Growing consensus on importance of delinkage in pharmaceutical R&D

By Ellen ‘t Hoen

The movement to delink the cost of developing medicines from their market price received another boost this week, with the publication of a new report from the Netherlands Council for Public Health and Society, an official government advisory body.

This report is part of a recent phenomenon in which even the wealthiest of health systems have been unable to afford medicines developed under a monopoly-based pharmaceutical innovation model, and underlines a growing international consensus that better models to incentivise the creation of new medicines are needed. High priced medicines resulting from this model cause access problems and are a threat to the affordability of health care in almost all European countries. Medical professionals and patients are calling on their governments to take action.

The Council’s report – Development of new medicines: Better, faster, cheaper – outlines a number of actions the Dutch government can take to immediately address high drug pricing, including the use of compulsory licensing to strengthen the government’s position in price negotiations.

But just as import is the Council’s focus on the need for greater efficiency and transparency in pharmaceutical R&D, and the need for changes in how society pays for R&D – a fundamental issue underpinning monopoly-based high drug prices.

It recommends the development of alternative innovation models that do not depend on high prices, such as patent buy outs, direct financing and not-for-profit drug development. The Council remarks that a better pharmaceutical innovation system will require cooperation with other nations, particularly in changing some of the EU rules. It singles out European patent regulations concerning the supplementary protection certificates (SPCs), rules about data exclusivity, orphan drug regulations, and the use of European research funds for further scrutiny and revision.

The Netherlands Council report follows in the footsteps of the Lancet Commission on Essential Medicines Policies, which almost exactly a year ago published an analysis showing that challenges of access to new essential medicines are directly associated with the failure of the current R&D system to develop much needed new medicines.

The Lancet Commission specifically recommends the implementation of “delinkage” models for the development of new essential medicines. It writes:

The concept of delinking costs from prices is based on the premise that costs and risks associated with R&D should be rewarded, and incentives for R&D provided by means other than through the price of the product. If the R&D cost of new medicines did not have to be recouped through high prices, those medicines would be free of market exclusivity and could be made more widely available and more affordably priced through better competition. The Commission supports proposals to progressively delink the cost of R&D for priority medicines from the price of the products, and to develop new ways of sharing the cost burden of innovation internationally.”

It recognises that new international agreements may be needed to achieve this end and recommends that governments take the lead in creating mechanisms like prize funds or a pooled fund for global health R&D to make this happen. (A recommendation also made by the UN Secretary General’s High Level Panel on Access to Medicines.) The Lancet Commission recommends that:

Governments must lead the process towards a global R&D policy framework and agreements, which include new financing mechanisms to ensure that missing essential medicines are developed and made affordable.

Such mechanisms should be based on transparent estimates of the real cost of R&D; they might include a pooled fund for global health R&D, prize funds, targeted research partnerships and advance market agreements, and licensing of related patents, leading to an increasing number of new priority products with an affordable price which is delinked from R&D costs (known as progressive delinking).

Dutch ministers Schippers (Health) and Ploumen (international development and trade) welcomed the Lancet Commission’s report and wrote in the Lancet:

Patent and intellectual property exclusivities are the only cornerstone of the current model. Companies can ask the price they like. This will no longer do. We need to develop alternative business models. And if public money is used for the development of new medicines, agreement upfront is needed about what this public investment will mean for the final price. We believe that companies must provide full transparency regarding the costs of research and development (R&D).

In 2016, under the Dutch EU presidency, the European Council tasked the European Commission with evaluating current EU legislative instruments – such as the marketing authorisation system, the supplementary protection certificate (patent), the orphan drug regulation , and paediatric drug development incentives – which intend to encourage investment in the development of new medicines, but also lead to higher prices.

This study is now on-going and is expected to result in recommendations for changes in European legislation. With study after study demonstrating how seriously these changes are needed, there is a unique opportunity for the delinkage agenda to take forward new models to finance needed pharmaceutical innovation and allow affordable access to those innovations.

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