Brief

UN group urges 'de-linkage' of R&D costs from drug prices

Dive Brief:

  • A high-level United Nations panel on Wednesday issued a major report calling on world governments to negotiate a binding treaty "de-linking" R&D costs from the final price of drugs in areas where market incentives have been insufficient, such as for new antibiotics or for tropical diseases. 
  • The panel, convened by UN Secretary-General Ban Ki-Moon last November, also supported the right of UN member countries to define patentability standards with an eye towards public health and to use tools such as compulsory licenses to promote access to medicines. 
  • While the recommendations were received positively by a number of consumer groups and health organizations (such as Doctors Without Borders), the pharmaceutical industry criticized the report's findings. BIO, a major industry trade group, attacked the report as too narrowly focused and "detrimental" to R&D. 

Dive Insight:

Tasked with finding solutions to fix "policy incoherence" between intellectual property (IP) rights and public health, the UN panel called for immediate action to spur development of new medicines for diseases heavily affecting the poor.

While the report recognized the outsize share of investment in medical R&D has come from the private sector, its recommendations envisioned a more active government role in supporting R&D and demanding greater transparency on costs. 

"Governments must urgently increase their current levels of investment in health technology innovation to meet unmet needs and they should enter into negotiations for a binding Research & Development treaty that delinks the costs of innovation from the end prices of health technologies," wrote panel co-chairs Ruth Dreifuss and Festus Gontebanye Mogae in a letter to the UN Secretary-General. 

As an initial step towards that goal, the report urged governments to form a working group tasked with negotiating a "code of principles for biomedical R&D," before eventually taking up the issue in the UN General Assembly itself. 

The report suggested increased use of public-private partnerships, along with provision of grants and prizes to drugmakers could be alternative means to fund R&D other than traditional market incentives. 

While the panel's recommendation is just that, a call to action rather than a requirement, the support of the UN panel for an alternative approach to pricing drugs comes at a challenging time for the industry. Biopharma companies are under fire for steadily increasing the prices of new drugs and taking advantage of IP laws to extend profitability. 

BIO sharply criticized the report in an initial statement. "The panel’s report fails to recognize the complexity around biopharma research and development ... Without the innovation incentivized through strong intellectual property protections the costly and challenging work will simply not take place," the trade association wrote. 

Andrew Witty, CEO of British drugmaker GlaxoSmithKline and a member of the panel, also took issue with some of the report's findings: 

"Delinkage will likely not be appropriate or useful in many therapy areas. Different mechanisms are needed for different problems when they arise — a one-size fits all approach is not optimal, and is potentially damaging to innovation." 

While the call to de-link R&D costs from drug prices caught the most attention, the report's support for government use of compulsory licenses to broaden access to drugs and for higher patent standards are also significant and highly relevant. 

Earlier this summer, for example, Colombia took initial steps to unilaterally lower the price of a Novartis cancer drug in the country, issuing a declaration of public interest in June. Such a declaration opens the door for a compulsory license, which would grant a third-party manufacturer rights to manufacture the still-patented drug.

The panel warned against the use of "explicit or implicit threats" by other governments or corporate interests to dissuade countries from taking actions enshrined in international trade law. A leaked memo from a Colombian diplomat suggested the U.S. Trade Representative and Senate Finance Committee disapproved of the Colombian government to infringe on Novartis' patent rights for the drug, known as Gleevec. 

While the report was issued by a UN-convened panel, the authors note the recommendations issued don't necessarily reflect the views of either the Secretary-General or the Executive Office of the UN Secretary-General. 

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Filed Under: Drug Discovery Regulatory / Compliance
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