[A2k] WHO DG Dr Margaret Chan: New business models for medical innovation

Thiru Balasubramaniam thiru at keionline.org
Mon Aug 12 06:53:39 PDT 2013

This speech was delivered by WHO Director-General Margaret Chan on 5 July
2013 at a joint WHO/WIPO/WTO technical symposium WHO/WIPO/WTO technical
symposium on medical innovation: changing business models.

New business models for medical innovationDr Margaret Chan
Director-General of the World Health Organization

Opening remarks at a joint WHO/WIPO/WTO technical symposium on medical
innovation: changing business models
Geneva, Switzerland Dr Francis Gurry, Mr Pascal Lamy, distinguished
experts, ladies and gentlemen,

I have always enjoyed these joint symposia. Hearing the views of experts on
trade and intellectual property enriches the perspective of public health.

This meeting is especially important to me because of its personal
dimension. This is the last time that Pascal Lamy will be part of our
group. We will miss him, of course, but we will benefit for a long time
from the legacy he created.

It is a credit to his leadership that concern about trade issues has been
deepened to include far more than rules for the international exchange of
goods and services.

As he has stated on several occasions, world trade is no longer a distinct,
narrowly defined area of policy. Trade policy intersects with climate
change policies, food security policies, energy policies and, of course,
health policies.

Pascal humanized the politics of world trade. In his view, the multilateral
trading system is designed to enhance, and not reduce, human welfare. It
must not be allowed to stand in the way of efforts to promote or protect
human welfare.

We have seen, too, how the multilateral system for intellectual property
can promote human welfare. Last week, WIPO generated a great deal of news,
and good will, with agreement on a new treaty that will significantly
expand access to books for the world’s 314 million people who are blind or
visually impaired.

As Francis told the media, the treaty strikes a good balance between the
interests of copyright holders and the need of the visually impaired to
have access to books in Braille, large print, or audio format.

Blind music legend Stevie Wonder pushed hard for successful negotiations,
calling for an end to the deprivation of information that, as he said,
“keeps the visually impaired in the dark.” He then travelled to Marrakesh,
where the treaty was negotiated, to celebrate with participants.

Finding new business models for medical innovation would also be something
to celebrate.

Ladies and gentlemen,

WHO and its Member States have long been concerned about the issues that
are being addressed during this meeting. The Consultative Expert Working
Group on Research and Development: Financing and Coordination, or CEWG,
explored issues that were identified as a priority well over two decades

The central problem is easily stated. The current system of incentives and
rewards for product innovation is driven by market forces, and not by
global health priorities. For diseases of the poor, the need for a new
product may be huge, but the market fails because of limited capacity to

The result is a great mismatch between products that can have a major
impact on global health and what is actually on the market or in the
pipeline. This is a mismatch between products that turn the biggest profit
and products that save the most lives in poor countries.

And there are other problems.

Current procedures for drug discovery and the development of new medicines
are inefficient. Companies and universities jealously guard their data.
Sharing is rare, and much work is duplicated.

Governments are struggling to align the need to create incentives for
innovation with the need to control health expenditures.

In the pharmaceutical industry, innovation has declined in a market shaped
by cost-containment measures, stringent regulatory requirements, and
complex diseases that are poorly understood.

New patents are issued, sometimes for “me-too” drugs, sometimes through the
evergreening of existing products. But the discovery of new entities with
breakthrough therapeutic potential continues to decline.

The health and medical professions everywhere are running out of first-line
antibiotics and, in several cases, second-line antibiotics as well. Few
replacements are in the pipeline. This trend strongly suggests that the
world is moving towards a post-antibiotic era in which common infections
will once again kill.

The problem of progressively higher and higher prices is another universal
concern that points to the need to change business models. It also raises
some fundamental ethical issues.

Should the price of a new medicine reflect the value or worth of the
medicine to shareholders, or to society? Are essential medicines a public

Should the need for innovation and appropriate incentives be driven by a
spirit of social solidarity? Or should the price of a new medicine be based
on what the market is willing to pay?

This leads quickly to the argument that no price can be placed on a human
life. If human life has value, no price for saving a life can be judged too

This argument, in turn, leads quickly to the reality. The costs of many new
medical products are becoming unsustainable for even the wealthiest
countries in the world.

Last year, the US Food and Drug Administration approved 12 drugs for
various cancer indications. Of these 12, 11 were priced above US$ 100 000
per patient per year. This price is unaffordable, for most patients, most
health budgets, and most insurance companies.

These are problems for all countries, not just the developing world. I can
assure you, after more than two decades of efforts, there are no easy

Everyone agrees that discovery and innovation must be rewarded. Most also
agree on the need to deconstruct the costs of R&D and divorce these costs
from the eventual price of the product.

Ways of doing so are being explored. But divorce always costs money. New
sources of financing must also be found.

In recent negotiations, WHO Member States have shown little appetite for
mandatory financial contributions to a global R&D fund. Instead, calls are
being made to make better use of what already exists. Countries are
re-examining existing systems that shape the market and could be adjusted
to operate as incentives for innovation.

Mechanisms such as direct grants to companies, milestone prizes and end
prizes, and patent pools likewise continue to be explored.

The CEWG report gave us an inventory of promising ways to promote
innovation. An updated report on Priority Medicines for Europe and the
World, to be launched next week, also discusses the promotion of innovation.

Public-private partnerships for product development are increasingly
accepted as a viable way to bring badly needed new products to market. The
results speak for themselves. You will be hearing about one such
partnership, the Meningitis Vaccine Project, later today.

Price and reimbursement policies offer another entry point for creating
incentives. More countries are using health technology assessments when
making decisions about pricing and reimbursement.

Drug regulatory authorities have expressed their willingness to be involved
in the stimulation of innovation. Some argue for adaptive approaches to
market authorization, whereby the single transition from non-approval to
approval is replaced by a series of approval stages as new evidence emerges
and is subsequently evaluated.

Better use of existing electronic health records may be more valuable in
obtaining the much needed data on safety and effectiveness of medicines
than more clinical trials and stricter regulations.

My final example continues the spirit of optimism in our quest for new
models that, to use Pascal’s words, “enhance human welfare.”

Last year’s Access to Medicines Index, which issues report cards on the
performance of pharmaceutical companies, was upbeat. Access to medicines is

More companies are producing more products for developing countries. We can
all welcome this trend

Thank you.

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