Access to medicines fatih conference final

Fatih Üniversitesi, 34500 Büyükçekmece, İstanbul
This study addresses how intellectual property practices by multinational pharmaceutical companies,
nation states and international bodies influence the availability and affordability of pharmaceutical drugs.
Protection of intellectual property rights is justified due their undeniable role on technological progress.
Strict use of protection of those rights in pharmaceutical markets helps research and development
investments to continue for new and existing diseases by guaranteeing monopoly rights and profits to
investors in return to their earlier R&D. However, sometimes high prices of drugs due to monopoly rights
prohibit access to those drugs by the poor especially in developing and underdeveloped countries where
public health systems are not fully established. Several adjustments to international protection of
intellectual property rights have been offered to balance between long-run R&D investments for new drugs
and short-run access to existing drugs by the poor. Negotiations between related parties, pharmaceutical
companies, developed-developing-underdeveloped nation states, WTO, and WHO, have not yet reached a
conclusion on mechanisms of international protection of intellectual property rights and access to
medicines. This paper discusses the relative merits and problems of status quo and those proposed
adjustments to the intellectual property rights protection.


In the last century there has been a tremendous improvement in the people’s material standard of living. Not only on average people live longer but also their quality of life is much higher. Significant portion of this improvement is presumed to be due development in knowledge and technological level in medicine. Moreover; there is growing empirical evidence that new drugs have played a central role in increased longevity, enhanced quality of life and improved labor force participation and productivity. However; dramatic inequalities in health still persists even arguably getting bigger. The poor country citizens not only have lower incomes, but they are also more often sick, and they live shorter lives. Recently gross inequities in disease burden between developed and developing countries became the subject of intense global attention. Three major diseases malaria, HIV, and tuberculosis kill approximately five million people each year, almost all of them in poor countries. According to Cohen (2002) when we add other communicable diseases this number jumps to 14 million of the 97 percent of deaths occur in developing countries. Infectious and parasitic diseases account for 25 percent of the disease burden in low- and middle-income countries, compared to only 3 percent in high-income countries. Beyond well known malaria, HIV and tuberculosis examples; there are other significant infectious diseases especially in Africa and Southeast Asia. Sleeping sickness is a primary example affecting 36 countries in sub-Saharan Africa; an estimated 300,000 to 500,000 people are currently infected with this disease. Left untreated, sleeping sickness is 100 percent fatal. It kills more than 65,000 people each year. There are numerous other diseases which practically nonexistent in developed countries while causing millions of deaths in poor countries. Table 1 presents these diseases concentrated on poor countries. Relative to this enormous social need, little public or private sector R&D is targeted toward developing new health technologies for diseases concentrated in poor countries. According to a prominent study by Pecoul et al (1999) of the 1233 drugs licensed worldwide between 1975 and 1997, only 13 were for tropical diseases. Of these 13, five came from veterinary research, two were modifications of existing medicines, and two were produced for the US military operating abroad; only four were developed by pharmaceutical companies for tropical diseases of humans. Even for diseases which are also major health problems in developed countries; research and development on these diseases may not be beneficial for poor countries since products and treatments came out of R&D may not be feasible under health care systems and epidemiological conditions of poor countries. For example most of R&D on HIV is concentrated on strain of the virus common in rich countries. In order to answer “why there is so little R&D on diseases disproportionably affecting underdeveloped countries while obviously there is so much need for them?” question, economics literature can be helpful. Schumpeter (1942) in his seminal work highlights that decisions on innovation (R&D) are based on expected profits due to a temporary competitive advantage originating from the innovation. In the Schumpeterian world firms compete through innovation, as it allows them to obtain higher profits than their competitors. Similar to other industries firms in medical care market, especially pharmaceutical companies, are investing huge amount of resources in new technologies (treatments and drugs for the health problems) due to potential profit opportunities. However; since developing countries are poor by definition, patients living there do not have ability and willingness to pay high prices for the new drugs. Thus profit opportunities are limited for these diseases. The effect of potential profits on pharmaceutical R&D is well documented by theoretical and empirical studies. Acemoglu and Linn (2004) analyzed the effect of potential market size on pharmaceutical innovations using U.S. demographical data. They find a large effect of potential market size (in the United States) on the entry of new drugs. Lichtenberg (2005) found that drug development is positively related to the burden of disease in developed countries but not the burden experienced in underdeveloped nations. In a similar study Civan and Maloney (2006) found that research in the drug industry is driven almost exclusively by demand from the United States. Even though drug companies market drugs worldwide and collect a significant portion of total industry revenues from this source, this has almost no impact in motivating drug research. Specifically the disease burden in underdeveloped country found to have no positive impact on pharmaceutical R&D. Numerous studies have shown that profit maximizing drug companies had little interest on spending their resources to develop drugs for diseases concentrated on underdeveloped countries. Since these diseases still claim millions of lives each year, the issue became the subject of intense global attention. Several potential solutions are proposed to develop new drugs for these diseases. In the rest of the paper market based and public institutions based solutions are discussed. MARKET BASED SOLUTIONS
