1. Report of the WHO Consultative Expert Working Group (CEWG) on Research and Development: Financing and Coordination Presented by: Suerie Moon, MPA, PhD Research Director & Co-Chair, Forum on Global Governance for Health Harvard Global Health Institute & Harvard School of Public Health smoon@hsph.harvard.edu MSF, DNDi, HealthGAP Satellite Event: Proposals for a Global Innovation System that Responds to Patients Needs and Ensures both Innovation and Access 22 July 2012, XIX International AIDS Conference, Washington D.C. Adapted from slides prepared by Prof. John-Arne Rottingen, CEWG Chair Presented by: Suerie Moon, MPA, PhD Research Director & Co-Chair, Forum on Global Governance for Health Harvard Global Health Institute & Harvard School of Public Health smoon@hsph.harvard.edu MSF, DNDi, HealthGAP Satellite Event: Proposals for a Global Innovation System that Responds to Patients Needs and Ensures both Innovation and Access 22 July 2012, XIX International AIDS Conference, Washington D.C. Adapted from slides prepared by Prof. John-Arne Rottingen, CEWG Chair

2. 1.Background 2.Context: Pharmaceutical R&D 3.The Problem: R&D for Neglected Populations 4.CEWG Process 5.Key Recommendations 6.Relevance for HIV/AIDS community OverviewOverview Adapted from JA Rottingen 2012

3. BackgroundBackground Commission on Health Research for Development (1990) Commission on Macroeconomics and Health (2001) Adapted from JA Rottingen 2012 WHO-UNICEF-UNDP-World Bank Special Programme for Research and Training in Tropical Diseases (1975) Longstanding recognition : market-driven global R&D system does not sufficiently meet the needs of majority of the world’s population, 80% of which lives in developing countries Investing in Health Research and Development (1996)

4. The Process 2003200620082010 Resolution WHA56.27Resolution WHA59.24Resolution WHA61.21Resolution WHA63.28 Intellectual property rights, innovation and public health Public Health, innovation, essential health research and intellectual property rights: towards a global strategy and plan of action Global strategy and plan of action on public health, innovation and intellectual property Establishment of a consultative expert working group on research and development: financing and coordination Commission on Intellectual Property Rights, Innovation and Public Health Intergovernmental Working Group Expert Working Group on Research and Development: Financing and Coordination Consultative Expert Working Group on Research and Development: Financing and Coordination Collect data and proposals from the different actors…produce an analysis of intellectual property rights, innovation and public health, including the question of appropriate funding and incentive mechanisms for the creation of new medicines and other products against diseases that disproportionately affect developing countries. Draw up a global strategy and plan of action in order to provide a medium-term framework based on the recommendations of the Commission; such strategy and plan of action would aim, inter alia, at securing an enhanced and sustainable basis for needs-driven, essential health research and development relevant to diseases that disproportionately affect developing countries, proposing clear objectives and priorities for research and development and estimating funding needs in this area. Examine current financing and coordination of research and development, as well as proposals for new and innovative sources of funding to stimulate research and development related to Type II and Type III diseases and the specific research and development needs of developing countries in relation to Type I diseases. Source: JA Rottingen 2012

5. Generic Competition & Treatment Scale-Up $10,400$2700 Source: Medicines Patent Pool 2011 HIV Treatment Scale-Up & Access to affordable medicines HIV Treatment Scale-Up & Access to affordable medicines

6. Fall in the approval of new drugs while investment in R&D has increased. Top-selling medicines going off patent, not replaced by new patented products with comparable commercial prospects. Greater focus on emerging markets which offer opportunities for rapid growth. Spate of mergers and acquisitions resulting in a decline of the number of traditional PhRMA companies researching any particular area. Increased attention to new approaches to R&D: e.g. “open innovation”, product development partnerships (PDPs) Context: Pharmaceutical R&D Source: JA Rottingen 2012

7. Context: Pharmaceutical R&D Source: JA Rottingen 2012

8. “…market forces alone will not lead to the development of sufficient, affordable, and appropriate new technologies and goods for these diseases. … Public support and public financing are required when public goods are under-supplied by the market.” Position paper on the EU Horizon 2020 research strategy endorsed by 23 organizations including public-private partnerships. The Problem Source: JA Rottingen 2012

