Life-saving drugs to the poor

The Australian health care system is widely regarded as world-class. In particular the Pharmaceutical Benefits Scheme (PBS) is highly successful. Up to 80 per cent of prescriptions dispensed in Australia are subsidised under this scheme. Every month new medicines are added to an already comprehensive list and no Australian is barred access.

If one crosses the Pacific to the United States, the situation is very different. Around 15 per cent of the population, a stunning 46 million people, have no health insurance and therefore no access to subsidised medicines. If they cannot afford to pay for a drug privately, they cannot take it. Barbara Ehrenreich, a well-known American feminist, called this a “health-care disgrace”, which should be remedied by implementing a “national health insurance – like just about everybody else [has] in the civilised world, please”.

If one looks further than Australia and the United States, this health-care disgrace applies to almost one third of the world population. According to a report by Anand Grover (the UN Special Rapporteur on the Right to Health), nearly two billion people lack access to life-saving medicines. By contrast to many uninsured Americans, these two billion cannot even afford cheap off-patent drugs. They are entirely cut off from the benefits of pharmaceutical innovations.

As a result, 10 million people die yearly. They would still be alive, if they had access to medicines. That’s two and half times the population of Melbourne every year. The situation is aggravated by the fact that many of them also lack access to safe water or sanitation. Hence, they are much more at risk from infectious diseases than the average Australian. For instance, tuberculosis affects around 5 per 100,000 population in Australia every year. The equivalent numbers for Southern Africa are: 733 for Namibia, 649 for South Africa and 405 for Botswana. Yet, despite growing antibiotic resistance, tuberculosis can still be cured relatively easily. Not, of course, if one has no access to drugs.

The reasons so many people lack access to life-saving medicines are manifold, amongst them: extreme poverty, shortage of health care personnel who could dispense medicines, lack of investment in health care systems, as well as high drug prices for medications still under patent protection.

Patents cannot account for all 2 billion cases of people lacking access to medicines, but Anand Grover recently confirmed that they do play a significant role. This should not come as a surprise. If one looks at patents granted, for instance in 2006, one can see that only ten countries (Japan, USA, South Korea, Germany, China, France, Russia, UK, Netherlands and Switzerland) hold 88 per cent of patents granted. These countries are the clear winners of the patent system. The losers are those whose populations are forced to pay high monopoly prices without obtaining benefits for their domestic pharmaceutical industries. Australia’s PBS shelters Australian patients from the effects of high drug prices, but other countries cannot afford such systems.

Ever since the HIV/AIDS crisis pitted the needs of the poor against the incentives structure for the pharmaceutical industry, the problem has been debated in international fora. After years of working on the topic, the WHO has now announced which reform plans or mechanisms deserve further consideration.

The only new reform plan, which emerged from the WHO discussions as “promising”, started its life in Australia and will this week be debated further at the University of Melbourne.

The so-called “Health Impact Fund”, which was first elaborated by Professor Thomas Pogge at the Australian National University in 2005, is a proposal to institute a market-based, pay-for-performance reward mechanism for innovators alongside traditional patents. Pharmaceutical innovators would be offered ten years of substantial annual rewards, based on the global health impact of a new product, on condition that they price it at the lowest feasible cost of production and distribution. Essentially, a complicated mathematical and statistical calculation would determine what impact a particular drug has (how many lives saved, for instance) and the reward be paid on this basis.

If funded adequately by taxpayers around the world, the Health Impact Fund would lead to reduced costs for national health systems, reduced insurance premiums, and reduced prices at the pharmacy, mostly, but not exclusively, in developing countries. The scheme would run in parallel to the traditional system of patent-protected mark-ups with the pharmaceutical innovator free to choose under which system to market each product.

It is highly encouraging that the Fund was chosen by the WHO for more detailed consideration. This month, Australia is playing a leading role in the further development of the Fund, by bringing 25 international experts to Melbourne to discuss its future and related topics. A three-day meeting is funded through the Australian governments’ International Science Linkages program and hosted by the University’s well-known Centre for Applied Philosophy and Public Ethics. Delegates are coming from the WHO, the Novartis Foundation, as well as prominent academic and other institutions in Asia, Europe, North America and Africa.

For information on the program:
http://www.philosophy.unimelb.edu.au/assets/pdf/cappe-march-2010.pdf

For information on the Health Impact Fund:
http://www.yale.edu/macmillan/igh/