Health Impact Fund
Encyclopedia
The Health Impact Fund is a proposed mechanism that would provide a market-based solution to problems concerning the development and distribution of medicines. It would incentivize the research and development of new pharmaceutical products that make substantial reductions in the global burden of disease
. The HIF is the creation of a team of researchers led by the Yale
philosopher Thomas Pogge
and the University of Calgary
economist Aidan Hollis, and is promoted by the non-profit organization Incentives for Global Health.
This is largely because it has been difficult for pharmaceutical companies to profit from research and development
directed at products needed by the poor. The cost of pharmaceutical research and development is high and unlikely to be recovered from those in poor countries who cannot afford the medicines.
The distribution of pharmaceutical research and development is partly a result of the global patent regime established by the Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS). Prior to TRIPS, countries were free to not enact intellectual property laws covering medicines, leading to flourishing generic drug industries in countries such as India
. Following TRIPS, all World Trade Organization
members were required to institute strict, American-style intellectual property rights. As a result, the supply of generic medicines to poor countries has been sharply diminished. According to Nobel Laureate
Joseph Stiglitz, the pharmaceutical patent system needs an "alternative" that would "give large rewards for cures or vaccines for diseases like malaria that affect millions."
and to cooperate in measuring the health impact of that medicine. In return, the firm receives an annual reward based on its measurable contribution to reducing the global burden of disease.
Registrants of new drugs are eligible for reward payments for ten years starting at the date of marketing approval
of their product. New uses receive rewards for five years. Following the reward period, registrants agree to allow generic
manufacturing of their medicines, in order to prevent price spikes. Registrants retain their rights to control follow-on innovation.
The standard measure of health impact is the Quality-Adjusted Life Year (QALY). For example, if all registered products were in conjunction estimated to have saved 10 million QALYs, then a registered product that saved 1 million of those QALYS would receive ten percent of the available reward funds for that year. The health impact assessment of a registered product would be conducted for each year of its registration with the HIF, and payments would be disbursed annually.
(GNI) to the HIF (0.03 percent of a country’s GNI is the suggested minimum). Governments would be required to make a twelve-year commitment to the fund, so that researchers would be confident that future funding will be available.
Outcomes and Benefits of the Pilot:
(1.) Create a comprehensive metric to evaluate the health impact of medicines based on the actual reductions in mortality and morbidity each achieves.
(2.) Determine how to apply this metric reliably through a field-test that focuses on a new drug’s introduction into a specific area. No attempt has ever been made to measure the health impact of a newly introduced medicine.
(3.) Benefit people in the field-test area by giving them access to an important new product at an affordable price and by rewarding the innovator promoting its wide and effective use by those who can benefit from it.
, since it essentially is a way of incentivizing new research while ensuring access at low prices. However, compared to the Advanced Market Commitment, it is comprehensive because it could apply to any drug or vaccine, and it would operate in all countries. Alternatively, one can put it in the context of prizes, since it has prize-like characteristics in terms of incentivizing research while not enabling high prices. A third way of viewing it is as a supplementary global drug insurance system
, in which the copayment
made by consumers is equal to the cost of production.
The HIF staff has prepared a memo setting out their view of the intellectual history of the HIF.
Brita Pekarsky (2010) has argued that the cost of the HIF may be too high, if it is taking money away from other valuable development aid or health related activities.
Paul Grootendorst (2009) states that the primary drawback of the HIF is the difficulty of measuring health impact accurately. He notes particularly the problems of trying to attribute health impact to drugs that have long latency periods in their effectiveness (such as vaccines and anti-hypertensives); the problems of consistency across different therapeutic areas; and the technical difficulty of disentangling the effect of the drug from confounding factors.
Jorn Sonderholm (2009) argues that there is a lack of evidence that patents create a barrier to access, so that the HIF may fail to address a real problem.
Sakiko Fukuda-Parr and Proochista Ariana (2011) criticized the HIF on a variety of grounds, including its approach to the distribution of benefits and costs, the impact on generic competition and the role of the HIF in strategic negotiations on intellectual property rights., leading to a response from IGH.
