[Ip-health] The baffling WHO EWG analysis of innovation inducement prizes
Malini Aisola
malini.aisola@keionline.org
Thu Jan 14 12:02:02 2010
http://keionline.org/node/750
The baffling WHO EWG analysis of innovation inducement prizes
January 14, 2010
The World Health Organization (WHO) Executive Board will soon consider
the Executive Summary of the Report of the Expert Working Group on
Research and Development Financing, a document, formally identified as
EB 126/6 Add.1.
In the section of the report on "Funding allocation proposals," the EWG
considers two types of innovation inducement prizes, including
31 (c) milestone prizes; and
31 (d) end-prizes (cash);
It is not surprising that prizes were considered by the EWG. Several
prize proposals were formally submitted to the EWG, and the WHO Global
Strategy for Public Health, Innovation and Public Health (WHA61.21)
states:
4. Proposals should be developed for health-needs driven
research and development that include exploring a range of
incentive mechanisms, including where appropriate, addressing
the de-linkage of the costs of research and development and the
price of health products and methods for tailoring the optimal
mix of incentives to a particular condition or product with the
objective of addressing diseases that disproportionately affect
developing countries.
We were thus baffled by the EWG analysis of innovation inducement prizes
-- a topic that was among the most controversial topics to be considered
by the EWG, as evidenced by the leaked comments of the IFPMA and the
extensive comments in the EWG web based hearings.
The EWG discussion of Milestone prizes
The brief EWG executive summary discussion of "milestone prizes" focused
entirely on prizes managed by InnoCentive, a for-profit firm initially
started by Lilly, to manage prize competitions detailing with discrete
technical challenges. The EWG say that "Only one pure prize proposal was
presented to the EWG," and that "InnoCentive, for example, is a pure
prize." In fact, there is no record of InnoCentive having made a
proposal to the EWG. In the 262 word discussion of milestone prizes, the
EWG concludes with the following confusing statement:
maximum buy-in from the private sector is likely to be obtained
by managing prizes within the intellectual property system.
Since it is difficult to imagine how InnoCentive, a private company,
could operate outside of intellectual property laws, one assumes that
the EWG is trying to say something about the way InnoCentive manages
intellectual property rights in the competitions it manages. But in
reality, how does InnoCentive management intellectual property rights?
The short answer is: any way the entity funding the prize wants to. Here
are a few examples, from the InnoCentive web page.
This is an example of a "Reduction to Practice" prize:
Biodegradable, Bioderived Elastomers for Medical Applications
Reward: $30,000 USD Type: RTP INNOCENTIVE 9046179
What is an RTP Challenge?
An InnoCentive RTP (Reduction to Practice) Challenge is a
prototype that proves an idea, and is similar to an InnoCentive
Theoretical Challenge in its high level of detail. However, an
RTP requires the Solver to submit a validated solution, either
in the form of original data or a physical sample. Also the
Seeker is allowed to test the proposed solution.
Exclusive rights to the Intellectual Property are always
transferred to the Seeker in an RTP Challenge.
This is an example of an eRFP prize:
Purification of a Biologically Active Membrane-bound Protein
Reward: varies Type: eRFP INNOCENTIVE 9006232 Share Challenge
deadline icon DEADLINE: Feb 02, 2010
What is an eRFP Challenge?
eRFPs allow Seekers to submit Requests for Proposals for a
partner or supplier to provide materials or expertise to help
solve a business challenge to the InnoCentive Solver community.
This global community includes organizations and individuals,
such as contract research organizations, scientists, university
researchers, and technology companies.
After a Solver submits an eRFP response, the Seeker evaluates
the responses to determine which Solver(s) to contact for
further business discussions. With eRFPs, the Solver must not
provide any confidential information in the eRFP response. If
your eRFP response is selected, you negotiate the terms of the
contract (including scope of work, tasks and duration) directly
with the Seeker.
This Challenge type does not require Intellectual Property (IP)
transfer. However, sometimes Challenges of this type do request
that certain IP arrangements be made should a partnership be
formed.
