Transcript How to frame a global trade agreement that promotes R&D

Benefits of a treaty on R&D
Session on alternative frameworks to finance R&D
James Love
The Drugs for Neglected Diseases (DND) Working Group
Rio de Janerio, Brazil
3 December 2002
How do we fund R&D?
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Public and Donor Funds
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Direct
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Indirect
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Research Mandates
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Intellectual Property Rights
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Patents
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other exclusive marketing rights
TRIPS is limited and problematic framework
for addressing global R&D
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TRIPS does not address the problem of free riding for the creation of global
public goods, such as research that enters the public domain.
Small return for non-profit and educational institutions
There are insufficient private incentives to invest in many important R&D
projects.
Exclusive rights on R&D may not be the most efficient mechanism to finance
R&D.
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Patent can be barriers to conducting research
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Private benefits are not equal to social benefits
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Excessive investment in drugs with incremental benefits, insufficient investments in
many areas.
Strong IPR protection can and does lead to access problems
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HIV, Glivec/Leukaemia, Singulair/Asthma
Tim Hubbard’s demand curve problem
Cost
+ Marketing
+ R&D
Cost + Profit
Free
People treated
Global thinking on new models for IPR
Global brainstorming on intellectual
property
• Open Source/GPL models for
software development
• Peer to peer technologies and social
organization models
• UK Commission on Intellectual
Property Rights
• TACD IP agenda
• Royal Society brainstorming on IPR
• OECD IPR studies
• US National Academies of Science
• US Federal Trade Commission /
Department of Justice hearings on
competition and intellectual property.
• MSF Working groups on IPR/DND
• IETF working group on IPR
• UNDP Human Development Report
2001
• Blur/Banff discussions on music
• Rockefeller Bellagio meetings /
collective management of intellectual
property rights
• World Business Council for
Sustainable Development Project on
Intellectual Property Rights
• Aventis Radical IPR scenarios
• Ransom / Matching Funds model
• WIPO access to genetic resources /
traditional knowledge and folklore
• WHO/Harare proposal
What are the benefits of initiating
discussions on an R&D treaty?
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Shift in responsibility from Trade and Industry ministers to health
and finance ministers.
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Multilateral framework (compare to G8 or World Bank)
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Overcome sense of powerlessness on R&D issues.
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Creates a mechanism to offset reduced incentives from weaker
IPR regimes.
Stimulate critical thinking
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Motivates proactive thinking for policymaking on health care R&D.
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Provides explicit framework for technology transfer
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Transparency
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Research priorities
Models for R&D treaties
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The Treaty of Europe: R&D as a development tool
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Landmine treaty: Humanitarian de-mining technologies
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Koyto Climate Treaty: Energy efficient technologies
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G8: Negotiations over funding vaccines and drugs for
neglected diseases
John Barton: Vaccines, public domain, technology
transfer
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Discussions on access to scientific journals
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Human Genome Project: Clinton/Blair Agreement
Possible approaches
Aventis Radical IP Scenarios
Decentralized decision making on
R&D
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Treaty requires minimum national contribution to R&D,
and transparency of investment flows
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Countries free to fund R&D in a variety of ways.
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Range of options allowed
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Strong IPR, high prices
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Research mandates
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Weak IPR regimes (non-exclusive rights liability models)
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Public Funding
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No IPR open source development regimes, marginal cost pricing
Each country’s system is without prejudice to claiming IP in other countries regimes,
subject to non-discrimination
Aventis Radical IPR Scenario #1
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No intellectual property rights
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Every product is marketed as a generic drug.
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$178 billion in US market falls to $45 billion or less, freeing
up $134 billion in resources
A portion of the $134 billon in savings is transferred to
R&D funds, replacing and expanding the $27 billion in
private sector investments
Use Intermediators to invest in projects
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Version 1.0.
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Create several competing intermediators, that spend
money, but don’t do R&D directly
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evaluate performance, and
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New allocations based upon performance
Version 2.0
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Intermediators compete to raise funds from employers
or persons managing funds on behalf of groups of
patients
Benefits of Aventis Radical Scenario
#1
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Fewer resources spent on lawyers
Reduces incentives for expensive and harmful marketing
practices
Marginal cost pricing or products
No need to address parallel trade or create complex
tiered pricing schemes
Consistent with decentralized decision making and
economic incentives
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Enables open source development models
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Probably far cheaper way to fund R&D
Challenges with this scenario
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Need to prevent countries from eliminating
budgets for innovation
Need to create management structures that are
decentralized and which avoid wasteful spending
and have accountability, while taking risks.
Less radical, incremental approaches
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Address research gaps
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DND
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Vaccines
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Funding of public goods
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Research mandates
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Agreement on transparency of investment flows
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Transfer of technology
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Good practices for licensing government funded inventions
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Affirmative allocations of funds in developing countries
Strategy to get to a treaty
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Think radical scenarios for long run.
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Big ideas sometimes easier to attract attention.
But start with incremental approaches, and build
confidence in mechanisms
Learn to walk before trying to run the marathon
Parallel trade and pricing issues
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Parallel trade
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TRIPS rules on exhaustion of patent rights need to be
changed to allow selective exhaustion based upon country
income or level of development
Pricing as an R&D issue
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Reference pricing
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World Health Organization or other non-WTO body for treaty or
resolution on restrictions on the use of reference pricing.
US/Korea agreement on pricing
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Korea must use average of G7 Prices
WTO type issues for R&D treaty
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Subsidies
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National Treatment
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Performance Requirements
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Market Access
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Investment
Strategies to move the debate forward
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Get R&D Treaty on agenda of NGO and Academic
meetings on IPR, access to medicine or drugs for
neglected diseases.
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Organize meetings that exclusively deal with the
structure of an R&D treaty.
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Find an official fora of have discussions about an
R&D Treaty
How fast could things move?
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Minimalist resolution at World Health Assembly
Executive Board meeting on January 26, 2003, to
be approved by full WHA in May.
For more information
Consumer Project on Technology
http://www.cptech.org
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