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SECTION 1:
Why Do We Need to Reform the Pharmaceutical R&D System? One of the first steps to understanding the outcomes and challenges of the current health and R&D systems, and assessing its potential for reform, is by recognising the complex and non-linear relationships that determine its performance.3–5 In the current pharmaceutical R&D system, the way the different actors interact, and in particular the relationship between public institutions and pharmaceutical companies, may be undermining the system’s primary objective: to meet public health needs and ensure equitable access to safe, effective and quality health related technologies. 4,6,7
“From the point of view of public health, patent-based systems disincentivise investment in unprofitable areas”
The poor outcomes being achieved with the current system could be explained as a consequence of the complex interactions between the incentives inherent in the model, the distribution of roles, risks and rewards across the system’s stakeholders, and the links between the R&D system and other sectors, such as international trade and financial markets:
01. Unequal distribution of risks and rewards.8,9 The failure to recognise the
public sector’s role as a risk-taker and as a first-hand investor in biomedical R&D has led to an unequal distribution of risks and benefits in the innovation process.9 As a result, the rewards are reaped primarily by the Intellectual Property (IP) holders, while the value generated by the cumulative and multistakeholder nature of innovation and research is overlooked.
02. Patents as the main driver of innovation.10–13 Whenever the IP protection system is misused or abused, patents have been widely studied as an incentive to innovation but also as barriers to access.8 From the point of view of access, patent-granted monopolies can lead to unaffordable prices for health systems in countries of all income levels. From the point of view of research and innovation, patents favour secrecy and competition to be first, the very opposite of the cumulative and collective development of science and innovation. Finally, from the point of view of public health, patent-based systems disincentivise investment in unprofitable areas which however, should be a priority from the public health point of view, such as epidemic preparedness, antimicrobial resistance and neglected tropical diseases.
03. Lack of a public health-oriented vision.6,14,15 Reliance on patent-based
incentive mechanisms has led to a shift in the pharmaceutical industry away from a public health-oriented vision and towards a financialised structure. In this scenario, the business model is more focused on managing intangible assets, such as IP rights (patents), and increasing prices in therapeutic areas that can be highly profitable (maximising shareholder value through payouts and share buybacks) than on increasing the effectiveness and impact of biomedical R&D in public health terms.
COVID-19 and the Reform of the Biomedical R&D System: A Proposal for a Preferred Supplier Model. An ISGlobal discussion paper.