Another type of InnoCentive prize is the Theoretical Challenge prize.
Improved Granule Technology for Turf Applications
Reward: $20,000 USD Type: Theoretical-IP Transfer INNOCENTIVE
9025116
An InnoCentive Theoretical Challenge implements an idea but is
not yet a proof of concept. A solution to a Theoretical
Challenge will solidify the Solver's concept with detailed
descriptions, specifications and requirements necessary to
bringing a good idea closer to becoming an actual product or
service.
This Challenge is a Theoretical-IP Transfer Challenge, meaning
that Solvers must relinquish all rights to the Intellectual
Property (IP) for which they are awarded. By contrast,
Theoretical-Licensing means that the Seeker is requesting
non-exclusive rights to use the winning solution. For both forms
of a theoretical Challenge, solvers that do not win retain the
rights to their solution after the evaluation period is
complete. The Seeker retains no rights to any IP not awarded.
If there is a common thread among the various InnoCentive rules for
managing intellectual property rights, it is simply that the people who
put up the money for the prizes often expect to use the prize winning
innovations, either by acquiring the exclusive rights, or a license to
use the innovation, or some other freedom to operate guarantee. Of
course, all of this operates "within the intellectual property system."
The EWG discussion of cash end-prizes
On page 14 of the report, the EWB making the following statements:
(d) End-prizes (cash)
42. Cash end-prizes propose providing a large lump sum at the
end of the development process as a reward for product
development. The prize can be awarded as a pure reward for
innovation, allowing the intellectual property-holder to retain
rights to their product, or as a =E2=80=9Cfee=E2=80=9D to purchase =
the
intellectual property rights from the developer to allow free
exploitation by the prize-giver. Although the notion of cash
end-prizes has been generally discussed, only one such proposal
was submitted to the EWG, the prize fund for development of a
low-cost rapid diagnostic test for tuberculosis.
43. End-prizes are likely only suitable for diagnostic
development, where prizes sufficiently large to reward
developers are within reach of public funders. The developing
country health impact of the prize would be optimized by
intellectual property-buyout prizes rather than prizes purely as
a reward for innovation.
What is mind boggling odd about this discussion is the last sentence in
paragraph 42, "only one such proposal was submitted to the EWG, the
prize fund for development of a low-cost rapid diagnostic test for
tuberculosis."
In fact, several prize fund proposals were submitted to the EWG,
including for example the following proposals that were submitted in the
first EWG public hearing:
1. PROPOSAL by Bangladesh, Barbados, Bolivia and Suriname: Chagas
Disease Prize Fund for the Development of New Treatments,
Diagnostics and Vaccines [1], Date: 09.04.15
2. PROPOSAL by Barbados, Bolivia, Suriname and Bangladesh: A Prize
Fund to Support Innovation and Access for Donor Supported
Markets. Linking Rewards for Innovation to the Competitive
Supply of Products for HIV-AIDS, TB, Malaria and Other Diseases
for Humanitarian Uses [2], Date: 09.04.15
3. PROPOSAL by Bangladesh, Barbados Bolivia, and Suriname: Prize
Fund for Development of Low-Cost Rapid Diagnostic Test for
Tuberculosis [3], Date: 09.04.15
4. PROPOSAL by Bolivia, Suriname and Bangladesh: Prizes as a Reward
Mechanism for New Cancer Treatments and Vaccines in Developing
Countries [4], Date: 09.04.15
In addition to these prize fund proposals were quasi prizes, such as the
Health Impact Fund, or the many prize like mechanisms such as the
advanced marketing commitments or the priority review voucher, which
were apparently evaluated by the EWG.
In the IFPMA comments that ended up on Wikileaks, and in the many
comments in the public hearings and in various EWG documents, it was
clear that innovation inducement prizes were among the most important
and controversial proposals before the EWG. The IFPMA referred to them
as "large prizes," endstage prizes", the "Economic Prize System" or to
"specific prize models" for cancer or Chagas. A number of government
submissions mentioned prizes, as did several NGOs, academics and others,
including those who thought prize funds were a good or a bad idea.