Intellectual Property Rights
R&D on pharmaceutical market is very expensive. Before putting a new drug on the market, companies have to prove that it is both “safe” and “effective.” The cost of developing new drugs has increased significantly in recent decades. It has been estimated that developing a new drug costs approximately $800 million today in the United States1 Part of the reason for the high cost is that most new chemical entities (drug candidates) fail to reach the market. Typically less than 1 percent of the new chemical compounds examined are used in human testing. Only 20 percent of those compounds finally gain FDA approval. While the fixed costs are in the hundreds of millions of dollars, the marginal production costs are relatively small. Moreover, unlike some other high-tech or high fixed cost industries, the imitation of the existing drugs is relatively low-tech and cheap. As a result, patent protection is crucial in recouping the cost of drug development. The special importance of patents to pharmaceutical innovation has been demonstrated in several studies. Richard Levin, et al, (1987) and Wes Cohen et al, (2000) have undertaken surveys of R&D managers in various industries to identify which factors are most important and necessary in appropriating the benefits from innovations. Both studies found that the pharmaceutical industry placed the highest importance on patents. By contrast, many other high tech industries, such as computers and semiconductors, placed greater importance on factors like lead-time and learning by doing efficiencies. According to Taylor and Silberston (1973) pharmaceutical R&D in UK would be reduced by 64 percent in the absence of patent protection. 2 However; governments are reluctant to give strong intellectual property rights to the pharmaceutical companies. Even countries that are otherwise market friendly only recently began granting drug patents. Sweden started to give pharmaceutical patents in 1977, Japan in 1976, Norway in 1992 and Brazil in 1996. Prior to 1995, there were more than 50 countries that did not provide any patent protection to the pharmaceuticals. Most of those were expectedly underdeveloped countries. It has been argued that due to lack of intellectual property right protections, pharmaceutical companies are reluctant to invest on diseases concentrated on underdeveloped countries. If patent protection is offered in these countries pharmaceutical companies would invest much more on these diseases which are more prevalent on underdeveloped countries. These projections coupled with the pressure from developed countries, mainly from US; in 1995 the member countries of World Trade Organization signed a treaty (TRIPS) which requires all countries to provide strong patent protection to the pharmaceuticals. The treaty gave 10 years to implement the rules to the least developed countries3. The proponents of the treaty anticipated a rise 1 See, DiMasi et al. (2003). 2 See also Mansfield (1986) for similar results. 3 The talks in Doha extended the time period to 2016. on pharmaceutical R&D for tropical diseases. However; many were not convinced of the impact of TRIPS, the residents and governments of underdeveloped countries were simply too poor to pay the necessary prices to recover the huge fixed R&D costs. According to opponents patent protection is irrelevant; these countries would never be potential profitable markets for new drugs with patents or without patents. On theoretical grounds, Chinn and Grossman (1990) and Deardoff (1992) conclude that under most circumstances the developing countries would lose with TRIPS and in some cases world wealth might also decrease because of increased patent protection in developing countries4 Lanjouw and Cockburn (2001) find no significant increase in research for developing country diseases such as malaria and chagas after TRIPS. In the follow-up study Lanjouw and MacLeod (2005) found that the level of innovative activity related to diseases specific to poor countries remains extremely low relative to pharmaceutical research overall. However, the subset the set of diseases still in need of better low-cost treatments has seen a trend increase in its share of patenting and bibliometric citation. In the case of patenting, a possible beginning of a speeding up of trend increase in the early 2000’s is observed, but it is too early to be confident that it will persist. It has also been argued that even if multinational pharmaceutical companies do not invest in tropical diseases, once the intellectual property rights are protected local pharmaceutical companies will step up and make necessary R&D investments. Since they are going to have comparative advantage in terms of local knowledge and costs over multinational companies, the fixed R&D costs of developing new drugs would be lower than their counterparts in developed world. Countries like India, Brazil and South Africa with relatively established domestic drug industry were expected to develop new drugs for the underdeveloped country diseases. However, a survey study by Lanjouw and Macleod (2005) suggests that Indian pharmaceutical companies focus on the diseases with potential markets in developed world. TRIPS agreement did not provide enough incentives for Indian firms to invest on tropical diseases. Many do not consider this relatively disappointing evidence on the effects of TRIPS treaty as very troublesome. They believe that it is still too soon to observe the impact. The pharmaceutical R&D is very long process sometimes takes more than a decade. Moreover, in 1995 when the Treaty was signed, it was not certain that it was going to be fully implemented. Thus it is normal that pharmaceutical companies did not immediately start to invest on tropical diseases. Price Discrimination

