Millions of people do not have access to medicines because of the high prices charged to recoup the costs of research. With an increase in the price of medicines, and a decrease in the therapeutic benefits associated with new innovations: the trajectory of the current financing of pharmaceutical R&D system is unsustainable. Governments or health care providers will not be able to afford to buy medicines for their citizens at this rate.
Pharmaceutical research and development has delivered some of the greatest achievements of the modern age, eradicating sources that have terrorized humanity for generations and improving the health and quality of life of billions. But it is increasingly clear that the system by which we finance this progress is broken. Around the world millions lack access to the medicines they need to survive and thrive and the source of the problem is several folds. First, the trajectory of the current financing of pharmaceutical R&D system is unsustainable, and Governments or health care providers will not be able to afford to buy medicines for their citizens at this rate. Second, drugs are often just too expensive, preventing millions of people from getting access to the treatment they need. Third, innovation is inefficiently incentivised, resulting in not getting new drugs for the illnesses we face. Notably, research is often slowed by legal disputes and licensing restrictions and a disproportionate amount of resources are used on areas with limited health impact. The patent system is at the cause of these tensions, as high prices for drugs are necessary to fund research and development.
Why is the trajectory of the current system is unsustainable?
Pharmaceutical research and development (R&D) in a context of rising prices combined with an aging population, demographic growth and falling therapeutic benefit make for an unsustainable system. The past decades have seen an increase in the price of medicines, and a decrease in the therapeutic benefits associated with new innovations.1 Projections suggest these trends will continue. The system for funding R&D is broken, and heading for catastrophe. It is therefore imperative to take action before the price of healthcare becomes completely unsustainable, and the number of new medicines dwindles. Governments will not be able to afford to buy medicines for their citizens at this rate.2 Such an outcome would not only spell disaster for state budgets and ordinary citizens, but also for pharmaceutical companies’ profits. Bankrupted healthcare providers will no longer be able to purchase from pharmaceutical companies if prices rise indefinitely. Everyone has a stake in changing the system to preserve both rewards for innovation and access to medicines.
Why do millions of people cannot get access to the treatments they need?
Millions of people do not have access to medicines because of the high prices charged to recoup the costs of research, and many urgent health problems go without treatments because of the lack of a profitable market. The World Health Organisation (WHO) estimates that around a third of the world’s population does not have access to medicines.3Affordability, a combination of price, cost and availability of funds, is a primary concern.4 If this particularly affects those living in poorer countries, governments of wealthier countries have also become unable to meet the rising costs of new medicines. Consequently, millions of people go without treatment or experience delays. See more details and estimates in our White Paper, section .
Why is innovation inefficient and money for R&D poorly allocated? Why aren’t we getting the medicines for the illnesses we face?
The distribution of R&D does not reflect actual health needs we face on a global scale. Because financial incentives for innovation are tied to the market, unprofitable but important areas of health are neglected; simultaneously, profitable but relatively insignificant areas in terms of health impact are heavily invested in. Additionally, there are structural blockers to research, such as patent disputes and licensing restrictions which unnecessarily delays and hinders us from receiving the most cutting edge innovation
The patent system produces the tension between access and innovation
These failures in access are a natural consequence of how we fund and incentivize medical innovation. Today, innovators are awarded a monopoly right on their inventions - a patent - which affords them exclusive marketing rights over the resulting product. As the research and development of new drugs is an extraordinarily expensive endeavor, the final prices innovators set on drugs are often very high in order to recoup costs, even though the actual drug itself may be relatively cheap to produce. As innovators are only paid through the final sale of the drug, prices must be high to cover these research costs. Necessarily, these high prices limit the number of people able to access the drug. If the current trends in prices and innovation continue, these problems will worsen over the coming years and become untenable. It is therefore essential that we find solutions to them now.
Rabah Kamal and Cynthia Cox “What Are the Recent and Forecasted Trends in Prescription Drug Spending?” Peterson-Kaiser Health System Tracker; “Health Spending Explorer” Peterson-Kaiser Health System Tracker; “A Look Back at Pharmaceuticals in 2006: Aggressive Advertising Cannot Hide the Absence of Therapeutic Advances”; “New Products and New Indications in 2016: A System That Favours Imitation over the Pursuit of Real Progress.”
[return]Frost, Reich, and others, Access, p. 2; “Delivering on the Global Partnership for Achieving the Millennium Development Goals”, p. 43.
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