This week, after KEI expressed considerable frustration over the lack of
documentation to justify the EWG conclusions, the WHO published several
papers that were distributed at the 3rd meeting of the EWG. Among the
papers distributed was a November 2009 paper by Pedro Concei=C3=A7=C3=A3o t=
itled
"Financing for Health R&D that Addresses Challenges of the Poor:
Context, Analytical Framework, and,Initial Compilation of Options," that
was prepared "with the Support of the WHO Secretariat on Public Health,
Innovation and Intellectual Property." This paper appears to be one of
the main analysis of prizes for the EWG. It is thus worth mentioning
that the only paper cited in the references that focuses specifically on
innovation inducement prizes was a 1983 article in the American Economic
Review by Brian Wright. Concei=C3=A7=C3=A3o's entire understanding of the r=
ole of
innovation inducement prizes seemed to be uninformed by any of the
public submissions to the EWG, including in particular the notion that
proportional reward mechanisms tied to the impact of inventions on
health care outcomes have been the focus of the newer prize fund
proposals explored since 2002, including the several proposals included
in the EWG list of proposals under consideration.
We do not yet have the full EWG report, but we have seen the draft
version of the report that was leaked by the IFPMA to its members and
placed on Wikileaks. The analysis of prizes in the Draft report, which
technically is not available yet, is surprisingly poor, and suggests
that the EWG did not ever bother to talk to anyone who had the ability
or inclination to read or understand any of the relevant literature. It
is hard to describe how underwhelming is the EWG work on prizes.
In some discussions, persons from the EWG have indicated that opposition
to the large end product prize proposals was due to an assumption that
they were unacceptable to the private sector. While this is certainly
true for some companies in the private sector, and for the lobbyists for
the IFPMA trade association, it is not true in general. Gilead, now the
largest seller of HIV drugs in the United States and a company with a
healthy pipeline, and Johnson and Johnson, a big pharma company with an
important profolio of products for TB and other infectious diseases,
have said that a combination of a prize fund and a patent pool would be
in principle a promising business model for developing countries,
depending upon the details, such as the size of the prize fund and the
diseases covered. Novartis has on occasion endorsed this approach for
TB, and several small companies have also endorsed this approach. None
of this is mentioned in any of the frankly biased EWG materials on prize
funds. (Compare, for example, to the more balanced discussion of prizes
in Paul Herrling's article on the FRIND, discussed here [5])
Another weak area of analysis by the EWG in the leaked draft report
concerns the assertion that prize funds are inferior because they would
be ineffective because they would be "complicated" and difficult to
manage. It is true that managing large sums of R&D funds does require
some management and some complexity. But this is certainly true for
administering grant programs, an approach endorsed by the EWG, for
managing small technical challenge grants, which is endorsed by the EWG,
and indeed can be said for managing the patent system itself. The issue
is not the existence of management requirements, or some details that
have to be addresses in the administration of the prize, but a real
assessment of how this would work in practice -- an analysis that
apparently lied outside of the limited analytical powers of the EWG.
________________________________________________________________________
Links:
[1]
http://www.who.int/phi/Bangladesh_Barbados_Bolivia_Suriname_ChagasPrize.pdf
[2]
http://www.who.int/phi/Bangladesh_Barbados_Bolivia_Suriname_DonorPrize.pdf
[3]
http://www.who.int/phi/Bangladesh_Barbados_Bolivia_Suriname_TBPrize.pdf
[4] http://www.who.int/phi/Bangladesh_Bolivia_Suriname_CancerPrize.pdf
[5] http://www.keionline.org/node/751
--
Malini Aisola
Knowledge Ecology International
1621 Connecticut Avenue NW, Suite 500, Washington DC 20009
malini.aisola@keionline.org|Tel: +1.202.332.2670|Fax: +1.202.332.2673