April 2006
Combating the Diseases of Poverty: Aid versus Innovation
Over the past decade, there has been considerable debate about who is to blame for the lack of research and innovation regarding treatments for the so-called diseases of poverty. Preventable diseases such as malaria and tuberculosis inflict a devastating toll in developing countries, killing millions and restricting economic growth. What should the U.S. government and the World Health Organization be doing to combat poverty-related diseases in the developing world? Are pharmaceutical companies, Western donors, or weak regimes responsible for the fact that many treatments remain out of reach from those who need them most? What are the effects of inadequate intellectual property rights and prohibitively high tariffs on drugs in developing countries? These and other questions were addressed during an April 19 briefing by Julian Morris, director of the International Policy Network in Great Britain, and Barun Mitra, president of the Liberty Institute in New Delhi, India.
Julian Morris
International Policy Network
In 2003, the World Health Organization c(WHO) commissioned a report that many felt was not as critical of government policies as it could have been. In response, fifteen organizations collaborated and put together an alternative report which follows the same remit of the WHO report and also looks at the pressing issues of disease burden, access to medicine, and the development of new drugs.
Ten million children a year die from treatable diseases. These diseases could be prevented through a variety of changes, including increased sanitation, access to clean water, and imposed air quality. Currently over a billion people do not have access to clean water and adequate sanitation. These are issues that the report puts on the table. Some of our recommendations include increased use of residual spraying such as DDT, which would dramatically reduce the number of deaths from malaria. Improved education would also have a significant impact.
It is currently estimated that 50 percent of the population in lesser developed regions lack access to medication, even those off patents. Clearly, if people do not have access to these medications now, then efforts to develop new medicines would be in vain. The fundamental problem is poverty itself. The poor lack the ability to procure even the simplest of medicines. There must be stronger infrastructures. In addition, both direct and indirect barriers implemented by governments must be addressed, including the lack of transportation infrastructure, and high tariffs which dramatically increase the price of medicines.
It is possible to reduce the number of children who die through interventions which cost as low as $10. But certain governments use up to $50,000-$100,000 to save one life because they divert money towards the middle class in urban areas instead of applying it effectively and efficiently in poor rural areas. Another large barrier is the regulation of health care provision in general. For example, in South Africa it can often take up to thirty-nine months to register a product which has already been through the FDA approval process. That is a significant and detrimental barrier. Governments also regulate insurance markets to the point where there is no incentive to provide insurance to the poor. Restrictions also exist on the release of new medicines. This means many drug companies are not willing to register their new medicines at all. Yet another issue is price control. When a drug company has a price control placed on their drugs, they lose their incentive to sell it, especially when there is no profit margin at all.
The lack of a market leads to weak incentives for investment in new drug development. When 50 percent or more of the population do not have access to drugs, what is the point to develop it?
There are several possible methods to address the access issue:
- Transferable patent extensions--Give a drug company that invests in certain drug development a chance to extend their patent on another drug. In principle, this is not a bad idea, but long patents on single popular drugs should not be allowed, only many shorter extensions on several drugs.
- Advance purchase commitments--Governments commit to buy a certain number of drugs before they are produced. In theory, this is a good idea, but it is also potentially dangerous. Advance purchase commitments may create a winner-takes-all situation, which may stifle innovation by discouraging further research.
- Drug Type Legislation--Provide tax breaks or fast track drug approval. This has worked in the United States and seems like a plausible method.
We think that policymakers in poor countries should remove barriers to the provision of health care like tariffs, taxes, and regulation. The same policymakers should improve the institutional environment to enable economical development to take place. Policymakers in higher income countries should provide regulatory and tax environments that nurture public-private partnerships, as well as private sector development of drugs for diseases of poverty. Finally, policymakers must address longer term problems, including the necessity to improve the intellectual property and patent system.
