Health Impact Fund

On Monday this week I went to hear Yale's professor 'Thomas Pogge (philosophy), Princeton's Peter Singer (philosophy), and U.Calgary's Aidan Hollis (economics) undertake the formal inauguration of the Health Impact Fund in Oslo. The event, which was about providing affordable medicines and improving the health of millions of impoverished people around the world, was thinly attended and scantily covered by the media; I couldn't help reflecting on how much greater the attention would have been had it concerned something of no consequence whatsoever to mankind, e.g. the launch of a new Iphone. The Health Impact Fund is an ingenious yet simple way to offset detrimental effects of intellectual property rights and the market on the equitable distribution of life-saving medicines, but without denying pharmaceuticals their rightful profits or removing incentives to develop new medicines. Simply put, pharmaceutical companies agreeing to participate in the system would sell their products at cost, and be rewarded according to the health impact of the drugs. The Fund would be mainly financed by governments - ie. taxpayers -  which of course is always troubling to our market-driven way of thinking, but as philosopher Peter Singer suggested in his remarks,  most people, if they stop and think, would gladly pay so little for so much. The executive summary of the Health Impact Fund booklet lays out the principles of the system clearly and persuasively; (here is an excerpt) The Health Impact Fund (HIF) is a new proposal based on two simple insights: (1) privately funded pharmaceutical R&D responds to incentives, and (2) new drugs can have a much larger impact if their prices are low. At present, the most profitable research efforts are not the ones most needed to alleviate the global burden of disease. And high prices often put new drugs out of reach of most of the world’s population.
The HIF seeks to correct both of these failings by offering to reward any new medicine, if priced at cost, on the basis of its global health impact. Any firm receiving marketing approval for a new medicine would be offered a choice between (a) exercising its usual patent rights through high prices or (b) registering its product with the HIF. Registration would require the firm to sell its product worldwide at an administered price near the average cost of production and distribution. In exchange, the firm would receive from the HIF a stream of payments based on the assessed global health impact of its drug. The HIF is, in other words, an optional pay-for-performance scheme for new pharmaceuticals...
Read more here.

Joseph Stiglitz's yuletide greeting in the British Medical Journal two years ago (Scrooge and Intellectual Property Rights) drives home the moral imperative of the Heath Impact Fund with the question, "What would we think of a Scrooge who could cure diseases that blighted thousands of people's lives but did not do so?"