Description: A proposal to create a fund to pay for pharmaceutical innovation according to health impact.
Start date: Proposed in 2008.
Status: Proposed.
The Health Impact Fund is a proposal to create a fund to pay for pharmaceutical innovation according to health impact.1 It is a project of Incentives for Global Health, which in turn is a project of the Global Justice Program.2
HIF would be an optional fund functioning alongside current patents and other rights. Pharmaceutical companies could choose to register a new drug with HIF. The drug would then be sold at cost price, and the company reimbursed from the fund in proportion to the health benefit created by the drug. Health impact would be measured in Quality-Adjusted Life Years (QALYs). Registration would expire after 10 years. Payments would be made annually.3
The HIF team estimate that \$6 billion would be a reasonable annual minimum level of funding.4 This money would come from states which join the HIF. The HIF team estimate that a threshold of states representing one third of global income would be needed before the HIF could become operational (for more information, see below).5
“For affluent countries with GNI per capita of around \$40,000 per annum, committing 0.03 percent of GNI would constitute a contribution of \$12 per citizen per year – as compared to average annual per capita expenditure on pharmaceuticals of \$413 in the OECD countries (2005).”6
The HIF proposers do not specify in full detail how HIF would be governed. They do set out a possible structure as follows:
Pogge and Hollis estimate that the administration of HIF would cost 10% of the overall budget, which is to say \$6 million.8 They also estimate that a fund of \$6 billion would “support the development of about two new drugs per year, sustaining a stock of about twenty medicines”.9 This would make the administrative cost of funding the development of one drug would be around \$3 million, or \$300,000 for one medicine.
Scope: HIF covers all medicines and would remunerate all aspects of research leading to medical products. In practice however as the system is optional, it would particularly target diseases of the poor (where the health impact is likely to be greater than potential profit)
Access: The cost of drugs would reduce under HIF. Distribution would also be incentivised as remuneration would be proportionate to health impact.
Innovation: Incentives would be directly linked to health impact.
Efficiency: HIF would require substantial funding and be expensive to run, as it requires complex large-scale administration. HIF would be market-based, in that there would be competition in R&D, manufacture and sales. Investment would be centralised however. The level of incentive would be regulated by the market: as HIF would be optional, there would be an inbuilt adjustment mechanism for regulating the level of remuneration given.10
Governability: HIF would require new international governance mechanisms which might be expensive to set up and could be open to influence. It is true that the implementation model of international cooperation around R&D is already proven in the form of the international intellectual property agreements, but these tend to set legal frameworks rather than create intergovernmental decision-making bodies. HIF also rests on the accurate measurement of health impact via QALYs, in order to allocate remuneration. While from a technical perspective this might be difficult, from a political perspective one advantage is that QALYs are less open to political influence than more qualitative schema.
Political Feasibility: HIF functions alongside traditional intellectual property. However as it is a comprehensive and multinational proposal, it might still be very hard to implement.
The Australian Democrats Prize Proposal is very similar to HIF.11
The Medical Innovation Prize Fund (MIPF) also envisaged a fund which remunerates based on health impact. However, MIPF proposed a compulsory fund which would entirely replace the patent system. In addition, MIPF would only operate in the US.
The Health Product Research and Development Fund would also be a pooled fund contributed to voluntarily by governments. Unlike HIF, this fund would target only Type II and III diseases, and would allocate funding based on a variety of selection criteria and using various mechanisms.
The Donor Prize Fund would be optional and disease neutral, like HIF. Unlike HIF, it would be funded by a set percentage of donor outlay, rather than government funding. Unlike HIF, remuneration would be tied to openness of information, rather than health impact (under the HIF model, openness is an obligatory condition for remuneration, rather than a variable that is used to determine the scale of the remuneration).12
FRiND and the PDP+ Fund proposed creating a fund which remunerates innovators on the condition that they promote access to their drug.13
The Cancer Innovation Fund is disease specific, unlike HIF, and would presumably be compulsory.
HIF is like a much farther-reaching Medical Patent Pool (MPP): innovators volunteer to join a pool, but the condition of joining is much lower barriers to access.
The effect of HIF is similar to the effect of the Chagas and Tuberculosis Prize Funds (drugs are available more cheaply and innovators are paid via a fund), only more generalised. Instead of winning only a prize, under HIF innovators win long-term remuneration rights, and instead of targeting one disease, HIF concerns medicines in general.
Developing Economies\’ Fund for Essential New Drugs (DEFEND) annual payments proportionate to social value and burden of disease are reminiscent of remuneration rights. 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.
Targeted at:
Governments, particularly the US
International bodies
Stakeholders on board:
The Global Justice Program, which is an interdisciplinary group at Yale led by Thomas Pogge
Incentives for Global Health, which is a non-profit organisation with the purpose of forwarding HIP, made up of an international and interdisciplinary group of scholars
The SDP in Germany endorse the HIP
The WHO Expert Working Group on Research and Development Financing recommended further investigation
Main document: Hollis, Aidan, and Thomas Pogge. The Health Impact Fund: Making New Medicines Accessible for All. Incentives for Global Health, 2008. http://healthimpactfund.org/wp-content/uploads/2015/12/hif_book.pdf.
Brief summary: “The Health Impact Fund: A Cost-Effective, Feasible Plan for Improving Human Health Worldwide,” n.d. http://healthimpactfund.org/wp-content/uploads/2015/12/HIFshort.pdf.
Article summary: Pogge, Thomas. “The Health Impact Fund: Boosting Pharmaceutical Innovation Without Obstructing Free Access.” Cambridge Quarterly of Healthcare Ethics 18, no. 1 (2009): 78–86. doi:10.1017/S0963180108090129.
Website: “Health Impact Fund,” 2015. http://healthimpactfund.org/.
An old but informative FAQ: “Incentives for Global Health.” Accessed July 6, 2017. http://healthimpactfund.org/Old/faq.html.
