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1 COMPAS Lecture, Ohio State University Thomas Pogge Leitner Professor of Philosophy and International Affairs, Yale World Poverty.

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Presentation on theme: "1 COMPAS Lecture, Ohio State University Thomas Pogge Leitner Professor of Philosophy and International Affairs, Yale World Poverty."— Presentation transcript:

1 1 COMPAS Lecture, Ohio State University Thomas Pogge Leitner Professor of Philosophy and International Affairs, Yale World Poverty

2 2 World Poverty Today Among 7+ billion human beings, about 868 million are chronically undernourished (FAO 2012), 2000 million lack access to essential medicines (, 783 million lack safe drinking water (MDG Report 2012, p. 52), 1600 million lack adequate shelter (UN Special Rapporteur 2005), 1600 million lack electricity (UN Habitat, “Urban Energy”), 2500 million lack adequate sanitation (MDG Report 2012, p. 5), 796 million adults are illiterate (, 218 million children (aged 5 to 17) do wage work outside their household — often under slavery-like and hazardous conditions: as soldiers, prostitutes or domestic servants, or in agriculture, construction, textile or carpet production. ILO: The End of Child Labour, Within Reach, 2006, pp. 9, 11, 17-18.

3 3 At Least a Third of Human Deaths — some 18 (out of 57) million per year or 50,000 daily — are due to poverty-related causes, in thousands: diarrhea (2163) and malnutrition (487), perinatal (3180) and maternal conditions (527), childhood diseases (847 — half measles), tuberculosis (1464), meningitis (340), hepatitis (159), malaria (889) and other tropical diseases (152), respiratory infections (4259 — mainly pneumonia), HIV/AIDS (2040), sexually transmitted diseases (128). WHO: World Health Organization, Global Burden of Disease: 2004 Update, Geneva 2008, Table A1, pp. 54-59.

4 4 Millions of Deaths

5 5 Global Household Income Distribution Segments19882008Change in % Poorest Tenth0.3370.251-25.3% Second Tenth0.5140.414-19.5% Third Tenth0.6680.587-12.0% Fourth Tenth0.8500.840-1.2% Fifth Tenth1.1541.244+7.7% Sixth Tenth1.6891.993+18.0% Seventh Tenth2.9023.442+18.6% Eighth Tenth6.0566.340+4.7% 80-95 th Percentile42.95839.137-8.9% Richest 5 Per Cent42.87245.751+6.7%

6 6 Key Facts In just 20 years, the richest five percent of human beings have gained about as much (3%) as the poorer half had left at the end of this period. The ratio of average incomes of the richest five percent and the poorest fifth rose from 202:1 to 275:1 in this 1988-2008 period. Had the poorest 30% held steady, its 2008 share of global household income would have been 21% higher (1.52% instead of 1.25%). Had it been allowed to gain the 2.9% of global household income that was in fact gained by the richest five percent, the poorer half would have nearly doubled its share — sufficient to end severe poverty.

7 … has two interlinked components: Innovation — creation, invention, discovery; and Diffusion — dissemination, uptake. Insofar as either component is stifled, humanity’s progress is impeded. Human Progress

8 We have learned that the speed and quality of innovation can be substantially raised by granting innovators temporary monopolies (patents, copyrights) that enable them to profit by charging high mark-ups. But such temporary monopolies facilitate innovation atthe expense of diffusion. The Dilemma

9 Rules Governing the Development and Distribution of New Medicines At present, pharmaceutical innovation is rewarded through product (vs. process) patents of minimally 20-year duration, which the World Trade Organization — under the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement — requires its member states to grant.

10 (1) The Present System Does Poorly in regard to Access Universal access is gravely undermined, even in affluent countries, by large mark-ups and, after the patent period, by inadequate incentives for the competent provision of generics to patients who are poor or hard-to-reach.


12 Profit-Maximizing Pricing

13 (2) The Present System Does Poorly in regard to Targeting Focused innovation is distorted by huge economic inequalities, which steer innovators away from diseases predominantly affecting the poor and also excessively reward the development of new “me-too” and maintenance drugs.

14 (3) The Present System Does Poorly in regard to Cost-Effectiveness Overall efficiency is greatly diminished by lobbying and gaming, by patenting and litigation, by wasteful marketing and counterfeiting, as well as by huge deadweight losses.

