Open Source
Open Pharmaceuticals
Lincoln Stein
Cold Spring Harbor Laboratory
Ideas from Tim Hubbard & James Love
AIDS Crisis in 3d World
Treatment Unaffordable
Complex Reasons
o Promised contributions from
developed world not forthcoming
o Use of generics blocked
o TRIPS agreement (trade related
aspects of IP) enforces 20-year patent
on most recent anti-retrovirals
o USA refusing to fund purchases of older
generic drugs manufactured in India
Domestic Concerns
Drug prices are increasing faster than inflation
Drugs are Lion’s Share of
Recent Health Care Increases
Pharmaceutical Economics
o
o
o
o
R&D is expensive
Marketing is expensive
Manufacture & distribution is cheap
Long lag time (3-5 yrs) between
research investment and bringing
product to market
Patent Protection
o Patents protect companies’ R&D
investment.
o 20-year exclusive license.
o IP trade agreements (TRIPS) protect
pharmas against international
freeloaders.
o System very effective at developing
new drugs.
Distorting Effects of System
o Strong incentive to develop “me too”
drugs.
o Strong disincentive to develop drugs
for neglected diseases.
Therapeutic
benefit, 24%
1,035 new drugs approved
by FDA, 1989-2000.
Source: NIHCM
Neglected
diseases,
1%
No significant
therapeutic
benefit over
existing
drugs, 76%
Incrementally Modified Drugs
Pay Off Better
NME
new molecular entity
IMD
incrementally
modified drug
Priority shows therapeutic
improvement over
existing drugs
Where Drug Sales Go
Other, 4%
Taxes, 6%
R&D, 11%
Marketing &
Just 2-3%administration,
of drug sales
31%
to finance R&D
on drugs
that are of therapeutic
benefit over existing
drugs.
Profit, 16%
Production,
32%
Compiled from quarterly reports & FTC filings of 6 pharmas, 1999.
Source: Boston University School of Public Health
go
Is There a Better Way?
Software Economics
o
o
o
o
R&D is expensive
Marketing is expensive
Manufacture & distribution is cheap
Long lag time (2-3 yrs) between
research investment and bringing
product to market
Software Market is Distorted
BLAST
Closed Source Financing
Commercial
R&D
copyrights
Software
Production &
Marketing
software
sales
Academic R&D
Public
sales tax
income tax
grants
Government
money
knowledge
Open Source Financing
“Volunteer” R&D
source code
grants &
contracts
Service
Service
Service
Companies
Companies
Companies
service
contracts
source code
Academic R&D
Public
taxes
grants
Government
money
knowledge
Open Source Benefits
o High quality software
o Low cost to consumers
o Large after-market/service &
support segment
o Enables “orphan” software
o All of bioinformatics is open source!
o (CGI.pm, BioPerl, GMOD project)
Current Drug R&D Financing
Commercial
R&D
patents
Drug
Production &
Marketing
drug
sales
orphan drug
incentives
Academic R&D
grants
Public
sales tax
income tax
FICA
grants
Government
money
knowledge
Open Source Drug R&D?
Generic
GenericDrug
Drug
Generic
Drug
Companies
Companies
Production
Commercial
R&D
generic
sales
applied
research
grants
Academic R&D
basic &
applied
research
grants
Public
Savings
sales tax
income tax
FICA
health insurance
Government
money
knowledge
Benefits
o R&D direction set by public health
priorities, not by marketing priorities
o No incentive to create “me too” drugs
o Less marketing overhead
o More competition on production &
distribution
o Lower prices
o Generics available sooner to 3d world countries
Can Government do Drug R&D?
o Government can direct drug
development when it wants to
o Retroviral protease inhibitors
o Polio vaccine
o Hundreds of complex clinical trials
funded by NIH and managed by
academics
Can Government Afford It?
health
insurance
premiums
Health
Insurance
Funds
payouts
Public
savings
Cheap Generic
Drugs
Open R&D
Let’s get Real
o Not a chance USA will adopt this
model.
o Must we force rest of world to follow
suit?
Global Considerations
o TRIPS agreement forces all but the
least-developed countries to honor
20-year patent rights
o It discourages experimentation with
alternative financing models
o It hurts 3d world countries by
denying them access to affordable &
effective generics
A Better Alternative
o Ditch TRIPS
o Allow overseas generic development
o Let countries exercise compulsory
licensing of patented drugs
o Discourage freeloaders by
o requiring WTO signatories to devote
fixed %age of GDP to drug R&D
o punitive tariffs on reimported generics
It is our Moral Obligation