Barun Mitra
Liberty Institute in New Delhi
Despite the fact that India lacks policies concerning product patents on medicines, the health care situation in India is far from ideal. India’s pharmaceutical industry is blessed with huge manufacturing capacity and strong exports. The market is full of cheap and effective drugs. However, only 70 percent of Indians have access to modern medicine, and only 1 percent of India’s HIV/AIDS population is receiving treatment. The big question at hand, therefore, is why is access so limited?
Access issues lie in the domestic situation. Unlike policymakers in other developing countries, Indian policymakers cannot blame multinational drug companies and patent laws for their population’s lack of access to medication.
In 1970 patent laws could be changed because domestic companies were not interested in preserving them. At that time, they had nothing to lose. Now Indian drug companies are looking out for their own intellectual property. Like India’s booming film, music, and IT industries, Indian drug companies are beginning to view their country’s lack of patent laws as a threat to their stability. As a result, these industries have been increasingly vocal in terms of copyright and patent advocacy.
India is not a medical haven. It has failed to expand with the same velocity as India’s film, music and IT industries. India’s detrimental lack of access has no valid explanation.
Unless we address how we can improve the health care delivery system and environment, things will not change. The poor will continue to live without sufficient health care. An infrastructure to serve the poor must be developed. Effective delivery mechanisms must be developed. This report will help address this.
Nicholas Eberstadt
AEI
The report uses common sense and is convincing. However, there are two points that must be addressed. First, the decision to use disability adjusted life years (DALY) to measure the state of health of a population and, together with the concept of cost-effectiveness, to judge which interventions to improve health deserve the highest priority for action is awful. The numbers are invented and cannot be replicated. The information necessary to calculate DALYs does not exist. Thus, DALYs, the product of spin-factoring, should not be taken seriously.
One should be especially concerned about the situation in the Russian Federation, Central Asia, Newly Independent States (NIS), and sub-Saharan Africa because of their devastating increase in mortality. The causes range in each of the regions. Long term, civil society should be strengthened in all regions. However, we should focus on immediate, short term mediation. In the case of Russia, this would include the immediate building of trauma centers and the development of an anti-alcohol campaign.
In conclusion, two central questions come to mind: I am a fan of private health insurance in low income areas. However, if the recommendations of the report concerning this issue were implemented, what would the impact be? The report touched upon Michael Kremer’s award for innovation in health areas idea. Does this idea deserve more emphasis?
Maureen Lewis
Center for Global Development
The criticism of DALYs should be endorsed. The fact that manufacturing drugs does not translate to better access shows that we are facing a big problem. Things are not working because lesser developed countries lack the ability to buy and stock medicine. They are unable to treat needy patients because of resistance. The health infrastructure lacks accountability and proper enforcement. Doctors are not waking up to go to work and drugs are going missing.
In terms of private insurance, we have tried it before in poor areas and it has not worked because of lack of infrastructure, especially in countries like those in Africa. Lack of regulation concerning private insurance also leaves the market vulnerable to corruption.
There is a serious problem with DDT and malaria. This issue is less rooted in government. It is an issue of people’s attitudes, which are difficult to change. As a result, we should pursue new methods, including increased advocacy for DDT.
Finally, the Brazil box in the report is absolutely wrong. Prevention efforts in Brazil have largely been private. The recent awareness campaign was superb and effective. Programs implemented through civil society have been phenomenal, despite the fact that the report criticized everything. Instead of condemning the Brazilian model, the report should laud it as a model that should be followed.
Roger Bate
AEI
The true bottleneck does not lie in problems with innovation, but rather in getting methods, medication, prevention, and treatment out there. Too many multilaterals are using their health budgets incorrectly. All too often, donors demand that their money be spent in one particular way or to treat one particular disease. This is ineffective. HIV is not a neglected disease; it is a disease that usually takes center stage, sometimes detrimentally. For example, 65 percent of the health budget in Sierra Leone is spent on HIV/AIDS. There are so many other diseases that are being neglected and could be more effectively addressed with these funds. The Western world has yet to realize this.
This summary was prepared by AEI intern Stacy Jer.