Sometimes companies with market power charge different prices to different consumers for the same products. This practice is called price discrimination and especially relevant for high fixed cost and low marginal cost markets. It has been argued 4 See also, Diwan and Rodrick (1991), Helpmann (1993), and Scherer (2002) for discussions of various that pharmaceutical companies could implement price discrimination i.e. wealthier countries would pay higher prices, poorer countries would pay lower prices for the same drugs. Price discrimination5 would provide pharmaceutical companies to recoup high R&D costs from relatively wealthy markets while allowing these drugs to be accessible even by the very poor country residents. Thus price discrimination would be both efficient and equitable. Although price discrimination opportunity does not create R&D incentives for diseases affecting only poor countries, it is relevant for the diseases affecting both developed and underdeveloped countries such as HIV and tuberculosis. Most HIV patients in US or other developed countries could easily pay hundreds of dollars for the drug while even five dollars could be prohibitively expensive for the patients living in Sub-Saharan Africa. Considering marginal cost of producing the drug is sometimes less than one dollar, with perfect price discrimination it would be profitable for the pharmaceutical companies to sell the drug in US for hundred dollars and in Africa for couple of dollars. There is some evidence that drugs are priced efficiently worldwide. Danzon and Furukawa (2003) find a close relation between drug prices and income across nine developed countries. They argue that this implies efficiency in a Ramsey-pricing sense. If true, the price differentials between the United States and other countries may be a signal of economic well-being and regulatory moves to remove them could lower welfare. Merck and Roche also offer some of their drugs at different prices to developing countries based on several criteria, including rank on the United Nations’s Human Development Index, adult HIV prevalence rate, geography, and classification by the World Bank as low or lower middle income. However; Scherer and Watal (2002) found little evidence of Ramsey pricing for 15 AIDS drugs in 18 low and medium income nations. Although discrimination, in theory both efficient and equitable, is not practiced extensively by pharmaceutical companies due to several reasons. First it is politically infeasible to charge significantly higher prices for the same products in developed countries. For example, after a Congressional hearing in which a US Senator asked a vaccine manufacturer how it could justify charging nearly three times as much to the United States government for vaccines as to foreign countries, U.S. manufacturers stopped submitting bids to UNICEF to supply vaccines.6 Since pharmaceutical products are much more homogeneous than products in other industries, for pharmaceutical companies price discrimination practices are harder to hide from the public. Stories on the headlines make drug companies to be very reluctant to charge lower prices in poor countries. This public opposition is said to be one reason drug companies give away drugs for use in developing world markets instead of selling them at deep discounts. Selling the drugs at discounted prices at poor countries raises other trade-related issues. One of the major issues is the possibility that these products will be re-exported to 5 This is sometimes called as Ramsey Pricing. 6 See Kremer (2000) for more details. high income countries where they can be sold at the higher prices prevalent in these countries. Parallel exportation of drugs from low to high income countries could adversely affect the return on their investment in major markets. Thus this possibility lowers pharmaceutical companies’ willingness to continue to market these drugs at discounted prices at poor countries. Currently parallel importation does not create significant problems for very poor countries. Both regulatory environment and public perception of the quality of drugs coming from very poor countries does not allow importation of drugs form very poor countries. However; since there is huge profit potentials from arbitrage, illegal trade of drugs from very poor countries to rich markets is potentially a significant obstacle on price discrimination. Moreover, even if American consumers do not want drugs from South Africa, they are more willing to buy drugs from Canada, or UK residents are eager to buy drugs from Slovenia where drugs are much cheaper. In European Union parallel importing on pharmaceutical products has been encouraged through European Court of Justice. Claims by pharmaceutical companies against other companies based on intellectual property rights have not been accepted, and the Court has ruled that pharmaceutical companies must respect the rights of free movement There is also the possibility of a spill-over of low pricing to other countries that have implemented comparative pricing systems. Unlike other commodities most countries regulate drug prices. A growing number of countries started to implement international reference pricing systems. Even though the details of system vary from country to country basically the method involves comparing the prices of products on the market with the prices of similar or identical products in other reference countries. Thus a lower price in a poor country can potentially lower the price of the drug in a developed country Political fallout, parallel trade, and international reference pricing systems make it very difficult for pharmaceutical companies to separate the markets. If the markets are not separable, price discrimination is not possible for the profit-maximizing firms. Like in many other issues, if the public is well informed about the necessity of the price discrimination on drugs to help the very poor, political obstacles on price discrimination would be eliminated. Similarly an international agreement barring parallel exports from developing or underdeveloped countries to high income countries may be necessary to avoid these adverse consequences. Philanthropic Donation Programs