In June 2010, the Social Democratic Party of Germany officially endorsed the HIF and called on the German government to actively support a HIF pilot.
The World Health Organization Expert Working Group on Research and Development Financing (related to Public health, innovation and intellectual property) described the HIF as one of a few "promising" proposals deserving further examination. A new WHO Consultative Expert Working Group (CEWG) has noted that the HIF proposal would benefit from a pilot to demonstrate feasibility.
Carl Nathan (2009) suggests that the HIF could help to overcome obstacles to the control of tuberculosis such as development and distribution of vaccines and medicines to the poor.
John J. DeGioia, President of Georgetown University, has complimented the HIF for bringing moral imperatives and pragmatic market principles together. He states, "that this is the beauty of the Health Impact Fund . . . it translates idealism into innovation."
Christian Barry and Matt Peterson favour the HIF as a mechanism for providing innovators with incentives to develop new medicines that have significant health impacts rather than significant sales impacts.
James Orbinski states that the HIF is an innovative policy proposal that "should be implemented."
Peter Singer, "Tuberculosis or Hair Loss?”, The Guardian
. 16 Sept. 2008.
Amitava Banerjee, Aidan Hollis, Thomas Pogge,“The Health Impact Fund: Incentives for Improving Access to Medicines” Lancet 375.9709 (2010): 166–69.
Disease burden
Disease burden is the impact of a health problem in an area measured by financial cost, mortality, morbidity, or other indicators. It is often quantified in terms of quality-adjusted life years or disability-adjusted life years , which combine the burden due to both death and morbidity into one...
. The HIF is the creation of a team of researchers led by the Yale
YALE
RapidMiner, formerly YALE , is an environment for machine learning, data mining, text mining, predictive analytics, and business analytics. It is used for research, education, training, rapid prototyping, application development, and industrial applications...
philosopher Thomas Pogge
Thomas Pogge
Thomas Winfried Menko Pogge is a German philosopher and is currently the Director of the Global Justice Program and Leitner Professor of Philosophy and International Affairs at Yale University...
and the University of Calgary
University of Calgary
The University of Calgary is a public research university located in Calgary, Alberta, Canada. Founded in 1966 the U of C is composed of 14 faculties and more than 85 research institutes and centres.More than 25,000 undergraduate and 5,500 graduate students are currently...
economist Aidan Hollis, and is promoted by the non-profit organization Incentives for Global Health.
Motivation
In the current system of development and distribution of medicines, millions of people in poor countries die from diseases because the patented medicines they need are unaffordable or because no medicine exists to cure their ailments. Little pharmaceutical research is concentrated on diseases specific to the poor.Diseases of poverty
Diseases of poverty is a term sometimes used to collectively describe diseases and health conditions that are more prevalent among the poor than among wealthier people. In many cases poverty is considered the leading risk factor or determinant for such diseases, and in some cases the diseases...
This is largely because it has been difficult for pharmaceutical companies to profit from research and development
Drug development
Drug development is a blanket term used to define the process of bringing a new drug to the market once a lead compound has been identified through the process of drug discovery...
directed at products needed by the poor. The cost of pharmaceutical research and development is high and unlikely to be recovered from those in poor countries who cannot afford the medicines.
The distribution of pharmaceutical research and development is partly a result of the global patent regime established by the Agreement on Trade-Related Aspects of Intellectual Property Rights
Agreement on Trade-Related Aspects of Intellectual Property Rights
The Agreement on Trade Related Aspects of Intellectual Property Rights is an international agreement administered by the World Trade Organization that sets down minimum standards for many forms of intellectual property regulation as applied to nationals of other WTO Members...
(TRIPS). Prior to TRIPS, countries were free to not enact intellectual property laws covering medicines, leading to flourishing generic drug industries in countries such as India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
. Following TRIPS, all World Trade Organization
World Trade Organization
The World Trade Organization is an organization that intends to supervise and liberalize international trade. The organization officially commenced on January 1, 1995 under the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade , which commenced in 1948...
members were required to institute strict, American-style intellectual property rights. As a result, the supply of generic medicines to poor countries has been sharply diminished. According to Nobel Laureate
Nobel Prize
The Nobel Prizes are annual international awards bestowed by Scandinavian committees in recognition of cultural and scientific advances. The will of the Swedish chemist Alfred Nobel, the inventor of dynamite, established the prizes in 1895...