15 The Health Impact Fund The HIF is a complement to TRIPS, offering voluntary registration of any new medicine for participation in ten consecutive fixed annual reward pools each of which is divided among registered products according to their health impact (in QALYs) around the world.

16 The Health Impact Fund Savings from lower drug prices help governments fund the HIF at initially $6 billion annually (0.01% of Σ GDP). Registrant may keep intellectual property rights, but must sell the new medicine at the lowest feasible average cost of manufacture and distribution and grant cost-free licenses after the reward period. This price ceiling is generally to be determined by a tender, which generic manufacturers in developing countries are favored to win.

17 Advisory Board Kenneth J. Arrow Nobel Prize in Economics; Professor Emeritus, Stanford University Noam Chomsky Institute Professor Emeritus, MIT John J. DeGioia President, Georgetown University Ruth Faden Director, Berman Institute of Bioethics, Johns Hopkins University Paul Farmer Harvard Medical School; co-founder, Partners in Health Robert Gallo Institute of Human Virology Paul Martin Former Prime Minister of Canada David Haslam Chair, UK National Institute of Health and Clinical Excellence Christopher Murray Director, University of Washington Institute for Health Metrics and Evaluation Baroness Onora O’Neill House of Lords; former British Academy President & Newnham College Principal Sir Gustav Nossal Former Director, Hall Institute of Medical Research, University of Melbourne James Orbinski Former International President, Médecins Sans Frontières Sir Michael Rawlins Former Chair, UK National Institute of Health and Clinical Excellence Karin Roth Member of the German Parliament Amartya Sen Nobel Prize in Economics; Professor, Harvard University Peter Singer Professor, Princeton University Judith Whitworth Chair, WHO Advisory Committee on Health Research Heidemarie Wieczorek-Zeul Former German Minister of Economic Cooperation and Development Richard Wilder Associate General Counsel, Bill and Melinda Gates Foundation

18 (1) The HIF Avoids High Prices All HIF-registered products are available at or below cost from day one. Poor people get better access to important new medicines: through their own funds or through national governments, NGOs or international agencies.

19 (2) The HIF Ends the Neglect of the Diseases of Poverty The HIF adds powerful targeting incentives to develop new medicines with the greatest health impact — regardless of the socio-economic composition of the patient population. In regard to these diseases, research firms in the developing world are at peak competitiveness: no head start by “Big Pharma,” easy availability of patients (trials), highly committed work force, supportive political and social environment.

20 (3) The HIF Boosts Cost-Effectiveness By reducing costs and losses due to: Patenting in many jurisdictions Litigation Marketing Counterfeiting Gaming Lobbying Deadweight losses

21 Bonus: The HIF Alleviates Last-Mile Problems in Drug Delivery By combining substantial rewards with low product prices, the HIF encourages efforts toward: 1 Efficacy (freshness, transportation, storage) 2 Targeting of patients who can benefit the most 3 Affordability (price below ceiling to boost reach) 4 Careful prescribing with proper instructions 5 Promotion of high compliance and adherence.

22 Willing governments contribute 0.03% of GNI through long-maturity or perpetual bonds with interest pegged to inflation or GNI/capita. Alternatively, a dedicated international tax, for instance on financial transactions or pollution, whose future revenue stream could be securitized. Such taxes would also moderate speculative excesses in financial markets / slow climate change. Financing the HIF

23 Either way, the HIF could create a diversified endowment, managed to generate a stable income stream that would cover a substantial and growing portion of the annual reward pools. The endowment could accept contributions also from international and non-governmental organizations, foundations, corporations, individuals, and estates — following the example of private universities. Financing the HIF

24 A crucial challenge is the uniform measurement of health impact across diverse medicines and cultures. This is especially difficult with drugs for infectious diseases where health impact depends on population effects which in turn are influenced by the extent to which resistance to the drug can be avoided. In partnership with Janssen (part of J&J), we hope to do a pilot involving their Sirturo (bedaquiline), the first new drug against tuberculosis is over 40 years. Piloting the HIF

25 Innovators: moral and reputational gains, large new markets, new R&D opportunities. Patients: broader arsenal, greater affordability, much stronger health-care focus on results, population effects of including the poor. Governments/taxpayers: reduced need for expensive care, reduced human and economic burdens of disease, North-South partnership for an important global public good. The HIF Would Benefit All Parties

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