Donation of drugs is a well-established charitable activity of private drug companies to support poor countries. A more recent phenomenon is the donation of specific drugs with explicit major public health goals. Some pharmaceutical firms have developed medicines for particular tropical diseases and made them available under drug donation programs (generally free of charge). Merck is the pioneer of this new type of philanthropic donation programs. Merck started to donate Mectizan (ivermectin) for river blindness beginning 1987. Since then more than 200 million patients have been treated in 31 countries under this program. The anti-filariasis drug, albendazole, by Glaxo Smith- Kline, the anti-trachoma initiative sponsored by Pfizer, and Novartis and donation of multi-drug therapy to eliminate leprosy are other major philanthropic donation programs. Moreover, involved corporations have made commitments to sustain the projects until the target diseases eradicated.7 Drug donation programs can make a strong contribution to patient welfare in underdeveloped countries. However, these philanthropic donation programs cannot be the
cornerstone to solving to health problems of these countries. The problems posed by
these diseases are too broad to rely primarily on charitable donations from a small
number of private sector profit maximizing entities. Even though donation programs can
be effective on distribution of existing drugs to relatively less affluent patients, they
cannot be relied on as the primary mechanism for R&D on new drugs. Moreover some
people still remain very skeptical about the motives of drug companies. This is especially
bad news considering the main motivation of corporations to involve with these programs
are public relations related.


“Push” Programs
The experience showed that market system alone is not able to make enough R&D investments for technological innovations to solve the health problems of poor countries; thus public involvement is required to accelerate the innovations. Public involvement to encourage the development of new products can be classified as “push” programs, which subsidize research inputs, and “pull” programs, which reward developers for creating desired products. Push programs provide funding for basic research through grants to academics, public equity investments in development, research and development tax credits, or work in government laboratories. Philanthropic funds provided by private foundations such as Gates Foundation funds can also be categorized as push programs. Push programs are generally successful on financing basic research since basic research creates more spillovers (positive externalities) than later-stage research. Thus basic research would be more underprovided than later-stage research by profit maximizing firms. Moreover, it is important that the results of basic research are quickly communicated to other scientists. Researchers funded through public grants have incentives to publish quickly while scientists working in private company research centers might withhold information from competitors. So et al (2005) notes that between 60 and 75% of innovative new drugs developed in the last decades in US would not have been developed or would have been delayed significantly absent public sector research. Private foundations in US have started to play increasingly active role in creating and supporting medical research; grants from Bill and Melinda Gates Foundation, the Rockefeller Foundation, and the Edna McConnell Clark Foundation are prominent examples of those. International organizations such as WHO, UN, World Bank and international NGOs such as Doctors without Borders are naturally involved with sponsoring and coordinating medical research disproportionally affecting the poor. A recent study made by London School of Economics researchers documented that public/private partnerships have been responsible for most of the increase in neglected diseases activity observed since 2000 (PRPP, 2005). Programs focused on development of new drugs, vaccines, and other medical products for diseases that disproportionately affect developing countries are called public/private partnerships (PDPPPs, Product Development Public Private Partnerships) PDPPPs are nonprofit institutions that sponsor others to perform or directly perform themselves R&D activities. PDPPPs serve to reduce the costs and risks of product development for private firms in order to motivate them to allocate R&D resources for new products to the developing world. Table 2 lists the major PDPPPs. Even though public institutions play a very significant role on research on neglected diseases, relying solely on those might cause very serious problems. Grant-funded scientists and research administrators competing for budgets will overestimate the chances of success and divert resources away from research with more success potential. It has been known for a while that government bureaucrats are not very successful on planning economies or choosing the best technologies for the future. Private companies or individuals motivated by profit-maximization generally far better on choosing the most efficient and most successful technologies. Desowitz (1991) notes the story of the U.S. Agency for International Development’s (USAID) 1980s program to develop a malaria vaccine. None of the research funded by USAID has created a successful malaria vaccine. The worse part of the story is not that; for these studies; at the end of the initial period independent expert panels recommended the research should not get additional funding since there is no success potential. However; USAID continued to fund these studies without any concrete results; later on the principal investigator of a study funded by USAID transferred grant funds to his personal account and indicted for theft.
