SECTION 4. The Preferred Supplier Model, an alternative based on the public sector’s leverage

SECTION 4:

The Preferred Supplier Model, an Alternative Based on Public Sector Leverage

Throughout this paper, certain aspects of the pharmaceutical R&D system have been identified as barriers to the efficient development of innovative treatments, vaccines and diagnostics, and to universal access to these benefits. These barriers that limit access to innovations and impede the correct functioning of the system are created by a number of factors: the lack of transparency, the unequal distribution of risks and rewards in the R&D process and the dependence on patents as the main incentive for innovation, leading to a margin-driven and profit maximisation model. Section 1 of the present paper has shown how a lack of transparency about R&D investment remains an issue in COVID-19 R&D. This problem affects public institutions as well as the private sector, with almost half of the recipients of public funding still undisclosed. Transparency is the key to ensuring efficiency and accountability for how public money is spent and to achieving a fair distribution of rewards based on information about who are the main risks takers in R&D funding. Public institutions are playing a central role in the discovery and development of COVID-19 vaccines, treatments and diagnostics, with an unprecedented contribution of investment to fund pharmaceutical R&D. In such a scenario, it is essential that the agreements between funders and recipients should include conditions designed to ensure that none of the aspects mentioned above jeopardise access to an innovation that can tackle COVID-19. As some of these agreements are not conditioned ex ante, governance mechanisms are being set ex-post (after funding agreements are signed) which are likely not sufficient to ensure that global equitable access is granted, as shown in Section 2.

In addition, the results produced by the existing system in recent years 34 do not lead to the conclusion that simply increasing inputs (e.g., financial incentives, prizes and rewards) will be sufficient to strengthen and improve its outcomes. Rather, the evidence points to a need to reconsider the laws and norms that regulate and direct the system. The system reacted promptly to the sudden emergency posed by COVID-19 and is implementing mechanisms to ensure that nobody is left behind. However, repurposing and strengthening the system needs to go beyond a single disease or point in time. There is clearly a need to address the political and organisational constraints inherent in the system to make a permanent impact and re-establish relationships across the different sectors. 4 In other areas, the leverage that the public sector has as a large purchaser of goods and a key player in the market, subsidising and supporting innovation, has been explored as a political tool to implement changes in corporate behaviour.35 Today, exploring how this leverage could be used to improve access to