Is The Health Impact Fund The Answer To Medicine Accessibility? Can The Health Impact Fund Better Prepare Pharma Companies To Manufacture Vaccines Or Medicines For Pandemics

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Is The Health Impact Fund The Answer To Medicine Accessibility? Can The Health Impact Fund Better Prepare Pharma Companies To Manufacture Vaccines Or Medicines For Pandemics

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1.     The health impact fund

 

The Health Impact Fund is mainly intended to provide access to expensive medicines to needy patients at an affordable cost. States and charitable foundations finance this Fund. It systematically offers rewards to those pharmaceutical innovators. They register their product with the Fund to receive annual payments.

These registered products with the Fund are then delinked from the Research and Development (R&D) cost. The product is limited to only the cost of manufacturing and distribution. This would make the drug affordable to poor patients.

The reward which pharmaceutical innovators receive solely depends on the annual gains achieved from their registered medicines. The more the medicines improve human lives, the more money the innovators gains.

The Health Impact Fund provides a global integrated solution. It ensures that the product has a uniform low price worldwide. This is to ensure that innovative firms do not face any difficulty while making money in poorer countries.

The Fund offers such innovative firms reward payments based on the positive impact on the patient's health no matter where the impact occurs. This approach of the Fund would help develop medicines having a global impact and also help in the development of medicines for neglected diseases.

  • Necessity of the Health Impact Fund:

Pharmaceutical companies must create medicines which are essential for global health. They must also provide access to all people once these new medicines are developed.

The Health Impact Fund ensures that these concerns are fulfilled by rewarding the innovation of pharmaceutical companies creating an impact on people's health. The Fund will also ensure that with the low prices, access to the medicines shall be open to all.

1.1       Accessibility

Accessibility of medicines plays an important role worldwide. There are two issues which arise after making such medicines available:

  • The accessibility of these medicines and
  • The correct use of the medicine by people who need them.

To answer the above question of whether the Fund is the answer to medicine accessibility, would show variation to a certain extent. One of the main reasons for barriers to access medicines is the price. If the price is high, the medicine automatically becomes inaccessible to poor patients or poorer countries due to its protection by patents.

The Fund can help remove the barrier to accessibility, although it also much depends upon the price of manufacturing. If the manufacturing cost is low, then the consumers would be able to afford the medicines. Therefore, a small manufacturing price is crucial to attaining medicine accessibility.

However, a manufacturer's price does not solely determine the cost of the product. Other factors like import duties, pharmacy board fees, inspection fees, storage and transportation cost and wholesale and retail costs, all add up to the manufacturer's price.

Sometimes these supplementary prices are not passed onto the consumers since the state or non-profit sectors may provide subsidies to consumers. However, in these cases, the financial burden lies on the state and non-profit organization due to high prices. Even where the supplementary costs are partially passed onto the consumer, it still affects the affordability of medicines.

Price does amount as a barrier to accessibility. However, it is not the only crucial concern that determines access. There are many low-income countries which due to their weak medical set-up limit their access to essential medicines. An inadequate infrastructure could lead to a significant amount of burden of cost and time on poor patients who need medical help.

Apart from the barrier of accessibility, the second issue is the improper use of the medicine to which patients have access. Many patients end up using incorrect medicines for their treatment which would lead to an increase in the mortality rate. Even with weak infrastructure, poor patients would obtain access to medicines but with bribes or informal payments. This could impact their health and could also lead to improper use of the medicines.

Therefore, the Fund can be the answer to medical accessibility as it not only gives an advantage to the pharmaceutical innovators but also to the patients who need medicines. Some ways in which the Fund can be beneficial towards pharmaceutical innovations are:

  • New incentives to pharmaceutical innovators for development of drug projects
  • Improving their public image and contributing to world health
  • Opportunities to help poor patients without having any financial trouble.

Tropical Neglected Disease

The accessibility of expensive medicines can help with the diseases which have been neglected in the poor countries. Where no good treatment options are available for diseases like Malaria, Ebola, Tuberculosis, etc. the Fund can help people get access to such expensive medicines.

Therefore, the essence of the Fund is providing rewards to companies which register their product with the Fund. The Fund rewards payments to them based on their products impact on a patient's health regardless of whether they are rich or poor. This encourages companies to engage in research, development and marketing.

This would, in turn, help the Fund to preserve and improve health, by providing access to the patients who are in need of expensive medicines. It would also provide incentives to those firms to continue their manufacturing process to help the ones at risk. This acts as a win-win situation, for the patients as well as the companies.

1.1.1                  Challenges faced by the Health Impact Fund

  1. Technical feasibility:

The technical challenge faced by the Fund is the development of a system which measures the health impact across all countries. This system must be reliable, cost-effective and consistent with respect to all countries and diseases. In order to take into account each medicines feature, a proper plan must be worked out to ensure a fair and effective assessment of health.