9. ”… lack of research into diseases that disproprtionally affect developing countries. … the financial returns are often limited. … a wide range of tools, partnerships and approaches will be needed” Andrew Witty, GSK Witty A. New strategies for innovation in global health: a pharmaceutical industry perspective. Health Aff (Millwood). 2011 Jan;30(1):118-26. The Problem Source: JA Rottingen 2012

10. 1.The economic case for public action: The incentive offered by intellectual property rights fails to be effective in correcting the market failure in developing countries due to the lack of reliable demand for the products generated by R&D. 2.The ethical and legal case for public action: “ the enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being without distinction of race, religion, political belief, economic or social condition” (WHO Constitution). 3. R&D as a public good: Knowledge generated by research is a true public good if it is made available to anyone to make use of without restrictions. The Case for Public Action Source: JA Rottingen 2012

11. In 2010, nearly US$ 3.2 billion ( around 2% of total health R&D ) was invested in research for Type II and Type III diseases. 65% from public sources: 90% increase of public funding from developed countries for “neglected” diseases (from US$ 590 million in 1986 to US$ 1.925 billion in 2010) but small and unclear contribution from developing countries (about $70 million not including China and other large developing countries). 18.5% from philanthropic sources: a five-fold increase from US$ 60 million in 1986 to US$ 568 million in 2010. Bill & Melinda Gates Foundation accounted for 80%, of which over half goes to product development partnerships. 16.4% from industry: US$ 500 million in 2010, stagnating or declining in real terms since 1986 – Compared to around 60% private sources of the total US$ 160 billion on health research (2005) R&D Funding Neglected Diseases Source: G-Finder Report 2011 Source: JA Rottingen 2012

12. Focus on financing and coordination of R&D for health products and technologies related to Type II and Type III diseases and the specific R&D needs of developing countries in relation to Type I diseases. – Type II : e.g. HIV/AIDS – Type III : e.g. Tuberculosis, Kala Azar, Malaria Take forward the work and deepen the analysis of the Expert Working Group (WHA 63.28). Examine additional submissions and proposals on R&D financing and coordination. Scope of CEWG Mandate Adapted from JA Rottingen 2012

13. Pre-competitiveDevelopmentProduction Costs PublicPrivate TaxesHigh prices On patent TaxesCompetitive prices Off patent Standard model Source: JA Rottingen 2012

14. Pre-competitive Development Production Costs PublicPrivate Taxes Price level? Subsidize (on patent) Taxes Competitive prices Delinking (open license) Public Private Delinking Standard Alternative models Source: JA Rottingen 2012

15. Assessment of the 109 proposals - reduced to 91 proposals and grouped under 22 proposals- examined by the EWG. Assessment of 22 new submissions reduced to 15 ( 5 outside the mandate and 2 unsuccessfully supported). All proposals regrouped in 15 groups. Proposals Assessment Process Source: JA Rottingen 2012

16. Affordable products can best be achieved through free open market competition in production Requires delinking of R&D costs and prices of products Requires upfront public financing of the R&D R&D is reestablished as a global public good where there is need for collective action and agreed financing contributions to avoid free riding Some basic underlying ideas Source: JA Rottingen 2012

17. Assessment of 15 grouped proposals CEWG proposals assessment 1Global Framework on Research and Developmentmet criteria well 2Direct grants to companiesmet criteria well 3Patent poolsmet criteria well 4Pooled fundsmet criteria well 5 Open approaches to research and development and innovation met criteria well 6Milestone prizes and end prizesmet criteria well 7Purchase or procurement agreementsmet criteria less well 8Priority review vouchermet criteria less well 9Green intellectual propertymet criteria less well 10Health Impact Fundmet criteria less well 11Orphan drug legislationmet criteria less well 12Tax breaks for companiesmet criteria less well 13Transferable intellectual property rightsmet criteria less well 14Removal of data exclusivitynot relevant to CEWG's mandate 15Regulatory harmonizationnot relevant to CEWG's mandate Assessment of 15 grouped proposals Assessment of 15 grouped proposals Source: JA Rottingen 2012

