[Ip-health] The US role in the R&D negotiations

Jamie Love james.love at keionline.org
Fri May 25 02:20:58 EDT 2012

During the R&D negotiations, the US has insisted that the US/EU orphan
drug legislation be seen as a "solution" to the R&D problem.  For
those who don't follow US or EU legislation, that involves the US
government providing a 50 percent tax credit for spending on clinical
trials, and the US granting a 7 year non-patent regulatory monopoly
for new orphan indications (longer in the EU), which are sometimes
used for older drugs approved for new indications.  The tax credit is
an important subsidy, but it not transparent at the level of the
individual products, and there is not connection between receiving the
government subsidy for the trial cost and the prices of the products.
Thus, super expensive products like Nexavar, Fabrazyme, etc benefit
from the tax credit, and then really stick it to the consumer.   The
regulatory monopoly sometimes can be seen as an incentive, and it also
raises the prices of products, sometimes by huge amounts (more than
10,000 percent for some products).   But even if the orphan drug
system is considered acceptable for high income country markets, where
cost control is sometimes a foreign concept, the grant of the monopoly
is not going to be much of an incentive to invest in diseases for
which the patent system itself is an ineffective R&D incentive.  Nils
went to Harvard, so maybe he can figure that one out if he thinks
about it some more.

The Advanced Purchase Commitment (APC) or Advanced Marketing
Commitment (AMC) has also been touted by Nils as something that needs
more consideration.  Those programs work by governments or donors
offering to subsidize drug purchases --- the incentive being a high
price for the drug developer.   The criticism of the APC and AMC
approaches is that they are expensive, and not sustainable, or not
easy to scale access.  They also have a variety of implementation
challenges, and compare unfavorably to more modern prize fund
approaches, for solving greenfield R&D problems, where it is difficult
to know what "price" would be appropriate to stimulate an unknown
invention.  Not sure if Nils has anyone on his staff who understands
these issues, or if they care much.

What Nils seems to be doing in the drafting group is defending a
regime that was designed with the interests of big drug companies in
mind, and to avoid the types of paradigm changes and new thinking that
the CEWG embraced, such as the de-linkage concept.

But even if the USA wanted to continue with older more pharma friendly
subsidies as the core elements of an R&D strategy, the US would
benefit from any global effort to share the costs of those subsidies.
So a number of delegates are confused by the frequency at which Nils
reminds them of how much money the US is spending on R&D programs,
while blocking work on a system that would create standards for others
to do more. In what universe does the United States benefit from
global under funding of these priority research projects?


James Love.  Knowledge Ecology International
http://www.keionline.org, +1.202.332.2670, US Mobile: +1.202.361.3040,
Geneva Mobile: +41.76.413.6584, efax: +1.888.245.3140.

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