  • Financial feasibility:

Many countries have a poor administrative set up. This would anticipate a bigger amount to be spent from the Fund’s budget in the assessment process. The Fund would be dependent on the annual funding from the government or taxpayers.

  • Intellectual property issues:

The Fund complements the different intellectual properties and does not alter the IP system. The Fund addresses any issues by creating an alternative method of payment. To attain rewards from the Fund the innovator must give up certain rights in their intellectual property. In the end the innovator would have to offer open licenses to ensure production of the registered product.

  • Accountability:

The Fund would be accountable to the government as well as the innovators. The innovators would be competing to ensure they gain rewards. The Fund must be responsive to these innovators for a fair process. The Fund must therefore generate a reliable system which allocates these rewards fairly. The government will also would be interested in knowing the way in which their funds are being used. Therefore, the Fund must be accountable to both and be responsive, ensuring it plays a fair and independent role.

1.1.1.1 Pharmaceutical companies and Health Impact Fund

The Fund can play a vital role in encouraging and better-preparing pharmaceutical companies to manufacture vaccines or medicines for pandemics.

Rewarding pharmaceutical companies based on their products heath impact can act as a fundamental way to encourage these companies to manufacture medicines. The more positive health impact, the greater is their reward. This incentivizes the companies since their profits are based on the impact their product has on patients.

The pharmaceutical companies who register their product with the Health Impact Fund are required to sell their products worldwide. These products must be sold between the average production and marginal cost as determined by the Fund. Incentives would be provided to ensure that the retail price of such medicines is within reach of a large number of people. The drugs registered with the Fund are sold at a low price mainly directed towards the price-sensitive customers.

The retail costs and taxes may increase the price for the patient and may reduce the innovators' profits. The innovators registered with the Fund will have strong incentives and would be motivated to use their lobbying power to control and reduce the taxes and retail costs.

Suppliers of patented medicines are provided such incentives only when they register their product with the Fund. These suppliers sell their products at high prices. They would, therefore, not be interested in restricting their taxes and retail cost.

Pharmaceutical Companies are rewarded on the basis of the impact of their products on the patient's health. This gives them an incentive to work towards how their drug is used and create interest in manufacturing accurate and precise drugs to people. The company will want to manufacture drugs which will have a long and positive impact on the patient. They will also want that drug to be accessed by all people in need of such drugs, in the right amount and right quality. They would want to manufacture such drugs which people would need and find useful.

To establish that the drugs are used rationally by the needy, the following measures can be established:

  • To develop a policy of the use of essential medicines
  • To establish a national body to incorporate several policies on drug use
  • Preparation of guidelines and measures for the treatment of certain diseases
  • Establishment of certain therapeutic committees
  • Providing the proper education on the availability of medicines and their use

The factors of accessibility and rational use of the product are mostly observed in poorer countries. A proper system or method is however not available which can benefit pharma companies to ensure their products are accessible and used rationally by all.

However, the Health Impact Fund does provide rewards to registered pharma companies. This acts as a strong incentive for those companies to move forward and manufacture medicines with a prolonged positive outcome. These registrants, when selling their products, will use their financial and influential powers to restrict the tax and retail prices to a minimum. This can help pharma companies to have a pressing interest in how their drugs are manufactured.

These registered companies will be encouraged to make sure their products give out maximum benefits. They can engage in activities which would increase the use of their product and decrease the incorrect use of products. Therefore, these companies are expected to bring their resources to the table and carry out the manufacturing process to curb the health systems in developing countries.

Thus, the Health Impact Fund can act as a contributory factor to help encourage and make better the manufacturing of medicines for any illnesses, diseases or pandemics.

 

 

 

About the author: Sameera Singal is currently an undergraduate student pursuing law at Symbiosis Law School, Pune. She is pursuing a BBA LLB (Hons.) dual degree and have presently finished with her 4th year of law school. She has a keen interest in Corporate Law and look forward to a career in the same. She wish to build a constructive impact on society by contributing to the legal system of our country in every possible way. 

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One Response

  1. Thomas Pogge says:

    Thank you for this clear, accurate and constructive discussion of the Health Impact Fund!

    In view of COVID19, it may be worth adding that the Health Impact Fund gives powerful incentives to attack infectious diseases at the population level. The greatest possible health gain is achieved – and therefore the largest possible reward obtained from the Health Impact Fund – when the innovator manages to deploy its new medicine so as to eradicate the target disease.

    By contrast, under the prevailing system of monopoly patents, this is an undesirable outcome for the innovator who, by eliminating the target disease, would be eliminating its own market of potential patients.

    Attacking an infectious disease at the population level means including all patients in one’s strategy: leaving no one behind who, left untreated, might spread the disease anew.

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