18. Open approaches to research and development and innovation which include precompetitive research and development platforms, open source and open access schemes. Prizes, in particular milestone prizes. Equitable licensing and patent pools, may facilitate access to research results on equitable terms and/or with low transaction costs. Direct grants * Open Knowledge Innovation can be defined as research and innovation that generate knowledge which is free to use without legal or contractual restrictions. "Open Knowledge Innovation“ * Adapted from JA Rottingen 2012

19. “Traditional” financing mechanisms based on direct or indirect taxation are more likely to succeed than a complex landscape of uncoordinated voluntary or innovative initiatives. Countries should consider at national level what tax options might be appropriate to them as a means of raising revenue to devote to health and health R&D, and also what can be done together in a coordinated fashion. Financing: Recommendations Source: JA Rottingen 2012

20. All countries should commit to spend at least 0.01% of GDP on government-funded R&D devoted to meeting the health needs of developing countries in relation to the types of R&D defined in CEWG mandate. Most of this funding should be used within each individual country. >20% of funds raised for health R&D addressing the needs of developing countries should be channeled through a pooled mechanism. Financing: Financing: Recommendations Source: JA Rottingen 2012

21. R&D for NTDs * (2011) 0.01% of GDP (billion USD) 20% pooled (billion USD) Current Global R&D (billion USD) EU 294 1,758352 USA 1,458 1,509302 BRICS 65 1,373275 Others 95 2,326465 Total 1.912 6.9661.393160.000 Data Sources: World Economic Outlook Database April 2012 International Monetary Fund. *Approximate estimates based on the G-finder report 2011 Adapted from: JA Rottingen 2012 Financial Contributions

22. Coordination: Recommendations 1) A Global Health R&D Observatory to monitor: Financial flows to R&D The R&D pipeline Learning lessons. 2) Advisory Mechanisms. A Network of Research Institutions and Funders An Advisory Committee. Source: JA Rottingen 2012

23. Implementation: A global binding instrument Need for a coherent global framework that combines the different elements and recommendations in a concerted mechanism. Conventions as a means by which countries enter into agreements with legal force to achieve common goals (i.e. WHO Framework Convention on Tobacco Control). Conventions can have funding provisions attached to them (i.e. Global Environment Facility (GEF)). Propose an international Convention on Global Health R&D under WHO Constitution Article 19: “The Health Assembly shall have authority to adopt conventions or agreements with respect to any matter within the competence of the Organization. (…). Source: JA Rottingen 2012

24. Assessment of 15 grouped proposals Key recommendations Key recommendations Open approaches Equitable licensing Open approaches Equitable licensing Milestone and end prizes Milestone and end prizes Patent pools Direct grants Financing commitments Pooled funding Financing commitments Pooled funding Global R&D Observatory Advisory functions at WHO Global R&D Observatory Advisory functions at WHO Open Knowledge Innovation Global Framework Convention on Global Health R&D Source: JA Rottingen 2012

25. A regulatory instrument is (very) desirable: > 85 % and (very) feasible: > 75 % (2% “no judgment”) National funding obligations are (very) desirable: > 75 % and (very) feasible: > 50 % (4% “no judgment”) Prize funds are (very) desirable: > 65 % and (very) feasible: > 75 % (7% “no judgment”) “Delinking” is (very) desirable: > 65 % and (very) feasible: > 50 % (16% “no judgment”) Method: Two-round Policy Delphi Survey: 159 / 77 participants (Round 1 and 2) Countries: developed (75%), developing (20%), threshold countries (5%) Affiliations: academia (54%), industry (11%), NGO (12%), national governments/parliaments (6,5%), international organizations (6%), public private partnerships (4%), other (8%). Backgrounds: medicine (34%), public health (29%), biomedical science (30%), law (19%), economy (4%), political science (10%), pharmaceutical sciences (18%), veterinary sciences (2%), other (21%). Fehr A, Thürmann P, Razum O. Expert Delphi survey on research and development into drugs for neglected diseases. BMC Health Serv Res. 2011 Nov 16;11:312 Expert Delphi survey on R&D for neglected diseases Expert Delphi survey on R&D for neglected diseases

