Monash University
Intellectual Property
Rights and Access to
Essential Medicines
Thomas Pogge
Professor of Political Science, Columbia University
Centre for Applied Philosophy and Public Ethics, Australian National University
Centre for the Study of Mind in Nature, University of Oslo
Our Shared Commitment
“Everyone has the right to a standard of
living adequate for the health and well-being
of himself and of his family, including food,
clothing, housing and medical care and
necessary social services, and the right to
security in the event of unemployment,
sickness, disability, widowhood, old age or
other lack of livelihood in circumstances
beyond his control” [Article 25(1)].
Universal Declaration of Human Rights
1
Human Cost of Poverty Today
Among 6630 million human beings (2006), about
800 million are undernourished (UNDP 2007, p. 90),
2000 million lack access to essential drugs
(www.fic.nih.gov/about/plan/exec_summary.htm),
1085 million lack access to safe drinking water (UNDP 2007, p. 254),
1000 million lack adequate shelter (UNDP 1998, p. 49),
2000 million have no electricity (UNDP 2007, p. 305),
2600 million lack adequate sanitation (UNDP 2007, p. 254),
774 million adults are illiterate (www.uis.unesco.org),
211 million children (aged 5 to 17) do wage work outside their household — often
under slavery-like and hazardous conditions: as soldiers, prostitutes or domestic
servants, or in agriculture, construction, textile or carpet production (ILO: The End of
Child Labour, Within Reach, 2006, pp. 9, 11, 17-18).
2
One Third of all Human Deaths
— some 18 million per year or 50,000 daily — are due to
poverty-related causes, cheaply preventable through
food, safe drinking water, rehydration packs, vaccines or
other medicines. In thousands per year:
diarrhea (1798), malnutrition (485),
perinatal (2462) and maternal conditions (510),
childhood diseases (1124 — mainly measles),
tuberculosis (1566), meningitis (173), hepatitis (157),
malaria (1272), tropical diseases (129),
respiratory infections (3963 — mainly pneumonia),
HIV/AIDS (2777), sexually transmitted diseases (180)
(World Health Organization: World Health Report 2004, 120-5).
3
Millions of Deaths
Worldwide Poverty
Deaths 1990-2008
>300
World War Two
1939-45
50
Mao's Great Leap
Forward 1959-62
30
Stalin's Repression
1924-53
20
World War One
1914-18
15
Russian Civil War
1917-22
9
Congo Free State
1886-1908
7.5
Korea and Vietnam
1951-54, 1965-74
5.5
0
50
100
150
200
250
300
4
Shares of Global Income
2005; poorest households versus richest countries
1%
20%
The poorest households
(40% of humankind)
The richest countries
(16% of humankind)
Others (44% of
humankind)
79%
Calculated in terms of market exchange rates so as to reflect the
avoidability of poverty. Per capita: Pie chart rich/poor ratio over 200:1.
5
(Decile inequality ratio 320:1, Milanovic 2005, pp. 111-12.)
Global Income Inequality
At current exchange rates, the
poorest half of world population,
some 3,400 million people, have
less than 2% of world income ―
as against 6% received by the
most affluent one percent of US
households consisting of 3 million
people.
6
Shares of Global Wealth
2000; poorest versus richest households
1.9%
4.2%
Up to 60th Percentile
($645 average)
8.8%
60th-80th Percentile
($4,277 average)
80th-90th Percentile
($17,924 average)
39.9%
15%
90th-95th Percentile
($59,068 average)
95th-99th Percentile
($156,326 average)
Top One Percent
($812,693 average)
30.7%
Calculated in terms of market exchange rates so as to reflect the
avoidability of poverty. Decile Ineq. 2837:1. Quintile Ineq. 85:1.
Year 2000, $125 trillion total. (James B Davies et al.: WIDER 2006) 7
Global Wealth Inequality
At current exchange rates, the
poorest half of the world’s
population, some 3,400 million
people, have about 1 percent of
global wealth ― as against 3
percent owned by the world’s
946 billionaires.
8
60.0%
50.0%
40.0%
30.0%
cumulative real per capita
gain/loss over 1984-2004
20.0%
period
10.0%
0.0%
1st
2nd
3rd
10th
20th
30th
40th
50th
highincome
countries
Percentiles of World Population Based on Consumption Expenditure
Milanovic: Bottom ventile lost 20% 1988-93 and another 23 % 1993-98 in real terms
9
Intranational Increases in
Income Inequality
• In the US, 1979-2005, the income
share of the bottom half declined
from 26.4% to 12.8% ― while that of
the top one percent rose from 9% to
21.2%.
• In China, 1990-2004, the income
share of the bottom half declined
from 27% to 18% ― while that of the
top tenth rose from 25% to 35%.
10
How do such huge
intranational and
(especially) global
inequalities
accumulate?
11
Global Institutional Order
4 privileges
Governments of the
More Powerful
(G-7) Countries
Citizens of the
More Powerful
(G-7) Countries
Protectionism
Pharmaceuticals
National Institutional
Schemes of the
Various Developing
Countries
Poor and Vulnerable
Citizens in the
Developing Countries
12
13
Rules Governing Medical Research
Under the TRIPs agreement – part of the
WTO Treaty – inventors of new medicines
must be granted 20-year monopoly patents
in all WTO member states.