Joseph Stiglitz, the pharmaceutical patent system needs an "alternative" that would "give large rewards for cures or vaccines for diseases like malaria that affect millions."
Design of the Fund
The HIF is intended to address the problems with an uncomplemented pharmaceutical patent system. The HIF uses market forces to create incentives to develop medicines for typically neglected diseases and to distribute these medicines at low prices all over the world. Pharmaceutical patent-holders would receive financial rewards by opting to register their new medicines, or new uses of existing medicines, with the Fund. By registering, a patent-holder agrees to distribute its medicine globally at costCost
In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this...
and to cooperate in measuring the health impact of that medicine. In return, the firm receives an annual reward based on its measurable contribution to reducing the global burden of disease.
Registrants of new drugs are eligible for reward payments for ten years starting at the date of marketing approval
Approved drug
In the United States, the FDA approves drugs. Before a drug can be prescribed, it must undergo an extensive FDA approval process. This process involves first testing the drug on animals or in medical labs. If found to be safe by the FDA and approved for the next phase of study, the drug is then...
of their product. New uses receive rewards for five years. Following the reward period, registrants agree to allow generic
Generic drug
A generic drug is a drug defined as "a drug product that is comparable to brand/reference listed drug product in dosage form, strength, route of administration, quality and performance characteristics, and intended use." It has also been defined as a term referring to any drug marketed under its...
manufacturing of their medicines, in order to prevent price spikes. Registrants retain their rights to control follow-on innovation.
Assessing the Health Impact of a Registered Product
When assessing the health impact of a registered product, “the HIF would essentially estimate the difference between (1) the actual health status of people who consumed the registered product and (2) the estimated health status of those people, had they not had access to the registered product.”The standard measure of health impact is the Quality-Adjusted Life Year (QALY). For example, if all registered products were in conjunction estimated to have saved 10 million QALYs, then a registered product that saved 1 million of those QALYS would receive ten percent of the available reward funds for that year. The health impact assessment of a registered product would be conducted for each year of its registration with the HIF, and payments would be disbursed annually.
Funding
The HIF is to be financed by governments, and will require an initial commitment of at least six billion dollars per year. Ideally, countries will commit a fixed amount of their gross national incomeGross National Income
The GNI consists of: the personal consumption expenditures, the gross private investment, the government consumption expenditures, the net income from assets abroad , and the gross exports of goods and services, after deducting two components: the gross imports of goods and services, and the...
(GNI) to the HIF (0.03 percent of a country’s GNI is the suggested minimum). Governments would be required to make a twelve-year commitment to the fund, so that researchers would be confident that future funding will be available.
Next Step: An Innovative Pilot
Performance measurement is at the heart of the HIF. It needs to be robust across different products, and in diverse settings. Working with leading health care assessment organizations such as The George Institute for International Health, NICE International, and the Institute for Health Metrics and Evaluation, Incentives for Global Health will perform evaluations of the health impact of different products in a variety of countries. The HIF would expand assessment beyond pre-approval clinical trials, using epidemiological data from actual usage, practical trials, physician surveys, and patient demographics, as modifiers to the core health impact assessment. Incentives for Global Health aims to pilot the proposed HIF mechanism by rewarding a pharmaceutical manufacturer on the basis of measured health impact in a region. This will allow the pay-for-performance approach to be field-tested and refined before it is implemented on a wider scale.Outcomes and Benefits of the Pilot:
(1.) Create a comprehensive metric to evaluate the health impact of medicines based on the actual reductions in mortality and morbidity each achieves.
(2.) Determine how to apply this metric reliably through a field-test that focuses on a new drug’s introduction into a specific area. No attempt has ever been made to measure the health impact of a newly introduced medicine.
(3.) Benefit people in the field-test area by giving them access to an important new product at an affordable price and by rewarding the innovator promoting its wide and effective use by those who can benefit from it.
