KEI submission to OECD consultation on “Sustainable access to innovative therapies”

This was the KEI submission to the OECD consultation on “Sustainable access to innovative therapies,” which involved four questions posed by OECD on access to medicines.

Question 1: Reflecting on the last 5-10 years, what do you think have been the major changes affecting access to medicines?

The notion that governments can manage prices under monopolies has taken a beating. The 2016 ESMO European Consortium Study on the availability, out-of-pocket costs and accessibility of antineoplastic medicines in Europe illustrates how unequal is access to new drugs for cancer, but also how access is restricted even in very high income countries. And, things are getting worse. Everyone seems to notice this except for trade negotiators, who continue to act as if all the system needs are higher and higher prices, and broader and more durable legal monopolies. Technology assessments on the value of new drugs are just the latest false hope that the current system can be tweaked, without a more fundamental questioning of the grant of a temporary monopoly as a right, rather than a privilege. But with each new drug registration, the higher and higher prices are leading to disparities and financial challenges that can no longer be ignored. And, also relevant, most countries have a growing percentage of persons over 65 and growing dependence ratios, and this compounds sustainability challenges.

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Question 2: What are the top three issues that must be addressed to ensure access to innovative medicines while maintaining financial sustainability of health systems?

Issue 1. In the short run, government need to treat monopolies granted via patents, test data and other measures as privileges that can be revoked if prices are unreasonable. This means dusting off the old compulsory licensing mechanism, and doing it once in awhile to make a point.

Issue 2. As governments implement measures to curb and moderate prices, they need to ensure that investments in R&D don’t suffer. The only justification for high drug prices is that they are an incentive to invest in R&D. If you aren’t going to accept very high prices, you should compensate by a combination of expanded direct funding, subsidies and innovation inducement prizes.

Issue 3. In the longer term, governments need to abandon the system of granting monopolies to finance R&D. What can be done right now is to undertake feasibility studies of full delinkage, which is a long term goal. Full delinkage involves the elimination of monopolies for drugs and vaccines, something that can’t be done overnight. Policies need to look at the feasibility, costs and benefits of full delinkage, but also look at the paths from now to the future, something described as the progressive delinkage of R&D costs from drug prices, over time. In the end, you want marginal cost pricing of products, and robust funding of R&D that is not based upon high prices of drugs. This is absolutely necessary to have universal access to new products, and to eliminate price based formularies.

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Question 3. Why do you think there are issues in ensuring access to innovative medicines while maintaining financial sustainability of health systems?

If your system of funding R&D is based upon high prices, and you let profit maximizing businesses set those prices, the conflict between innovation, affordability and access is baked in.

Access should be easy, because the drugs and vaccines are generally cheap to manufacture. The decision to make drugs expensive creates the access and unfairness problems.

The policy to make something cheap expensive is the way policy makers have long embraced to finance R&D. It’s not as if there are no alternatives to expensive drugs. Rather, there is opposition to even studying alternatives.

Some countries are currently lobbying against a resolution at the WHO to do a feasibility study of delinkage. Why? Because big drug companies that have political influence in these countries don’t want the studies done. One large drug company explained that big pharma companies are good at exploiting the opportunities that legal monopolies create, and they would not benefit from a shift to delinkage models, where innovation in new products are rewarded, but marketing products are not.

Some people profit a lot from the existing system, and they don’t want it to change. But the people who pay for the current system are being exploited, they pay too much for every dollar invested in R&D, many are confronted with difficult financial burdens, and millions are excluded from access to medicines they need.

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Question 4. What changes would you like to see happen to improve access to innovative therapies?

As mentioned above, in the short run, make it clear that the temporary monopoly is a privilege, not a right, and grant a compulsory license or otherwise terminate the monopoly when companies insist on prices that are unreasonable, unaffordable and/or unsustainable. Regardless of whatever theories you embrace regarding what constitutes a fair or reasonable price, unless you can threaten to end the monopoly, the drug manufacturer will be able to threaten to withhold the drug from the market. Being serious about access is also being serious about having the power to make that happen.

Governments can do a lot to make manufacturing more competitive, by requiring more disclosure of knowhow, data and materials, including, for biologic drugs things like cellular clones stocks, Plasmids/ sequences, and physicochemical/ biophysical characterizations, as well as information on methods of production, such as growth conditions/ protocols, and extraction/ purification protocols. Patent landscapes on all drugs and vaccines should be more transparency, particularly for biologic drugs.

To make better policies, all sorts of better data is needed. Companies need to routinely disclose the costs of each clinical trials, all public sector R&D subsidies, including tax credits, and make licensing practices transparent for the public, rather than only when such information is material to investors.

In the longer run, full delinkage is the only policy that puts patient interests first, and allows governments to be more efficient in funding R&D. Consider, for example, the market for HIV/ARV drugs. In 2015, the global ARV/HIV market was more than $24 billion. Despite these massive outlays, the rate of innovation is just one novel drug per year, for the past three decades, and the prices are so high governments and insurers ration access to the best new products. How do we justify spending $24+ billion per year to get one new drug per year, and then limit access to the best drugs? By pretending there is no alternative, when there clearly is.

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