Just Rules for Innovative Pharmaceuticals

Globalized in 1995 through the TRIPs Agreement, humanity’s dominant mechanism for encouraging innovations involves 20-year product patents, whose monopoly features enable innovators to reap large markups or licensing fees from early users. Exclusive reliance on this reward mechanism in the pharmaceutical sector is morally problematic for two main reasons. First, it imposes a great burden on poor people who cannot afford to buy patented treatments at monopoly prices and whose specific health problems are therefore neglected by pharmacological research. Second, it discourages pharmaceutical firms from fighting diseases at the population level with the aim of slashing their incidence. These problems can be much alleviated by establishing a supplementary alternative reward mechanism that would enable pharmaceutical innovators to exchange their monopoly privileges on a patented product for impact rewards based on the actual health gains achieved with this product. Such an international Health Impact Fund (HIF) would create powerful new incentives to develop remedies against diseases concentrated among the poor, rapidly to provide such remedies with ample care at very low prices, and to deploy them strategically to contain, suppress, and ideally to eradicate the target disease. By promoting innovations and their diffusion together, the HIF would greatly enlarge the benefits, and thereby also the cost-effectiveness, of the pharmaceutical sector, in favor of the world’s poor especially.