Relationship to Other Proposals
The HIF can be seen as a kind of comprehensive Advanced Market CommitmentAdvance market commitments
An advance market commitment is a binding contract, typically offered by a government or other financial entity, used to guarantee a viable market if a vaccine or other medicine is successfully developed. As a result of such a commitment, the market for vaccines or drugs for neglected diseases...
, since it essentially is a way of incentivizing new research while ensuring access at low prices. However, compared to the Advanced Market Commitment, it is comprehensive because it could apply to any drug or vaccine, and it would operate in all countries. Alternatively, one can put it in the context of prizes, since it has prize-like characteristics in terms of incentivizing research while not enabling high prices. A third way of viewing it is as a supplementary global drug insurance system
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...
, in which the copayment
Copayment
In the United States, the copayment or copay is a payment defined in the insurance policy and paid by the insured person each time a medical service is accessed. It is technically a form of coinsurance, but is defined differently in health insurance where a coinsurance is a percentage payment after...
made by consumers is equal to the cost of production.
The HIF staff has prepared a memo setting out their view of the intellectual history of the HIF.
Criticisms
When the HIF was proposed in 2008, it attracted criticism from Professor Brook Baker and Knowledge Ecology International for not requiring open licensing of registered drugs. Instead, it allowed drug manufacturers to maintain a monopoly, subject to regulated prices. The proponents modified the proposal in response, suggesting greater flexibility about this aspect of the HIF, but this remains a controversial feature of the proposal, when compared to other prize fund proposals that feature open licensing of patents to generic manufacturers.Brita Pekarsky (2010) has argued that the cost of the HIF may be too high, if it is taking money away from other valuable development aid or health related activities.
Paul Grootendorst (2009) states that the primary drawback of the HIF is the difficulty of measuring health impact accurately. He notes particularly the problems of trying to attribute health impact to drugs that have long latency periods in their effectiveness (such as vaccines and anti-hypertensives); the problems of consistency across different therapeutic areas; and the technical difficulty of disentangling the effect of the drug from confounding factors.
Jorn Sonderholm (2009) argues that there is a lack of evidence that patents create a barrier to access, so that the HIF may fail to address a real problem.
Sakiko Fukuda-Parr and Proochista Ariana (2011) criticized the HIF on a variety of grounds, including its approach to the distribution of benefits and costs, the impact on generic competition and the role of the HIF in strategic negotiations on intellectual property rights., leading to a response from IGH.
Support
The Health Impact Fund is supported by a distinguished Advisory Board.- Kenneth J. Arrow, Professor of Economics and Operations Research, Stanford University; Nobel Prize Winner in Economics
- Noam ChomskyNoam ChomskyAvram Noam Chomsky is an American linguist, philosopher, cognitive scientist, and activist. He is an Institute Professor and Professor in the Department of Linguistics & Philosophy at MIT, where he has worked for over 50 years. Chomsky has been described as the "father of modern linguistics" and...
, Institute Professor, Department of Linguistics & Philosophy, MIT - John J. DeGioiaJohn J. DeGioiaJohn J. "Jack" DeGioia became the 48th and current President of Georgetown University on July 1, 2001. Since graduating from the university in 1979, he has served both as a senior administrator and as a faculty member...
, President of Georgetown University - Ruth FadenRuth FadenRuth R. Faden, M.P.H., Ph.D., is the Philip Franklin Wagley Professor of Biomedical Ethics and Executive Director of The Johns Hopkins Berman Institute of Bioethics at Johns Hopkins University. She is also a Senior Research Scholar at the Kennedy Institute of Ethics, Georgetown University.She has...
, Director of the Berman Institute of Bioethics, Johns Hopkins University - Paul FarmerPaul FarmerDr. Paul Edward Farmer is an American anthropologist and physician. He is currently the Kolokotrones University Professor at Harvard University, formerly the Presley Professor of Medical Anthropology in the Department of Social Medicine at Harvard Medical School, an attending physician and Chief...
