Regulatory Focus™ > News Articles > Long-Awaited UN Report Calls for Breaking Link Between Drug R&D Costs and Prices

Long-Awaited UN Report Calls for Breaking Link Between Drug R&D Costs and Prices

Posted 14 September 2016 | By Zachary Brennan 

The United Nations (UN) High-Level Panel on Access to Medicines released its long-awaited report on Wednesday, with recommendations sure to rile up the pharmaceutical industry as it calls for World Trade Organization (WTO) members to no longer link the cost of research and development (R&D) with drug prices, as well as for an increase in the issuance of compulsory licenses and to require the disclosure of pharmaceutical R&D costs.

The call for more compulsory licenses, which allow the production of a patented product or process without the consent of the patent owner, comes in addition to calls for other “flexibilities” that WTO members can use under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement:


But what the report does not discuss is that compulsory licenses can often dissuade the development of new pharmaceuticals.

Jacob Sherkow, an IP expert and associate professor at New York Law School, told Focus: "Compulsory licenses are the bogeyman of the pharma industry, the ghost stories they tell each other around the campfire at corporate retreats. Rightly or wrongly, the pushing of compulsory licenses dissuades pharmaceutical developers from researching treatments for diseases endemic to the countries using them. I can only imagine that the expansion of compulsory licenses would cause some pharmaceutical manufacturers to shelve certain research programs entirely. Whether that's better or worse from a public health perspective, I can't say. But drug companies, like other rational actors, respond to incentives."

And though others like Doctors Without Borders (see below) are urging the implementation of the report's findings, Sherkow explained how expanding compulsory licenses could actually discourage the development of important new treatments.

"I do think it's more problematic than it may seem at first blush because the drugs often held up at the knife point of compulsory licenses are those with the greatest public health benefit," he said. "Drugs treating AIDS, cancer drugs like Gleevec - these are the drugs that other countries want to mandate compulsory licenses for. By contrast, vanity drugs - say, Viagra - are largely left alone. An expanded compulsory licensing scheme may very well encourage pharmaceutical manufacturers to focus on less important, more easily treated diseases."  

The 16-member panel (including outgoing GlaxoSmithKline CEO Andrew Witty) – formed last November to remedy “the policy incoherence between the justifiable rights of inventors, international human rights law, trade rules and public health” – also calls for publicly accessible databases with patent data on medicines and vaccines (including dates of grant and expiry, as well as international common names) that is periodically updated and searchable. 

Delinking Cost of R&D and Drug Prices

Building on current discussions at the WHO, the report also calls on UN Secretary-General Ban Ki-moon to initiate a process for governments to begin “negotiations for a binding R&D Convention that delinks the costs of research and development from end prices to promote access to good health for all. Such a Convention should focus on public health needs, including but not limited to, innovation for neglected tropical diseases and antimicrobial resistance.”

Highlighting the issue of antimicrobial resistance (see graphic below), the report also focuses on discrepancies over the true cost of developing a new drug, saying estimates range from a couple hundred million to PWC’s estimate of $4.2 billion.


James Love, Director of Knowledge Ecology International, said in a statement: “The most important recommendations from the UN experts is to delink the cost of R&D from the prices of drugs. You cannot rely upon high drug prices to finance R&D without harming patients and creating unequal access. Policy coherence means making innovation and access happen at the same time. Delinkage is key to policy coherence.”

However, according to Reuters, GSK’s Witty expressed doubts about the proposed R&D Convention given the expected difficulties of raising such government funds.

Rohit Malpani, Director of Policy and Analysis at Doctors Without Borders (MSF), meanwhile, urged "governments and industry to rapidly implement the recommendations of the High-Level Panel’s report, including demanding more transparency from pharmaceutical corporations on research and development costs and prices, breaking the link between the way research and development is funded and how much companies charge for lifesaving medical tools, and minimising existing barriers, in particular intellectual property-backed monopolies, that undermine access to affordable medicines and vaccines."

But the US pharmaceutical lobbying group PhRMA was less than pleased by the recommendations, calling the report "a missed opportunity to address the wide array of barriers to access that far too many people face every day."   


While noting that the current lack of transparency around the pharmaceutical industry makes it difficult to hold governments and other stakeholders accountable, the report echoes the persistent calls for more transparency on clinical trials, recommending that governments require data on all completed and discontinued clinical trials to be made publicly available in an easily searchable public register, “regardless of whether their results are positive, negative, neutral or inconclusive.”

In addition, the report recommends that governments require drug manufacturers and distributors to disclose to regulatory and procurement authorities information on: “(1) the costs of R&D, production, marketing and distribution of health technology being procured or given marketing approval with each expense category separated; and (2) any public funding received in the development of the health technology, including tax credits, subsidies and grants.”

In the report’s conclusion, the panel seems insistent that any recommendations or changes made by governments should not hinder innovation.

“There is no single cause or solution to the persistent and burgeoning problem of lack of access to medicines and health technologies; but there must be single-mindedness in the global commitment to confront it. The Panel’s recommendations respond to problems we know and face today. In considering these recommendations, care must be given not to drive innovation to sub-optimal levels or to unjustly tar all innovators with the same brush,” the report says.

The panel also calls on the UN General Assembly to convene a "Special Session" no later than 2018 on innovation and access to medicines in order to agree on strategies and a framework that will be in line with the 2030 Agenda for Sustainable Development.

UN Report (via IP-Watch)

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