Health Impact Fund: A Cure for Big Pharma?


Not to step on Phil Plait‘s toes, but today I’m talking about antivaxxers’ favourite target.  Does “Big Pharma” have to be “evil”? Or are we (and by that I mean lawmakers) to blame?

We’re all well aware of the well-worn mantra: “Big Pharma doesn’t care about us.  They would rather make money than save lives“.  Is that true? I doubt that, but there might be a grain of truth in there, and Thomas Pogge would probably agree.  Currently Professor or Philosophy and International Affairs at Yale, Pogge has big ideas for how Big Pharma should be funded in the future.  His idea centres around the Health Impact Fund (HIF), which in his own words, is:

a new proposal based on two simple insights: (1) privately funded pharmaceutical R&D responds to incentives, and (2) new drugs can have a much larger impact if their prices are low. At present, the most profitable research efforts are not the ones most needed to alleviate the global burden of disease. And high prices often put new drugs out of reach of most of the world’s population.

The idea is breathtakingly simple.  The current mode of R&D into new drugs is: a) spend lots of money on ventures you know will turn a profit, b) claim your intellectual property when you find your compound, and get a patent, c) mark up the price of the drug to recoup your investment (while preventing cheap generic copies being made by other manufacturers).  It is of course c) which is what gets everyone’s hackles up.  And this is what of course causes a great deal of suffering – potentially vital medicines are withheld from countries that cannot afford to pay the markup, and people will remain ill (and possibly die).

This is not some big conspiracy at work – drugs are expensive to manufacture, so in a capitalist society you need entities with lots of money to do the research, and they won’t just do it for the happy feeling inside.  They need to be remunerated for their hard work.  They can’t spend years developing a lifesaving drug without recouping their investment, otherwise you lose the entire industry, and no-one gets the drugs.

Pogge’s Health Impact Fund (HIF) would change all that.  The HIF would:

offer to reward any new medicine, if priced at cost, on the basis of its global health impact.

The HIF would be a pot of money filled by the world’s governments.  Pharmaceutical companies developing a product would sell their product at the cheapest feasible price, and the drug’s ability to lengthen human life and/or improve its quality would determine how much money the company was reimbursed.

Now let’s be careful here: when we talk about impact, we’re not talking about a nebulous quantity such as the academic impact that is currently vexing astronomers and other blue-sky scientists.  The drugs’ impact can be measured in QALYs (Quality Adjusted Life Years), which is a well-defined unit used by insurance companies and other businesses.  The more QALYs you save as a result of your drug, the bigger the share of the HIF pot you get.

Therefore, pharmaceutical companies would not only want to make a drug that’s lifesaving, they would want to shift as many units as possible to notch up as many QALYs as they can, and get the lion’s share of the HIF.  Pogge reckons that the HIF would need about $6bn per year to function (with funding in place about fifteen years in advance).  He even suggests this model could also be adopted for other R&D efforts (such as clean renewable energy and CO2 reduction), again encouraging the company to make cheap, affordable and effective models as quickly as possible.

Will it ever become a reality? Do you think this incentivisation will work? Should all scientists be grasping for QALYs?

Catch a podcast of Pogge talking about his idea at Philosophy Bites (not to mention some nice tidbits of other philosophers you can listen to at the bus stop).

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