[Ip-health] CPTech WHO IGWG submission

[James Love]

I'll have to clean this up for typos later, but this is our draft
submission to the WHO IGWG.  They are due November 15. Jamie


http://www.who.int/public_hearing_phi/en/

Submission of CPTech to IGWG
James Love
15 November 2006

The IGWG has a very broad mission, and a limited time to respond.  It
must on the one hand address many issues raised in the CIPIH Report,
including the dozens of specific recommendations, many involving
policies and practices relating to controversial topics such as drug
prices and intellectual property.  The IGWG is also charged with
addressing issues that were first raised by Kenya and Brazil,
regarding the creation of a new global framework for essential R&D.
Taken together, these recommendations cover a wide range of topics,
and will require further research, proposals for concrete
implementation, determination of the resources needed for essential
R&D, identification of who should bear the costs of such R&D, and the
mechanisms to stimulate both public and private sector R&D, while
promoting access.   This is a difficult charge.

The CIPIH recommendations were the result of a compromise.  The
commission members came from diverse backgrounds and interests, and
could not resolve many important issues.  That said, it is impressive
that the CIPIH was able to put forth as many recommendations as it
did.  The IGWG has an opportunity to move forward in these areas
where consensus was reached.

The Swiss government has proposed that the IGWG seek to create
process to that asks WHO member countries to implement all CIPIH
recommendations.  We agree.  Such a process might begin with a
request that every WHO member provide a report to the IGWG, outlining
its intentions regarding a review and implementation of the CIPIH
recommendations, and perhaps also, an ongoing system to monitoring
implementation, and providing technical assistance to countries.

Addressing the issues in the Kenya/Brazil proposal will require a
different approach.  The IGWG is asked to create:

"an enhanced and sustainable basis for needs-driven, essential health
research and development relevant to diseases that disproportionately
affect developing countries, proposing clear objectives and
priorities for research and development, and estimating funding needs
in this area."

While this is consistent with the CIPIH recommendations, it demands
considerable new consultation and analysis, and the creation of new
policy initiatives.   It requires the IGWG to address issues the
CIPIH could not resolve.

In order to address these issues, the IGWG needs to create a process
to identify the resources needed to address unmet needs for essential
medical R&D.   It needs to identify the types of mechanisms that
could stimulate such R&D efforts, and it needs to develop practical
ways to ensure that these mechanisms are undertaken.

Almost by definition, R&D incentives based upon existing intellectual
property rules can only play a limited role.   As commonly
implemented, patents and other mechanisms are primarily designed to
create marketing monopolies, and high drug prices.  These incentives
have failed to do anything for areas where consumers have no
purchasing power, and when high prices are possible, they interfere
with affordability and access, points that are explained in great
detail in the CIPIH Report.

More promising are proposals for greater global cooperation in
supporting public sector research, or new incentive systems that are
not tied directly to high drug prices.   This includes work by a
growing number of economists and others who propose new rewards for
R&D that are tied to health care outcomes.

Steven Shavell, Michael Kremer, James Love, Tim Hubbard, Burton
Weisbrod, Aidan Hollis, Owen Barder, Thomas Pogge, Joseph Stiglitz
and others are among those calling for greater attention to new
incentives that reward innovations that successful change health care
outcomes.  (See http://www.cptech.org/ip/health/prizefund/ for cites
to articles on these topics).

Some academics and NGOs have suggested these ideas be combined with
other aspects of the CIPIH work.  For example, by combining the
patent pool and prize fund mechanism.

The CIPIH recommends that patent owners voluntary license inventions
to generic producers, or that governments issue compulsory licenses
to facilitate generic production of medicines.   This could be done
most efficiently through the creation of patent pools or other
methods of collective management of intellectual property rights.

Governments could contribute money to global "prize" funds to reward
inventions that provide positive impacts on health care inventions,
perhaps tied to measures such as QALYS.   These prizes could be
limited to inventions that were voluntary licensed to patent pools,
creating an incentive to make inventions available at low costs to
patients in developing countries.

The IGWG could set norms for WHO member countries to contribute to
such a prize fund mechanism.   Countries that met or exceeded these
norms could be given greater flexibility in implementing TRIPS or
TRIPS plus measures, as an incentive to fund such prizes.   Taken
together, this could provide a powerful new model to reconcile the
global interest in promoting both innovation and access in resource
poor settings.


SELECTED ARTICLES ON USE OF PRIZES TO STIMULATE INNOVATIOIN

2006. Joseph Stiglitz. Patents, Profits, and People. In Making
Globalization Work. New York: W.W. Norton & Company. 103-132. See
also: 2006. Joseph Stiglitz. Give Prizes not Patents. New Scientist.
Proposes a global prize fund paid for by industrialized nations that
would reward new drug and vaccine developments on the basis of their
health impact. Argues that using such a prize system in lieu of
patent monopolies would be 'more efficient and more equitable.'

2006. James Love. Drug development incentives to improve access to
essential medicines. Bulletin of the World Health Organization.

