9 September 2016

What Is Delinkage?

Delinkage describes the idea that temporary monopolies and the associated high drug prices should not be used to fund pharmaceutical research and development, as well as a set of policy proposals that would replace monopolies and high prices with alternative incentives based upon cash rewards, and expanded funding for research, drug development, and clinical trials through a combination of grants, contracts, tax credits, and other subsidies.  Delinkage would transform the business model of the pharmaceutical industry in order to expand access, improve outcomes, and reduce costs.

A paper published by UNITAID described delinkage as follows:

The term “delinkage” is used for a set of options that aspire to change fundamentally the paradigm for financing innovation. The term can best be understood as partly technical — the separation of R&D costs from product prices — and partly polemical — a demand that the R&D system be reformed to accommodate universal access to knowledge goods, to induce openness and sharing of knowledge in general, and to make investments in R&D more cost-effective and responsive to the needs of patients and society.

This discussion of delinkage is from a 2016 joint submission to the United Nations Secretary-General’s High Level Panel on Access to Medicines:

We can define de­linkage in the negative, by saying that the R&D funding should not be tied to the price of the product. R&D incentives and funding mechanisms that involve granting or extending a product monopoly to charge high prices are not de­linkage mechanisms.

There are multiple and complementary mechanisms to fund R&D, many of which are already in place, that can meet the de­linkage criteria if appropriately designed. The problem is that currently not only are these mechanisms typically implemented without regard to affordability of products, but on the contrary, high prices are seen as the primary reward and incentive for product development.

Direct grants and contracts (such as NIH or EU Framework grants, for example) and R&D subsidies (such as orphan drug tax credits) can be expanded and reformed so that products are put on the market at lower and eventually affordable generic prices. Incentive mechanisms that now rely on the granting of product monopolies and high prices (patents, test data monopolies, orphan drug exclusivity, etc.), can be progressively replaced with new incentives including, most importantly, cash innovation inducement prizes or prize funds.

There can be confusion or ambiguity about the role of patents and other intellectual property in a de­linkage system. Research grants, contracts, and innovation inducement prizes can be implemented with or without patents, as patents can be managed with or without the subsequent creation of monopolies. For example, patents could be used to establish a claim on prize revenues, when the prize is provided as a substitute for the monopoly, rather than as a complement, an approach proposed by Senator Bernie Sanders in the United States.

Progressive de­linkage means that governments implement reforms over time that sequentially and progressively move prices closer and closer to affordable generic prices, and reform incentives so they no longer rely upon high prices.

– February 28, 2016 Submission to UN High Level Panel on Access to Medicines on research and development agreements, by 12 NGOs and four individuals.