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Creating R&D Incentives for Medicines for Neglected Diseases An Economic Analysis of Parallel Imports, Patents, and Alternative Mechanisms to Stimulate Pharmaceutical Research

:	Frank Müller-Langer
:	Creating R&D Incentives for Medicines for Neglected Diseases An Economic Analysis of Parallel Imports, Patents, and Alternative Mechanisms to Stimulate Pharmaceutical Research
:	Gabler Verlag
:	9783834983237
:	1
:	CHF 85.40
:

:	Volkswirtschaft
:	English

:	297
:	Wasserzeichen/DRM
:	PC/MAC/eReader/Tablet
:	PDF

Virtually no research is targeted at developing medicines for tropical diseases as the expected market returns from R&D into these diseases in the private pharmaceuticals sector are too low. Frank Müller-Langer addresses the market failure with respect to R&D for medicines for tropical diseases and the lack of short-term access to affordable medicines in poor countries. The author analyzes additional push and pull mechanisms to stimulate R&D for pharmaceutical products alongside patent protection which may help mitigate the problem of those consumers in poor countries who lack access to affordable medicines. Furthermore, he reasons that a global regime of banning parallel trade from low-income countries to high-income countries is desirable from a developing country's perspective.

Dr. Frank Müller-Langer is a research fellow at the Max Planck Institute for Intellectual Property, Competition and Tax Law and academic coordinator of the International Max Research School for Competition and Innovation in Munich. He obtained his doctorate in economics from Hamburg University in 2008.

1. Introduction (p. 1)

“Today, in what is now a globalizing market economy, a growing injustice confronts us. More than 90% of all death and suffering from infectious diseases occurs in the developing world. Some of the reasons that people die from diseases like AIDS, TB, sleeping sickness and other tropical diseases are that lifesaving essential medicines are either too expensive, are not available because they are not seen as financially viable, or because there is virtually no new research and development for priority tropical diseases. This market failure is our next challenge.”

Moreover, 98 percent of children who die before their fifth birthday live in the developing world as do all but a few thousand of the millions who die prematurely of TB, malaria, tetanus or measles. We shall analyze the market failure mentioned above with respect to R&D for medicines for neglected infectious and tropical diseases and the lack of short-term access to affordable medicines in low-income countries. In recent years several disease-based initiatives supported by governments and private foundations have been set up in order to solve the problem of underinvestment in R&D for pharmaceuticals and insufficient access to medicines in developing countries.

Examples include the Medicines for Malaria Venture (“MMV”) which accounts for most of today’s antimalarial drug development projects, the Global Alliance for TB Drug Development (“TB Alliance”) and the Special Programme for Research and Training in Tropical Diseases (“TDR”) set up by UNICEF, UNDP, World Bank and WHO. The MVV and TB Alliance’s main objective is to convert drug candidates into registered entities.

Moreover, they are managed as non-for-profit ventures and employ a social venture capital model that is funded by the public sector. Usually, they collaborate with partners from the pharmaceutical industry, academia and development agencies and rely on business drug development models. Newer sources of funding like the Bill& Melinda Gates Foundation8 play a significant role in securing short and medium term budgets.

Despite the programs mentioned above the world’s poorest regions are still suffering from death and disability from infectious diseases for which vaccines either exist but need improvement or do not exist at all. In fact, deaths caused by infectious diseases contribute most to the health disparity between rich and poor countries (comparative life expectancy at birth being 77 and 52 years respectively).

Furthermore, infectious diseases kill 14 million people worldwide every year predominantly amongst poor populations in the developing world. We shall focus our analysis on infectious diseases such as malaria, trachoma, and dengue as well as on tropical diseases such as lymphatic filariasis, leishmaniasis, and schistosomiasis that predominantly plague poor nations.

Despite substantial advances in molecular biology with regard to the biology of the parasites that cause leishmania, African trypanosomiasis or malaria virtually no new chemical entities for these diseases have been developed and marketed so far. Adequate and sufficient R&D for new medicines against these diseases does not exist. For instance, R&D for HIV/AIDS per fatal case is at least 80 times higher than for malaria.

Table 1 shows 20 diseases for which 98 percent of the global burden fell on developing countries. For all these diseases, virtually no R&D efforts are aimed at producing appropriate treatments because potential consumers are too poor to generate sufficient demand which would allow pharmaceutical producers to cover their R&D costs.

With respect to the potential incentives for R&D through patent protection the analysis will not consider HIV/AIDS as it is a different disease in the sense that there are strong incentives for pharmaceutical companies in the Northern Hemispehre to develop drugs and treatments for patients in high-income economies.

As these incentives have already spurred the development of effective pharmaceutical products and treatments, the debate concerning HIV/AIDS has shifted to how these medicines can be transferred to patients in poor countries.Trouiller et al. (2002) analyze quantitatively and qualitatively the global drug development output over a period from 1975 to 1999 and conclude that there is an underinvestment in R&D for pharmaceutical products for the diseases mentioned above.

	Foreword	7
	Acknowledgments	9
	Summary Contents	11
	Detailed Contents	12
	List of Abbreviations	15
	List of Figures and Tables	17
	1. Introduction	18
	1.1. The Malaria Case	21
	2. The TRIPS Agreement and Access to Patented Medicines	24
	2.1. Introduction	24
	2.2. Standards	26
	2.3. Enforcement of IPRs under the TRIPS Agreement	37
	2.4. Dispute Settlement	41
	3. Economic Analysis of Patents	45
	3.1. Introduction	45
	3.2. Underlying Economic Theory	46
	4. Patent Protection in the Developing World: Theory and Evidence	115
	4.1. Introduction	115
	4.2. Microeconomic Theory as to Patent Protection in the Developing World	116
	4.3. Empirical Evidence regarding Patent Protection in the Developing World	147
	5. Legal and Economic Analysis of Parallel Imports	157
	5.1. Introduction	157
	5.2. Parallel Trade and the Pricing of Pharmaceutical Products in a Double Marginalization Game	158
	5.3. Parallel Trade of Pharmaceutical Products in the Context of National Price Regulation	206
	5.4. Parallel Trade and the Availability of Patented Pharmaceutical Products in the Developing World	213
	6. Solutions for the Problem of Underinvestment in R	213
	217	213
	6.1. Introduction	217
	6.2. Insufficient Market Size and Low Expected Market Returns to Research	218
	6.3. Push Programs and R	218
	221	218
	6.4. Pull Programs and R	218
	228	218
	6.5. Parallel Trade and Medicines for Neglected Infectious Diseases	244
	6.6. Conclusions and Policy Recommendations	245
	7. Conclusion and Ideas for Further Research	248
	Appendix	251
	Bibliography	265
	Index	298