The missing healthcare market

This week, the annual World Health Assembly (WHA) of the World Health Organization (WHO) will be deliberating on a critical aspect of availability of medicines. This relates to establishing an effective research and development (R&D) system for ensuring access to medicines at affordable prices for the global community. The trigger for this discussion is an influential report authored by the consultative expert working group (CEWG) on R&D that was submitted last month. CEWG was established with the mandate “to examine current financing and coordination of research and development, as well as proposals for new and innovative sources of financing to stimulate research and development” related to the diseases that afflict citizens, in particular, of developing countries.

The report marks a landmark as it sets the stage for implementing a number of innovative ideas for addressing the disease burden of the developing countries. For instance, the Commission on Macroeconomics and Health (CMH) had, in 2001, offered what it considered “a new strategy for investing in health for economic development, especially in the world’s poorest countries, based upon a new global partnership of the developing and developed countries”. Among the key recommendations of the commission was a significant scaling up of resources spent in the health sector by both poor countries and the donors alike and the removal of non-financial obstacles that limit the capacity of poor countries to deliver health services. The recommendations of CMH were seen as part of the initiatives taken for realization of the health targets that were set as a part of the millennium development goals (MDGs). While progress has been made in areas such as child and maternal health, the disease burden in developing countries arising from pandemics such as tuberculosis has not gone down. What is of considerable concern is that diseases that were typical of developing countries, kala-azar (leishmaniasis) and African river blindness (onchocerciasis) to cite two examples, were not given adequate attention by the predominantly market-determined R&D system.

CEWG reminds us that even after a decade since CMH had made its observations, no effective solution seems to be in sight. The major problem in addressing the gaps is that private enterprises dominating the R&D landscape do not find it profitable to invest in developing country diseases as the returns are too low. This is a case of market failure, which can be plugged only through proactive action by public-funded institutions. Ideally, these institutions need to find ways of involving the private sector to provide sustainable solutions to this vexed problem.

While there is an economic case to address the deficit in patient treatment, CEWG has reminded us that there is a moral case as well. The moral case arises from the commitments governments have taken to protect human rights. The International Covenant on Economic, Social and Cultural Rights recognizes “the right of everyone to the enjoyment of the highest attainable standard of physical and mental health”. This builds on the first article in WHO’s constitution that its objective “shall be the attainment by all peoples of the highest possible level of health” and its declaration that “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.” The global community is, therefore, bound by its rights and responsibilities to ensure that the suffering get adequate treatment.

The present state of health R&D demands interventions at two levels, both of which were addressed by CEWG. The first relates to the financing of R&D and the second, institutional mechanisms that should be established for obtaining the desired results. Based on an assessment of needs, CEWG concluded that the total annual public sector R&D spending should be about $6 billion. This funding target works out to be just 0.01% of global gross domestic product (GDP). It was, therefore, suggested that all countries should commit to spend at least an equivalent of 0.01% of GDP on public-funded R&D devoted to meeting the health needs of developing countries. Besides this overall target for public funding in health-related R&D, CEWG emphasized that developing countries with potential to carry out research, should aim to commit 0.05-0.1% of their GDP to public-funded health research of all kinds and developed countries should aim to commit 0.15-0.2% of GDP to such research activities.

This funding, according to CEWG, should be provided to support public-private partnerships, and “open knowledge innovation”. The latter has been defined as the research and innovation model which generates knowledge that can be freely used without legal or contractual restrictions. It is being developed in a number of countries, including India, and stands in sharp contrast to the conventional “closed” models where R&D was essentially conducted in-house.

However important the recommendations of CEWG may be, they would be meaningful only if WHO members give effect to them through a legally binding treaty. One would hope that the first steps towards this end will be taken immediately, for later will be too late.

Biswajit Dhar is director general at Research and Information System for Developing Countries, New Delhi

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