Pharmaceutical Accountability Foundation

Solution #1: Better Innovation Models

Innovation need not always be incentivised by potential profit. Alternative innovation models that “delink” the cost research and development from the eventual price of a medical product offer the potential to separate incentives for research and development from profit and to allow for a more public-health focused agenda. Several such alternative innovation models have been proposed, and many have been successfully implemented. They are detailed below.

Better innovation models: Solution contents

Innovation need not always be incentivised by potential profit. Alternative innovation models have been proposed that would take further the idea that medical research should serve primarily health needs. See below for details on the following relates solutions:

Related Issues: No product

Medicines development is currently incentivised by profit. Because of this incentive structure, products that are important for public health but unlikely to be profitable are often not developed.  This means that some places of acute need are underserved, if the market they provide is not sufficiently profitable to motivate companies to develop medicines. 

Product Development Partnerships

Product Development Partnerships (PDPs) are a form of cooperation combining public and private sector aspects. These partnerships enable the public, private, philanthropic and academic communities to pool funding for neglected diseases that disproportionately affect people living in low- and middle- income countries and that are not an attractive investment for the pharmaceutical sector. The vaccines, drugs and other health tools developed are then put to use as public goods. 
A good example of this is the Drugs for Neglected Diseases Initiative (DNDi), which has developed an impressive 8 treatments for 5 rare diseases within 15 years. Another example is GAVI (formerly known as Global Alliance for Vaccines and Immunization), which joined forces with vaccine developers, philanthropists and public health experts to ensure improved availability and accessibility of vaccines. GAVI is currently involved in the fight against the Covid-19 pandemic. PDPs also contribute to reducing R&D costs and applying innovative methods that have proved effective in other areas of work.

Further Reading

Pharmaceutical compounding

Pharmaceutical compounding is the act of preparing ‘personalised’ medications for patients by the pharmacist, who will combine or alter the ingredients of a drug in the exact form or dosage required by the patient. This practice may be used, for example, when a patient suffers from certain allergies or to modify the way the drug is administered. Compounding can be useful in case of drug shortages, or as a solution to the high prices of generic drugs.  

Public financing

Public financing today already supports significant amounts of base research, though it is often not linked to provisions that ensure public benefit from that research. For example, a recent study found that every one of the 210 products approved by the Food and Drug Administration between 2010-2016 had benefited from research conducted by the publicly financed National Institutes of Health.

Governments could decide to directly support research through the product development phase, either through grants or other forms of financing. Such as Tax credits for the development of particular products. Direct financing currently occurs through public research institutions such as the National Institutes of Health and the Biomedical Advanced Research and Development Authority (BARDA). Tax credits can also be a form of direct support from governments, for example tax credits offered to companies in the US and the EU who develop medicines for “orphan” diseases [diseases with a very small patient population, insufficient to incentivise research under normal circumstances].

Advanced market commitments

Advanced market commitments (AMCs) are a promise to purchase a certain amount of a product if it is created. This effectively creates a market where there might not have previously been one. Perhaps the most widely recognised example of an AMC was the initiative to increase access to pneumococcal vaccines in developing countries. This model is currently being replicated with the COVAX facility that is working to develop and donate Covid-19 products.

Further Reading

Prize funds

Prize funds offer prizes (generally a large sum of money) in lieu of monopoly as a financial reward for companies that are able to create products meeting a predefined set of specifications. Often intermediary prizes are offered for making a critical step forward towards meeting those specifications, or for sharing technology that might help others meet them.

“Grand challenge” funds are a sub-type of prize fund where a financial reward is offered for solving a clearly defined problem (where a novel solution is required but not yet defined), such as “preventing deaths during childbirth.”

Examples of prize funds include InnoCentive, which crowdsources solutions to pre-defined challenges and the X Prize Foundation, which runs competitions to find the best solution to solve a challenge such as how to build private spaceships or better clean up oil spills.