“Pull” Programs
Advance Purchase Commitments

The basic structure of an advance market commitment is that sponsors commit (prior to
product development) to fully or partially finance purchases of drugs for poor countries at
a pre-specified price. Sponsors would sign a contract underwriting a guaranteed price for
the drug supplier. A purchase guarantee would provide the establishment of a fund to
purchase a pre-determined amount of a new drug or other medical product meeting a
given therapeutic profile for a neglected disease. Once the drug is developed poor
countries would buy it at a low price (say, $1 per treatment), and sponsors (aid agencies
etc…) would guarantee to top-up to a higher price (say, $15 per treatment) – thus
providing a normal market return for the developer. Once the full number of treatments
has been purchased at the guaranteed price, the supplier would be required to either
selling further treatments at an affordable price, or to licensing the technology to other
companies.8 This type of commitment would allow for a return on expected R&D outlays. As discussed on the preceding sections normally the potential consumers of the new drugs for neglected diseases are very poor; the expected profits are very low or even negative for the investors in these new drugs. Even if international organizations and other NGOs allocate considerable amount of resources to neglected diseases these problems are not solved in the absence of advance purchase commitments. Once private pharmaceutical companies have developed new drugs, governments and aid institutions often use their power as dominant purchasers and regulators to keep prices at very low levels in the interest of increasing access. Contractual bindings of advance purchase commitments would reduce the political risk that firms would be forced to sell their product at a very low price, and thus would give investors confidence about the returns they could expect if the new drugs are developed. Advance Purchase Commitments could solve two market failures on markets for Time inconsistency: By pre-committing governments and other aid institutions not to
negotiate down the price once a drug has been developed.
Public good: By appropriating investment in medical R&D without restricting access to
the product. The producer receives a high price that enables recovery of its R&D while
the purchaser pays an affordable price that reflects the low marginal cost of producing
Glennester et al (2006) notes the recent increase in the activities of aid organizations
using advance purchase commitment structures:
“The idea of advance purchase commitments for vaccines has recently been gaining political momentum. In 2003 the Center for Global Development (CGD), with financial support from the Bill and Melinda Gates Foundation, convened a working group to explore the details of how this type of proposal could be implemented.4 In November 2004, U.K. Chancellor of the Exchequer Gordon Brown announced that the U.K. government, working in cooperation with other donors, would be willing to enter into an advance purchase commitment for a malaria vaccine. The Chancellor later announced that the U.K. will also explore the use of advance purchase commitments for HIV vaccines. In April 2005 the CGD working group published a report recommending how advance purchase commitments for vaccines could be implemented; in December of that year the G-7 finance ministers announced an agreement to work with others on developing a pilot advance purchase commitment during the 2006 calendar year.” Berndt et al (forthcoming) studied theoretical and practical design issues of the advance purchase commitment in the context of vaccines. They estimated that the net present value of revenues that a vaccine advance market commitment would need to offer in order to match existing commercial products would be $3.1 billion, in year 2004 8 See Kremer (2000) for a very detailed discussion of advance purchase commitments for vaccines. dollars. They also estimated potential benefits of advance commitment purchases for
malaria tuberculosis and HIV/AIDS in terms of saved DALY9. Advance commitments of
$15, $31, and $17 per DALY saved are estimated for malaria, tuberculosis and
HIV/AIDS vaccines. They also note that these are very cost-effective relative to
Other “Pull” Mechanisms