26. Promote effective and fair financing of research that benefits the health of all Ensure that innovations and interventions produce products and services that are accessible and affordable. Working towards a global framework for research and development that addresses the priority health needs of developing countries and prioritizes pertinent research actions to tackle global health challenges Exploring models that dissociate the cost of Research and Development and the prices of medicines in relation to the Global Strategy and Plan of Action on Public Health, innovation and intellectual property Ensuring … public investments in health research secure access to the knowledge and tools generated as a global public good and help generate socially essential medical products at affordable prices, to be used through rational use Promote dialogue and joint action with key global players and stakeholders, including UN agencies concerned with global health, International Financing Institutions, regional organizations, regional health networks, and countries, in order to identify synergies, coordinate actions, advance in the achievement of commitments, and avoid duplication and fragmentation to increase effectiveness. Council conclusions on the EU role in global health. 3011th Foreign Affairs Council meeting. Brussels, Council of the European Union, 2010 European Council Conclusions (27 Foreign Ministers) European Council Conclusions (27 Foreign Ministers)

27. Bottlenecks in the antibiotic pipeline. So A D et al. BMJ 2012;344:bmj.e1782 ©2012 by British Medical Journal Publishing Group Open Knowledge Innovation Public financing – fair sharing Bottlenecks in the antibiotic pipeline Bottlenecks in the antibiotic pipeline Affordable health products Source: JA Rottingen 2012

28. «A variety of incentives probably have to be applied, but having all in common that the financial return has to be separated from the use of the product” Richard Bergström, EFPIA Bergström R. The role of the pharmaceutical industry in meeting the public health threat of antibacterial resistance. Drug Resist Updat. 2011 Apr;14(2):77-8. Epub 2011 Apr 13. Antibacterials - delinking Antibacterials - delinking Source: JA Rottingen 2012

29. 1.Principles: – Affordable products can best be achieved through free open market competition. – Requires delinking of R&D costs and prices of products. – R&D is a global public good where there is need for collective action and agreed financing contributions to avoid free riding. 2.Functions/operational: – Need to increase public investments to at least $6 billion annually (the double of current total investements). – All countries should commit to spend at least 0.01% of GDP on government- funded R&D. – 20  50% of funds should be channeled through international pooled mechanisms to improve efficiency and coordination – More efficient and collaborative R&D processes through sharing of results: Open Knowledge Innovation : precompetitive research and development platforms, open source and open access schemes, and the utilization of prizes, in particular milestone prizes, equitable licensing and patent pools. – Strengthening research and development capacity in and technology transfer to developing countries. – Establish a Global Health R&D Observatory and relevant advisory mechanisms under the auspices of WHO. Summary of Recommendations Summary of Recommendations Source: JA Rottingen 2012

30. 3. Implementation instrument: – Need for an agreed upon global framework – A global legally binding instrument would be most effective – Propose an international Convention on Global Health R&D Processes and Next steps: Resolution at 2012 World Health Assembly called for: – Aug-Oct 2012: National & regional consultations – Nov 2012: Member State meeting in Geneva to discuss next steps – Jan 2013: WHO Executive Board – May 2013: World Health Assembly Key Question: How to ensure that the process leads to a stronger, more equitable global R&D system that provides for both innovation and access? Summary of recommendations Summary of recommendations Adapted from JA Rottingen 2012

31. 1. Affordability : innovation in new ARVs, but affordability a constant challenge that is likely to grow. – Opportunity to try new models that don’t trade-off access for innovation 2. R&D Investment : Increased, reliable, sustainable global investment needed to develop products when markets fail – e.g. for products primarily needed in resource-poor settings – Pediatric formulations, microbicides, point-of-care diagnostics, opportunistic infections such as (DR-)TB drugs and diagnostics, vaccines, antibiotics 3. Effectiveness of R&D: new models sought to improve efficiency, effectiveness of R&D 4. Opportunity : Unprecedented political opportunity to strengthen the global R&D system so that it delivers for all 5. Leadership : HIV/AIDS community long at forefront of access to medicines movement Relevance for HIV/AIDS Community Relevance for HIV/AIDS Community

32. Thank you Full report & other information: http://www.who.int/phi/news/cewg_2011/en/index.html