Seven Problems
1. High Prices Impeding Access by the Poor
2. Neglected Diseases (90/10 Problem)
Distribution of Pharma Research
Diseases accounting for 90% of the global
disease burden receive only 10% of all
medical research worldwide. Pneumonia,
diarrhea, tuberculosis and malaria, which
account for over 20% of the global disease
burden, receive less than 1% of all public
and private funds devoted to health
research. Of the 1556 new drugs approved
between 1975 and 2004, only 18 were for
tropical diseases and 3 for TB.
Are Patents Just?
• A natural right of the inventor?
– Libertarian worries
– Fair opportunity worries (tainted inequality)
• The Argument from Rational Consent
– Not plausible from PV of present global poor
• The Argument from General Utility
– Interests of present global poor outweigh
– There may be a superior alternative …
17
Seven Problems
1. High Prices Impeding Access by the Poor
2. Neglected Diseases (90/10 Problem)
3. Bias toward Symptom Relief
4. Waste: Litigation, Deadweight Losses
5. Counterfeiting
6. Diff Cost/Price  Excessive Marketing
7. Last-Mile Problem, perverse incentives
“The root of the evil lies not in how corporations do
business, but in how we regulate and incentivize them. If
we structure markets so corporations can earn billions by
getting people to smoke, then corporations will work
hard to get people to smoke. If we structure markets so
corporations can earn billions by getting people to stop
smoking, then corporations will work hard to get people
to stop smoking. It is our responsibility to restructure the
patent regime so that pharmaceutical innovators lose the
financial stake in the proliferation of their target diseases
and gain a financial stake in the destruction and
eradication of these diseases. If we can reverse present
incentives, the immense powers of free enterprise will be
marshaled against the great diseases that bring so much
misery and premature death to poor people everywhere.”
19
Solutions
1. Differential Pricing
a. Status Quo before TRIPS
b. Voluntary Tiered Pricing
c. Compulsory Licenses
2. Public Good Strategies
a. Push Programs
b. Pull Programs (Prizes, APCs, AMCs)
(i) FULL PULL (Health Impact Fund)
Health Impact Fund
• Comprehensive Advance Market
Commitment promising to reward any
new medicine (upon registration) on the
basis of its global health impact
• Innovator must give up either claims to
market exclusivity, allowing generics to
be produced and sold immediately, or all
revenues from sale of the new medicine
• Voluntary for the innovator
21
Problems Solved?
1. High Prices Impeding Access by the Poor
2. Neglected Diseases (90/10 Problem)
3. Bias toward Symptom Relief
4. Waste: Litigation, Deadweight Losses
5. Counterfeiting
6. Diff Cost/Price  Excessive Marketing
7. Last-Mile Problem, wholesome incentives
Measurement & Reward
• Fixed term of payments, ca. 10 years
• Fixed annual HIF pools
• Metric: variant of QALY
• The $/QALY “exchange rate” / Funding
• Data: clinical, sales, clusters
• Interfering factors: baseline projections
• Phase-in
• Allocation Rules
• Corruption and Gaming
23
Funding by Willing Governments I
15-year commitment by willing governmnts
d : total reward dollars for the year
q : total number of QALYs that same year
r : rate at which QALYs are rewarded in $s
Low-yield ― Ceiling on the reward rate r
High-yield ― Government-Company Risk Sharing:
d ~ qe and r ~ q-e, with 0 < e < 1,
preserving the constraint d = rq
24
Funding by Willing Governments II
“yield”
QALYs achieved
in millions (q)
Reward Rate per
QALY in $ (r)
Reward Expense
in $b (d)
low-yield
1
$1000
1
low-yield
3
$1000
3
border low-high
4
$1000
4
high
6.25
$800
5
high
10.24
$625
6.4
high
16
$500
8
high
25
$400
10
high
64
$250
16
high
100
$200
20
25
Allocation Rules
• “Because pharmaceutical companies negotiate
under a virtual veil of ignorance with respect to
as yet uninvented medicines, their collective
interests will shape their negotiating strategy.
They will want to design the allocation rules so
as to maximize their collective harvest of
rewards. In particular, they will want these rules
to be clear and transparent so as to reduce
uncertainty. They will want the incentives to be
shaped so as to foster efficient collaboration and
synergies among themselves. They will want to
set up a cheap and reliable arbitration
26
mechanism so as to avoid costly disputes.”
27
28
Rules Governing Medical Research 2
One obvious alternative is a regime under which inventor firms can
choose to be rewarded in proportion to the impact of their invention
on the global disease burden.
This solution would end the morally untenable situation of the drug
companies, which must now, to recover their costs, price life-saving
medications out of the reach of vast numbers of poor patients. The
solution would align the interests of inventor firms and the generic
drug producers. The former would want their inventions to be
widely copied, mass-produced, and sold as cheaply as possible,
because this would magnify the health impact of their inventions. If
new drugs were sold at the competitive price, near the marginal
cost of production, many poor patients would gain access to drugs
they now cannot afford. And affluent patients would gain as well, by
paying substantially less for drugs and medical insurance.
This solution would also greatly expand research into diseases that
now attract very little research: dengue fever, hepatitis, meningitis,
leprosy, trypanosomiasis (sleeping sickness and Chagas disease),
river blindness, leishmaniasis, Buruli ulcer, lymphatic filariasis,
schistosomiasis (bilharzia), malaria, tuberculosis, and many more.
In time, this one rule change alone would easily halve
the number of annual poverty deaths.