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Comment: Making malaria pills profitable

A Health Impact Fund would encourage research into neglected diseases such as malaria, by making cures for the diseases of the poor as lucrative as new hair loss remedies, writes philosopher Thomas Pogge

Male pattern baldness is a progressive thinning of the hair. At age 30, approximately 25 percent of men have begun balding. By age 80, over 75% of men are afflicted by this progressive, degenerative disorder.

An active research program is providing hope as new drugs and treatments are showing efficacy, though no cure has yet been found.

Read the University Post interview with Thomas Pogge here.

Disease of the poor

Malaria is a life threatening disease spread by mosquitoes. Each year 300-500 million people contract malaria. Each year about 1 million people die from malaria.

75% of these deaths occur in African children who are under the age of 5. While there are some new treatments on the market, no cure has ever been found for malaria.

Pharmaceutical companies are active in the search for cures for both malaria and male pattern baldness.

Research efforts depend on expected profits

Their research effort depends on the expected value of the patents that emerge from their research investments.

Treatments for male pattern baldness offer a strong return on investment. Treatments for malaria don’t.

A cure for malaria and other diseases of the poor have predictably eluded us while great strides have been made in improving the quality of life of older men.

Changing the incentives

The problem is not that pharmaceutical companies research and spend on hair loss treatments. This is no more problematic than researching and spending on other consumer items such as cell phones or video games.

Rather, the problem is that pharmaceutical companies currently spend too little on combating various diseases that are concentrated among the poor.

A greater effort in pursuing a cure for malaria and other diseases of the poor is unlikely unless incentives change.

We need a clever mechanism for unlocking the energy of private enterprise to find medicines that can reduce the burden of disease worldwide – and ideally the same mechanism should be designed so that newly developed drugs are affordable to the poor as well as to the rich.

Health Impact Fund

A new proposal offers hope that pharmaceutical companies can be encouraged into becoming more involved in finding, developing and distributing new life-saving drugs for the poor. The plan, which we support, is surprisingly simple.

It involves the creation of a Health Impact Fund, with which innovators could register their new product. By choosing to register a product with the HIF, a company would become entitled to ten annual reward payments, in exchange for selling its product worldwide at the lowest feasible cost of manufacture and distribution.

The Fund would allocate its fixed annual reward pools among registered products according to their global health impact.

Thus a drug that saved 100,000 lives would earn twice as much as one that saved 50,000. Of course, to make it worthwhile for firms to register their products, the fund would have to be large – paying at least in the billions of dollars annually.

Low net cost

Fortunately, the net cost of the Fund would be relatively small, since governments (and private citizens) would realize large savings through lower prices on registered drugs.

This is not a plan to rip off the drug companies or to enhance their profits: it is designed to restructure the way that we pay for medicines so as to create incentives to develop the most therapeutically valuable drugs while enabling widespread availability at low prices.

This is also a plan that all countries can participate in: we think that the right way to finance the Health Impact Fund is through contributions from each country proportional to its national income.

Cooperation, not aid

In other words, this wouldn’t be just another form of international aid, but would constitute a new form of international cooperation in which every country could play a meaningful role.

The World Health Organization recently picked out the Health Impact Fund as a promising approach for addressing the problem of getting both innovation and widespread access to new drugs.

Denmark, with its history of international leadership in development, as well as an active pharmaceutical industry, has an opportunity to play a constructive role in advancing this proposal. The first step towards implementation of the Fund is a trial in which a drug would be rewarded in one country on the basis of measured health impact.

This trial will need financial and technical support, but would constitute meaningful progress towards a fairer system that will develop the drugs we need at affordable prices.

Read more about the Health Impact Fund here.

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