Global R&D convention: Pipe dream?

Frustration with the status quo of the patent system and its inability to address the growing needs of developing countries has inspired the development of a new innovation paradigm, a global research and development (R&D) convention.  Such an effort will certainly generate controversy and be met with skepticism. Here’s why.

An expert group of the World Health Organization (WHO) recommended the convention in a report titled “Research and Development to Meet Health Needs in Developing Countries: Strengthening Global Financing and Coordination.” See here.

As envisioned, the R&D convention would delink drug prices and R&D costs in order to ensure greater access and affordability, especially for the world’s most vulnerable. It seeks to compel countries to commit at least 0.01% of their gross domestic product (GDP) on medical research dedicated to the health needs of developing countries.  The suggested level of spending would be 0.15-0.2% of GDP by industrialized nations and 0.05-0.1% of GDP by developing nations with research capacity.

The convention necessitates the coordination and consensus of all member governments and health ministries on research goals, areas of innovation and treatments. This is contentious and subject to political battles and gamesmanship.

One need only look to the World Trade Organization’s Uruguay Round for an illustration of the difficulties of reaching agreement on a global level.  The Uruguay Round extended from 1986 to 1994, in large part due to the contentious nature of the debate surrounding intellectual property rights.  Significant disagreement characterized the positions of developing vs. industrialized countries and the talks were drawn out for years due to entrenched positions.

In the context of a global R&D convention, one can imagine stringent differences when it comes to priority setting.  Should AIDS research take precedence over malaria or heart disease?  Should conditions that primarily impact wealthy, industrialized nations receive any funding at all?

Nations may renege on their financial commitments if they do not see their priorities reflected in the convention’s aims and objectives.  It will undoubtedly be difficult to hold them accountable to these commitments.  This type of gamesmanship is prevalent on the international stage in many contexts, perhaps most notably in the reluctance of the United States to pay its U.N. dues.

Administering a global R&D convention would require agreement on research priorities and balancing social welfare gains against the likelihood of success, risk and costs.  One must address how financial resources should be devoted to a project with a low risk of success, but for a condition impacting a multitude of people. Should such a project be prioritized over a project with a high likelihood of success but one that will treat a limited number of people?  How will we balance the likelihood of success against the risk and the number of affected people?  In addition, as with any bureaucracy of significant size, we must safeguard against corruption and abuse of power and financial resources.

Finally, a global R&D convention would almost certainly meet resistance from the established pharmaceutical industry and other entrenched stakeholders.  If they perceived such a convention as a threat to future markets, innovative capacity or financial profitability, they would likely endeavor to undermine the convention or forestall its progress as long as possible.

Yet, the paucity of research on neglected diseases mandates an examination of all alternatives. Here are some benefits that it would provide over the current system :

  • The drugs developed through convention efforts would be competitively produced and priced accordingly, increasing access for the poor in the developing world.
  • The costs of R&D would be borne globally, by all taxpayers, rather than by those afflicted with a particular disease or condition.
  • The convention would discourage duplicative research efforts and excessive marketing.
  • It would complement the existing patent system
  • It would incentivize the development of innovations that provide high social value but are distinguished by low appropriability, precisely the characteristics needed to generate research into neglected diseases.
  • It would encourage cooperation between different research organizations.

Efforts to initiate work on the convention were deferred at the 65th annual meeting of the World Health Assembly and will be revisited by the WHO’s executive board in January 2013.  In the interim, national consultations and regional discussions will begin to work out the specifics of implementation.

Such a convention has the potential for tremendous improvement in global public health.  However the risks are just as large, if not greater.  Given the time and financial commitment required to move forward, we must proceed with extreme caution, but we must proceed.  The magnitude of public health needs mandate an examination of every alternative, every dream, every crazy idea.

Dr Kristina Lybecker is Associate Professor of Economics at Colorado College in Colorado Springs. Kristina is an economist with a PhD from the University of California at Berkeley. She specialises in innovation and intellectual property rights and has been writing on these issues for 12 years. She is currently employed full-time at Colorado College. In the interests of transparency, the writer states that she has been commissioned to work for the pharmaceutical industry on issues of innovation, corruption, counterfeiting and intellectual property rights. However, she has not been compensated or otherwise rewarded for this piece which stems from her intellectual interest in the topic and closely relates to her academic research.

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