, Chair of the Department of Global Health and Social Medicine at Harvard Medical School; Co-Founder, Partners in Health - Jim Yong Kim, President of Dartmouth College; Co-Founder, Partners in Health
- Paul MartinPaul MartinPaul Edgar Philippe Martin, PC , also known as Paul Martin, Jr. is a Canadian politician who was the 21st Prime Minister of Canada, as well as leader of the Liberal Party of Canada....
, twenty-first Prime Minister of Canada - Christopher Murray, Institute Director, Institute for Health Metrics and Evaluation (IHME)
- Baroness Onora O'Neill, Member of the UK House of Lords; President of the British Academy
- James OrbinskiJames OrbinskiJames Jude Orbinski, OC, OOnt, MSC is a Canadian physician, writer, and humanitarian activist. He is an associate professor of Medicine at the University of Toronto and a Fellow at the Munk School of Global Affairs. In January 2011, he also assumed the Chair of Global Health at the Dalla Lana...
, Associate Professor of Medicine and Political Science, University of Toronto; Former International President of MSF - Sir Michael RawlinsMichael RawlinsSir Michael Rawlins is the chairman of the National Institute for Health and Clinical Excellence .- Education :Rawlins obtained his undergraduate medical degree at St Thomas' Hospital, graduating in 1965...
, Chairman of the UK National Institute of Health & Clinical Excellence (NICE) - Karin Roth, German Parliament member, speaker of the SPD-faction in the Subcommittee on Health in Developing Countries
- Amartya SenAmartya SenAmartya Sen, CH is an Indian economist who was awarded the 1998 Nobel Prize in Economic Sciences for his contributions to welfare economics and social choice theory, and for his interest in the problems of society's poorest members...
, Professor of Economics and Philosophy, Harvard University; Nobel Prize Winner in Economics - Peter SingerPeter SingerPeter Albert David Singer is an Australian philosopher who is the Ira W. DeCamp Professor of Bioethics at Princeton University and Laureate Professor at the Centre for Applied Philosophy and Public Ethics at the University of Melbourne...
, Ira W. DeCamp Professor of Bioethics, Princeton University - Judith Whitworth, Chair of WHO's Global Advisory Committee on Health Research
- Heidemarie Wieczorek-ZeulHeidemarie Wieczorek-ZeulHeidemarie Wieczorek-Zeul is a German politician and a member of the Social Democratic Party since 1965.-Career:...
, Member of the German Bundestag for Wiesbaden; German Federal Minister for Economic Cooperation and Development, 1998 to 2009 - Richard Wilder, Associate General Counsel of the Bill & Melinda Gates Foundation
In June 2010, the Social Democratic Party of Germany officially endorsed the HIF and called on the German government to actively support a HIF pilot.
The World Health Organization Expert Working Group on Research and Development Financing (related to Public health, innovation and intellectual property) described the HIF as one of a few "promising" proposals deserving further examination. A new WHO Consultative Expert Working Group (CEWG) has noted that the HIF proposal would benefit from a pilot to demonstrate feasibility.
Carl Nathan (2009) suggests that the HIF could help to overcome obstacles to the control of tuberculosis such as development and distribution of vaccines and medicines to the poor.
John J. DeGioia, President of Georgetown University, has complimented the HIF for bringing moral imperatives and pragmatic market principles together. He states, "that this is the beauty of the Health Impact Fund . . . it translates idealism into innovation."
Christian Barry and Matt Peterson favour the HIF as a mechanism for providing innovators with incentives to develop new medicines that have significant health impacts rather than significant sales impacts.
James Orbinski states that the HIF is an innovative policy proposal that "should be implemented."
Further reading
More information about the Health Impact Fund is available online at: http://www.healthimpactfund.orgPeter Singer, "Tuberculosis or Hair Loss?”, The Guardian
The Guardian
The Guardian, formerly known as The Manchester Guardian , is a British national daily newspaper in the Berliner format...
. 16 Sept. 2008.
Amitava Banerjee, Aidan Hollis, Thomas Pogge,“The Health Impact Fund: Incentives for Improving Access to Medicines” Lancet 375.9709 (2010): 166–69.