Description: A fund for buying licenses to produce and sell drugs in the developing world.
Start date: Proposed in 2001.
DEFEND would create an international fund managed by UNITAIDS or the WHO and funded by state contributions. The fund would be used to buy licenses for essential medicines treating diseases which largely affect poor countries. These license payments would be made to patent holders on an annual basis as lump sums, and would be proportionate to social value and global share of patients. The payments would also ensure a net present value equal to R&D costs.1
The medicines whose licenses were purchased by DEFEND would then be sold at marginal or below marginal cost in affected countries, conditional on those countries restricting parallel trade.2
The implementation of DEFEND could be phased in by starting with a small portfolio of HIV/AIDS drugs. Such a portfolio would cost in the region of \$8-12bn annually.3
One of the authors has also suggested a possible extension of the DEFEND proposal, where rather than buying licenses, the fund is used to buy out patent rights completely.4 This would mean that rather than creating regional spaces without patent limitations, there would be a global system under which essential medicines were available cheaply.
Regarding the cost of the proposed fund, the authors make two arguments: \‘if this amount were fully paid by the United States, the European Union and Japan, it would come to only \$13.50 per person per year. In another view, \$12.1 billion may be compared with the anticipated loss in South African GDP of \$22 billion in the year 2010.\’5
Scope: DEFEND would cover diseases of the poor, and is intended to reimburse the fixed costs of late-stage R&D.
Access: Medicine prices would go down in affected countries, as drugs would be sold at or below marginal cost. There is no explicit distribution incentive.
Innovation: Innovation would be linked somewhat to health impact, partly simply because diseases of the poor also tend to be higher impact disease areas, and partly because the license fees would be proportionate to social value as well as other factors.6
Efficiency: Even the initial phasing in of the DEFEND proposal would cost \$8-12bn a year. The authors point out that this is not a large sum in comparison to the economic effects of the diseases under consideration. The mechanism is not market-based.
Governability: The mechanism would require international cooperation, particularly around parallel trade. The authors propose using existing governance mechanisms under the auspices of the WHO or UNITAIDS.
Political Feasibility: The proposal is TRIPS compliant and ensures pharmaceutical profit. It does not seem to have gained support beyond its authors. Potentially the fact that the proposal depends upon rich patients subsidising poor patients makes it less popular in rich countries.7
License purchase is similar to creating a patent pool like Medical Patent Pool (MPP) or the pools envisaged by FRiND.
The annual payments proportionate to social value and burden of disease are reminiscent of remuneration rights (see Health Impact Fund (HIF), Cancer Innovation Fund (CIF), Medical Innovation Prize Fund (MIPF)). The difference is that remuneration rights replace patent rights completely, while these license payments only compensate for the drug licenses in developing countries, leaving the patents in developed countries intact.
DEFEND is a geographically limited and license purchase limited version of Medical Research and Development Treaty (MRDT) and the WHO biomedical convention proposals. Both of the latter would also require international agreement and state contributions, but the contributions would be spent on medical research in general via a variety of mechanisms.
DEFEND is fairly similar in scope to the Health Product Research and Development Fund. Both use WHO governance mechanisms and state funding to tackle medical R&D for diseases of the poor. Where the Health Product Research and Development Fund is a mixed fund incorporating grants and prizes, DEFEND is more narrow and would only operate through license purchasing.
States and philanthropists
Stakeholders on board: The authors
The article: Ganslandt, Mattias, Keith Maskus, and Eina Wong. “Developing and Distributing Essential Medicines to Poor Countries: The DEFEND Proposal.” The World Economy 24, no. 6 (2001): 779–795.
A book by one of the authors containing a proposed update to the DEFEND proposal: Maskus, Keith E. Intellectual Property, Growth and Trade. Emerald Group Publishing, 2007.
A review piece which discusses DEFEND briefly: Stewart, Tessa, and Benjamin Mak. “New Drugs, New Frontiers: Balancing Access and Affordability in the Treatment of Infectious Diseases.” Cambridge Medicine Journal, 2016. doi:10.7244/cmj.2016.03.001.