2006. James Love, "A new initiative at the WHO, Prizes rather than
prices." Le Monde diplomatique.

2006. James Love. "Measures to Enhance Access to Medical
Technologies, and New Methods of Stimulating Medical R&D." Paper for
the WIPO Open Forum on the draft Substantive Patent Law Treaty (SPLT).

2005. Thomas Pogge. Human Rights and Global Health: A Research
Program. Metaphilosophy. 1/2(36) See also: 2005. Thomas Pogge on
Online Opinion. A New Approach to Pharmaceutical Innovations.
Proposes a global reward fund of $45-90 billion per year from which
pharmaceutical innovators could choose to apply for payment in lieu
of a patent monopoly. Emphasizes the moral as well as prudential
rationale for such a system.

2005. Aidan Hollis. An Optional Reward System for Neglected Disease
Drugs.
Proposes that pharmaceutical innovators be eligible for a share of an
approximately $1 billion global reward fund if they chose to open
license the patent for their innovation in all developing countries.
Proposes a mechanism for determining reward shares for a given drug
based on relative social value.

2005. Aidan Hollis. An Efficient Reward System for Pharmaceutical
Innovation.
Discusses benefits of a pharmaceutical reward system over current
patent system. Explains features of the pharmaceutical market that
make profits poor indicators of a drug's social value.

2005. James Love. Medical Innovation Prize Fund System of
Remuneration. In Remuneration Guidelines for Non-Voluntary Use of a
Patent on Medical Technologies. James Love. WHO UNDP. 77-80 and 101-104.

2005. James Love. Two Ideas Regarding Innovation and Access.
Presentation for the WHO Commission on Intellectual Property Rights,
Innovation and Public Health Open Forum.

2005. James Love and Tim Hubbard. Paying for Public Goods. In Code:
Collaborative Ownership and the Digital Economy. Edited by Rishab
Aiyer Ghosh. MIT Press, Cambridge. 207-229.

2004. Tim Hubbard and James Love. We're patently going mad:
Lifesaving drugs must be developed differently - for all our sakes.
The Guardian.

2004. James Love and Tim Hubbard. A New Trade Framework for Global
Healthcare R&D. PLOS Biology.

2003. Tim Hubbard and James Love. Medicines Without Barriers.The New
Scientist.

August 22, 2003. Burton Weisbrod. Solving The Drug Dilemma.
Washington Post.
Proposes a prize system for pharmaceutical innovation with an
emphasis on increasing efficiency in the American health care system.

2001. Steven Shavell and Tanguy van Ypersele. Rewards versus Rights.
Journal of Law and Economics. 44: 525-547.Previously published as
Rewards versus Intellectual Property Rights. 1998 Harvard Law School,
Olin Center for Law, Economics & Business, Discussion Paper No. 246.
Argues that the better system between standard patents and a
mandatory prize system, and between a mandatory prize system and an
optional prize system depends upon factors like information
asymmetry. Concludes, however, that an optional reward system where
the size of rewards is based upon sales would be superior to standard
patents.

2001. Nancy Gallini and Suzanne Scotchmer. Intellectual Property:
When is it the Best Incentive System? University of California,
Berkeley Working Paper E01-303.
Comparison of intellectual property, procurement contracts, and
prizes with emphasis on the implications of (a)symmetry of
information about cost and value. Argues that when sponsors know the
value of innovations, a system with prizes linked to the social value
of innovations is optimal.

2000. Gerard Llobet, Hugo Hopenhayn, and Matthew Mitchell. Rewarding
Sequential Innovators: Prizes, Patents and Buyouts. Federal Reserve
Bank of Minneapolis Research Department Staff Report 273.
Considers cumulative innovation with multiple innovators and
innovations of unknown value. In such cases, the authors argue that a
revised patent system that permits compulsory licensing by
competitors would be preferable to prizes and traditional patents.

1999. Gabriella Chiesa and Vincenzo Denicolo. Patents Prizes and
Optimal Innovation Policy. Mimeo. University of Bologna.

1998. Michael Kremer. Patent Buyouts: A Mechanism for Encouraging
Innovation. Quarterly Journal of Economics 113: 1137-67.
Proposes that government offer to buy out pharmaceutical patents
using a described auction system to determine price. Patent holders
could choose whether or to sell or to retain patent monopolies.

1998. Steve Calandrillo. An Economic Analysis of Intellectual
Property Rights. Fordham Intellectual Property, Media & Entertainment
Law Journal. 9: 301-360.
Argues for the superiority of a government run prize system over
traditional patents and includes responses to common criticisms of
prize systems.

1998. Suzanne Scotchmer. On the Optimality of the Patent Renewal
System. Mimeo, University of California, Berkeley.

1996. Eric De Laat. Patents or Prizes: Monopolistic R&D and
Asymetrical Information. International Journal of Industrial
Organization. 15: 369-390.

1983. Brian Wright. The Economics of Investment Incentives: Patents,
Prizes, and Research Contracts. American Economic Review. 73: 691-707.



---------------------------------
James Love, CPTech / www.cptech.org / mailto:james.love@cptech.org /
tel. +1.202.332.2670 / mobile +1.202.361.3040

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