Prices, Markets, and the Pharmaceutical Revolution (AEI Press, 2000) and the coauthor of Biotechnology and the Patent System (AEI Press, 2007). Mr. Calfee has testified before Congress and federal agencies on various topics, including alcohol advertising, biodefense vaccine research, international drug prices, and, most recently, FDA oversight of drug safety.
Aidan Hollis is a professor in economics at the University of Calgary and vice president of incentives for Global Health, a U.S.-based NGO focused on the development of the Health Impact Fund proposal. Mr. Hollis's research centers on innovation and competition in pharmaceutical markets, although he has published widely in economics. From 2003 to 2004, he was the T.D. MacDonald Chair in Industrial Economics at Canada's Competition Bureau. He has advised companies and governments and provided expert reports and testimony in a variety of pharmaceutical-related cases before federal courts, appeals courts, and the Supreme Court.
Andreas Seiter is a senior health specialist at the World Bank's Health, Nutrition, and Population Anchor. A medical doctor trained in Germany, Mr. Seiter worked for eighteen years in the pharmaceutical industry before joining the World Bank in 2004. He is responsible for the World Bank's analytical and advisory work in all areas of pharmaceutical policy, such as regulation, governance, quality assurance, financing, purchasing, supply chain, and rational use. He has worked with World Bank teams, policymakers, and experts in several client countries in Africa, eastern Europe, Latin America, the Middle East, and South Asia. He recently published A Practical Approach to Pharmaceutical Policy (World Bank, 2010), a synthesis of many of his experiences working with international pharmaceutical stakeholders.
