The de-linkage of the cost of research and development and the price of health products

1. The de-linkage of the cost of research and development and the price of health products Michelle Childs Director Policy Advocacy

2. About Médecins Sans Frontières • Independent Medical humanitarian organization founded in 1971 and working in over 70 countries • 150,000 HIV patients on ARV treatment • 25,000 cases of TB treated per year • 1 million cases of Malaria treated per year • 7 million vaccinated against meningitis in 08/09 season • 40,000 cases of sleeping sickness treated in the past 20 years • 75,000 cases of kala azar treated in Sudan alone • Campaign for Access to Essential Medicines since 1999 • Medical staff frustrated at not being able to diagnose and treat patients with appropriate and effective tools

3. The Access Campaign’s main issues:Unaffordable,Unavailable, Unsuitable • Unaffordable: Existing medicines, vaccines and diagnostics are priced out of reach - too expensive for individuals and mass government treatment • Unavailable: Certain diseases ‘neglected’ few or no drugs or diagnostics exist or are being developed. (ND, TB) Production of essential medicines and diagnostics that are needed but do not make profits are abandoned • Unsuitable: Not adapted or developed for needs of developing countries e.g heat stable, child formulations, diagnostic tools . Important for adherence ,decentralisation of health care.

4. Problems that need to be solved • Lack of needs-driven Innovation • Lack of affordable Access • Innovation is pointless in the absence of favourable conditions for people to access existing, as well as new, products

5. Key Questions- overarching framework • Identification of the priority medical needs how and by whom? • Where will the money come from? • How is the money best spent?

6. Where will the money come from? • A framework for Contributions: Burden Sharing by Member States • Innovative Sources that deliver on sufficiency, regularity, predictability, sustainability. • A Financial Transaction Tax • CEWG help make case for R&D funding

7. How to identify the priority needs • WHO and Member States should take the lead with input from field practitioners, people living with diseases and other end users. • TB research roadmap established by WHO/ Stop TB partners good example. • How to secure early, low cost patient access to products for Type I diseases? • Deepen anyalsis of proposals that were made • Review access but also innovation needs for resource limited settings - diagnostics and delivery mechanisms.

8. How is the money best spent? • Number of different proposals some appear the same but have significant differences in relation to costs and access provisions • No single proposal will deliver for all needs • Current approaches such as direct grants or financing PDPs are important but not sufficient • What is the appropriate starting point? • Start with priority medical needs and need for end product to be accessible and affordable. • need to move beyond main reliance on adaptation model

9. Funding model barrier to low cost High Prices No R&D for ‘poor’ markets

10. De-linkage – key issues 1 • TRIPS Agreement: IP protections used to enforce monopoly to recover cost of R&D development through high prices = linkage • But • separating the payment for the cost of R&D development for health technologies from price of the product - delinkage provides a path way to focus R&D towards health needs • R&D priorities driven by health needs not marketing opportunities • Aim: innovation and access • Does not mean that IP will never used but not to enforce high prices

11. De-linkage – key issues 2 • Reconciling innovation and access: affordability and accessibility need to be considered up front when funding/ creating incentives for R&D • Must be included at all stages of research from the basic research through to product development and delivery • As de- linkage provides pathway to orient R&D towards health needs • Delinkage can and should apply across the full range ways of funding R&D • grants , PDPS ( push) and rewards at the end prizes (pull) • Key issue for CEWG how to implement it.

12. Principle options to ensure affordability and accessibility • Third party competition • highly efficient to reduce price (more efficient than tiered pricing) • Requires dealing with patents, i.e. no patent, no enforcement or appropriate licensing strategy (voluntary/compulsory, patent pooling) • Additional benefit: allows for further adaption and innovation by third parties • Where quick competition may be not feasible, e.g. vaccines, complex diagnostics • Needs short term strategy: possibly tiered pricing (but who decides on price level and when?), • Pathway to accelerate time to competition: technology transfer- meningitis A vaccine produced by Serum Institute of India to be sold at $ 0.50 /dose.

13. Not-for-profit pricing and competition asd Development of ACT prices Moon et al. PLoS Medicine 2009; 6(7)

14. De-linkage and R&D push and pull funding • PDP • De-linkage possible • Donors can/do request global access policies • Too early to assess: most products still in pipeline and IP and access agreements kept confidential • Example: DNDi-sanofi malaria ASAQ: patentfree • But if no producer? • Direct grants to small companies • De-linkage only realistic if grant covers full R&D cost • Access provisions should be a minimum requirement – Government grants in general • Need to ensure public access to the results of government funded research. This is not always the case, e.g. • rBCGΔureC:Hly (VPM1002) – TB vaccine candidate

15. De-linkage and R&D and pull funding • Prizes • Pull reward that provides de-linkage, if appropriately designed • E.g. Innocentive: depending on type of prize innovator need to transfer IP in return for reward • Different options: patent buy-out, open licensing (+/- no profit/low margin pricing and production guarantees) etc • Advanced market or purchase agreements to stimulate R&D • Reward is in price of product and predictable market = no de-linkage • Priority Review Voucher • Award is provided through other than target product – de-linkage for target product possible in principle (but cost is added to other product) • Current FDA voucher does not include access provisions – no de-linkage

16. Applying de-linkage: Cash Prizes • Large cash prizes have not yet been trialed • Models to ensure affordability and allow to leap frog technological hurdles • Pilot for TB POC Diagnostics

17. The Adaptation model can only get us so far…

18. Highly important innovations… • …but access barriers are significant… • Xpert MTB/RIF : • Level of the Health system: Peripheral laboratory, at district and sub-district level (intended for use in secure facilities with a reliable source of electricity) • For LICs and MICs FIND negotiated a 75% reduction relative to the market price: • $16.86 per cartridge • $17,000 - $17,500 per Instrument • But • Not the POC diagnostic that is needed. Need mechansims

19. From Expert Meeting on Defining Test Specifications for a TB point-of-care test, Paris, March 17 –18, 2009 The TB test we need ! (in 5 – 10 years) • Point-of-care: easy to perform in peripheral health centres • Detect active TB in adults regardless of HIV status • Improved diagnosis of TB in children • Result that allow decision on treatment initiation • Patient can receive result on the same day

20. The point-of-care test challenge Ag/AbMolecular Biomarker Unknown Specific genes IDed POC Platform Lateral flow Nonexistent

21. Well designed prizes have a number of advantages over traditional grants and contracts and can allow funders to: Only pay for results Establish a bold and important goal without having to choose the path or team that is most likely to succeed Attract new ‘solvers’ for the problem Flexible: can include Incentives for collaboration and sharing knowledge Encourage wide range of participants by Intermediate prizes to reward solutions to key technical challenges Promote innovation and access- criteria for affordability and access Incentives to overcome IP barriers prize immediately serves as the compensation for R&D investment, no need to recoup this investment through high prices Benefits of prizes

22. Conclusions • De-linkage is a key concept that enables reconciliation of innovation and access • De-linkage is a key criteria to assess proposals for stimulation of R&D related needs for developing countries • Implementation of de-linkage is uneven among push mechanisms and not yet implemented for pull financing • De-linkage should be included as one of the principles in the design of a needs driven R&D global framework

23. Conclusions CEWG : Could recommend hosting of meetings prior to its final report in order to explore promising mechanisms in more detail. Outcome of final report operational and provide concrete steps on how to take forward any proposals recommended.

24. Thank you! • For more information please visit: • www.msfaccess.org