The Health Impact Fund is a proposed pay-for-performance mechanism that would provide a market-based solution to problems concerning the development and distribution of medicines globally. It would incentivize the research and development of new pharmaceutical products that make substantial reductions in the global burden of disease. The Health Impact Fund is the creation of a team of researchers led by the Yale philosopher Thomas Pogge and the University of Calgary economist Aidan Hollis, and is promoted by the non-profit organization Incentives for Global Health (IGH).
Motivation In the current system of development and distribution of medicines, millions of people from developing countries die from diseases because the patented medicines they need are unaffordable or because no medicine exists to cure their ailments.Little pharmaceutical research is devoted to diseases specific to the poor. This is largely because it has been difficult for pharmaceutical companies to profit from research and development directed at products needed by the poor. The cost of pharmaceutical research and development is high and unlikely to be recovered from those in poor countries who cannot afford the medicines. Therefore, "the Health Impact Fund would give companies incentives to develop new products targeting the diseases and conditions for which existing systems have failed to produce results, which would especially benefit the poor." The allocation of pharmaceutical research and development effort is partly a result of the global patent regime established by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Prior to TRIPS, countries were free to not enact intellectual property laws covering medicines, leading to flourishing generic drug industries in countries such as India. Following TRIPS, all World Trade Organization members were required to institute strict, American-style intellectual property rights. As a result, the supply of generic medicines to poor countries has been sharply diminished. According to Nobel Laureate Joseph Stiglitz, the pharmaceutical patent system needs an "alternative" that would "give large rewards for cures or vaccines for diseases like malaria that affect millions."
Design of the Fund The Health Impact Fund is intended to address the problems with an uncomplemented pharmaceutical patent system. The Health Impact Fund uses market forces to create incentives to develop medicines for typically neglected diseases and to distribute these medicines at low prices all over the world. Pharmaceutical patent-holders would receive financial rewards by opting to register their new medicines, or new uses of existing medicines, with the Fund. By registering, a patent-holder agrees to distribute its medicine globally at cost and to cooperate in measuring the health impact of that medicine. In return, the firm receives an annual reward based on its measurable contribution to reducing the global burden of disease. In order to achieve distribution at cost, the Health Impact Fund could require generic licensing, tendering, or price controls, depending on the nature of the product. Registrants of new drugs are eligible for reward payments for ten years starting at the date of marketing approval of their product. New uses receive rewards for five years. Following the reward period, registrants agree to allow generic manufacturing of their medicines, in order to prevent price spikes. Registrants retain their rights to control follow-on innovation.
Assessing the health impact of a registered product When assessing the health impact of a registered product, “the Health Impact Fund would essentially estimate the difference between (1) the actual health status of people who consumed the registered product and (2) the estimated health status of those people, had they not had access to the registered product.” The standard measure of health impact is the Quality-Adjusted Life Year (QALY). For example, if all registered products were in conjunction estimated to have saved 10 million QALYs, then a registered product that saved 1 million of those QALYs would receive ten percent of the available reward funds for that year. The health impact assessment of a registered product would be conducted for each year of its registration with the Health Impact Fund, and payments would be disbursed annually.
Funding The Health Impact Fund might be financed by governments, with countries committing a fixed fraction of their gross national income (GNI) to the Health Impact Fund (0.03 percent of a country's GNI is the suggested minimum). Alternatively, the Health Impact Fund might also be funded through an international tax on carbon emissions, say, or on disruptive financial speculations.
Next step: an innovative pilot
As performance measurement is a core component of the Health Impact Fund, it needs to be robust across diverse products, patient demographics, and social and natural environments. Working with leading health care assessment organizations such as The George Institute for International Health, NICE International, the Institut für Qualität und Wirtschaftlichkeit im Gesundheitswesen (IQWiG) and the Institute for Health Metrics and Evaluation, the Health Impact Fund would perform evaluations of the health impact of different products in a variety of countries. Such assessments would go beyond pre-approval clinical trials, using epidemiological data from actual usage, practical trials, physician surveys, and patient demographics, as modifiers to the core health impact assessment. IGH aims to pilot the proposed Health Impact Fund mechanism by rewarding a pharmaceutical manufacturer on the basis of measured health impact in a region. This will allow the pay-for-performance approach to be field-tested and refined before it is implemented on a wider scale.
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