Blogging the Washington DC HIF presentation

Yesterday December 1 2008, professors Aidan Hollis and Thomas Pogge presented their Health Impact Fund (HIF) proposal at Georgetown University in Washington, DC.

The meeting convened and moderated by the President of Georgetown University, Jack deGioia, was attended by 50/60 people and was structured with two presentations by the co-authors and a panel discussion by :

Paul Antony, M.D., Chief Medical Officer and Executive Director, PhRMA
Lawrence Gostin, J.D., Associate Dean and Timothy and Linda O’Neill Professor of Global Health Law, Georgetown University Law Center
Ruth Levine, Ph.D., Senior Fellow & Vice President for Programs and Operations, Center for Global Development
John Osborn, J.D., Member, United States Advisory Commission on Public Diplomacy

The co-authors of the HIF proposal presented a good moral case for the need of new incentives to ensure access and new innovation to low cost medications. They characterized the HIF proposal as a way to stimulate biomedical R&D through prizes, and said the main advantages were that it was an optional and market based mechanism that would reward pharmaceutical companies for addressing the last mile or drug delivery issues.

The HIF is in fact one of several proposals to introduce prize mechanisms to reward drug development, with the valuation of the prizes based upon incremental impacts on health outcomes. Other such proposals would include KEI’s early (2002 — ) work on prizes, including work with Senator Sanders on two legislative proposals in the U.S. Congress, work on voluntary prize mechanisms that Hollis and Pogge made separately in 2005, and a series of voluntary and non-voluntary prize mechanisms proposed by the governments of Bolivia and Barbados, in an ongoing World Health Organization (WHO) negotiation on new financing mechanisms. For others that have written on prizes see our annotated bibliography.

I arrived somewhat late but according to persons who attended the entire meeting, Hollis and Pogge did acknowledge that there was some earlier thinking on these issues, but in their initial presentations, they did not mention other specific proposals. The HIF Book did not mention the Bolivia/Barbados prize proposals, and I did not hear any mention of the proposals during the talk. Professor Hollis was quite generous about the contributions of KEI and other experts working on prizes and AMCs during the Q&A.

Hollis and Pogge described for the audience how the HIF would reward efforts to promote proper prescribing, compliance, management of drug resistance and counterfeit problems, and, like several other prize proposals, would link R&D rewards to the impact of inventions on assessed health outcomes.

Hollis and Pogge estimated the costs of health assessment will be approximately 600 million a year, or 30 million per drug per year — a number that surprised some of the participants.

Professor Pogge eluded to some of the criticisms that the proposal has received and announced that were considering some design changes. Pogge specifically mentioned they were being asked to revisit the issue of requiring open licensing and generic competition from drug developers that benefited from the reward mechanism.

During the Q&A section, I followed up on this issue and asked the authors about the criticism that KEI and others have made that the HIF was essentially a voluntary prize fund without open licensing, and that it would undermine generic competition in developing countries. I also noted the decision to rely on price controls to protect consumers was controversial, and ran counter to much of the recent work during the WHO IGWG negotiation (resolutions WHA 60.30 and WHA 61.21), as well as some government proposals, like the Barbados & Bolivia proposals for prizes without exclusive rights, or the UNITAID patent pool.

Professor Hollis, although recognizing that there are advantages to open licensing and generic competition and saying he personally supported the UNITAID patent pool, answered that in his opinion this was not the most important issue when dealing with incentives and that health impact assessment was really the most difficult and important component of their proposal.

During the panel discussion, John Osborn, Member of the United States Advisory Commission on Public Diplomacy and former counsel of a pharmaceutical company (Cephalon, Inc), expressed strong concerns of the viability of the HIF from a business perspective. He asked the authors to consider why the 1983 Orphan Drug Act, which provided 7 years of exclusivity, had disappointing results.

Paul Anthony, speaking for PhRMA, applauded the HIF proposal, emphasizing that it was voluntary and “complementary” to the existing system, while expressing some skepticism on some of the details.

Ruth Levine, Senior Fellow & Vice President for Programs and Operations at the Washington, DC based Center for Global Development mentioned that the proposal was ambitious and potentially transformational and that the economic and moral arguments were powerful but also highlighted the following difficulties:
1. Estimating incremental QALYs and the focus on individual value versus social value.
2. The danger of negatively affecting the health sector with the last mile or delivery aspects of the proposal by shifting the focus from prevention, education and other initiatives to pure drug delivery.

Levin invited everyone to continue considering and working on the AMC model that her group has helped pilot and highlighted that their work on AMCs has shown how difficult is to estimate long-term marginal costs of production because the industry does not know or do not want to share this information.

Answering to the question about the difficulties of estimating long term marginal cost of production, professor Hollis explained that they believe a system of accepting tenders by generic producers could allow them to solve this difficulty.

In my opinion, the notion that one could continually invite tenders to produce generic drugs, without actually granting licenses to generic companies, or that a tender at any one moment would reveal longer run costs under efficient manufacturing processes and scale, is not persuasive, to say the least.