Patent rights for a DRUG developed for a neglected disease is likely to provide a weak incentive in developing countries; it would be much stronger incentive if companies were able to transfer patent rights from the neglected disease drug to a drug prevalent in rich countries. Jonathan Mann, founding director of WHO Global Program on AIDS, suggested compensating the developer of an HIV vaccine with a ten year patent extension on another drug. Transferable intellectual property rights would allow companies benefit from an extended period of patent life for a drug of their choice in high income markets in exchange for developing for a neglected disease in poor countries. Towse and Renowden (2004) estimated the required extension period for profit-maximizing companies to develop new drugs for neglected diseases. They concluded that if European Union countries implement this mechanism, 1-6 years of patent extension on the drugs marketed in EU would be sufficient incentive for drug companies. Of course if the same drug was able to get patent extension in other developed country markets (US, Japan etc.) then a much shorter extension would be needed. Lanjouw (2002, 2004) proposed an alternative patent mechanism to increase the access to drugs in developing countries. According to this scheme inventor of new drugs in developed countries makes commitments to their own governments that they will not enforce patent rights in developing countries. However; this mechanism is unlikely to create enough incentives for R&D on neglected disease drugs though it could be used alongside with other pull mechanisms as complementary. 9 DALYs are estimates of years of life lost or lived with a disability, adjusted for its severity. 10 This quote shows the relative cost-effectiveness of the advance purchase commitments: “As a benchmark for cost-effectiveness comparisons, we note that health interventions in the poorest countries are generally regarded as highly cost effective if they cost less than $100 per DALY saved (World Bank, 1993).20 More recently a country’s gross national product (GNP) per capita has also been used as a benchmark (GAVI, 2004; WHO, 2000) and in the United States, the cost-effectiveness threshold is estimated to be as high as $50,000 to $100,000 per DALY saved (Neumann et al., 2000). As an alternative benchmark, even at the lowest of recently negotiated estimates of prices for antiretroviral drug treatments for HIV, the cost of purchasing and delivering antiretrovirals using a directly observed treatment short-course (DOTS) is estimated to cost $613 per year of treatment.” CONCLUSIONS

There are numerous diseases which practically nonexistent in developed countries while causing millions of deaths in poor countries. Relative to the social need, little public or private sector R&D is targeted toward developing new health technologies for diseases concentrated in poor countries. The main reason for this problem is the lack of profit potentials for the drugs developed for drugs prevalent in developing countries. Several market based and public institutions based mechanisms are proposed to create incentives for R&D on neglected diseases. Improving intellectual property rights in developing countries, providing an environment in which pharmaceutical companies can price discriminate (i.e., charging higher prices rich countries and low prices poor countries for the same drugs), and giving incentives for philanthropic donations by drug companies are market based solutions to the problem. Providing grant funds to medical scientists for neglected diseases, or involving advance purchase commitments are also proposed to increase the amount of research on these diseases. Not any one of the propositions cited above would be able to solve the lack of R&D in neglected diseases alone. Those are not substitutes but generally complements and different circumstances require different solutions. For example it is a generally accepted consensus that government- and philanthropic-directed push programs are well-suited for basic research, but more applied stages of research the pull incentives are more appropriate. It must also be noted that more than 90 percent of the drugs on the World Health Organization’s List of Essential Drugs are not patent protected. Even though those are sold at comparatively low prices; the extremely low per capita income in those nations suggests that low prices on essential drugs do not necessarily result in adequate utilization. REFERENCES

Acemoglu, D., and Linn, J., (2004) “Market Size in Innovation: Theory and Evidence
From The Pharmaceutical Industry” The Quarterly Journal of Economics, 119(3) August,
Berndt, R.E., Glennerster, R., Kremer, M., Lee, J., Levine, R., Weizsacker, G., and Williams, H., (Forthcoming) “Advance Market Commitments for Vaccines Against Neglected Diseases: Estimating Costs and Effectiveness” Health Economics Chin J., Grossman, G., (1990) "Intellectual Property Rights and North-South Trade," in The Political Economy of International Trade: Essays in Honor of Robert E. Baldwin, Jones, R., and Krueger, A., eds., (Cambridge: Basil Blackwell) 90-108 Civan, A., Maloney, M., (2006) "The Determinants of Pharmaceutical Research & Development Investments ", Contributions to Economic Analysis & Policy, Vol. , No. 1, Jan Cohen, R., (2002) “An Epidemic of Neglect: Neglected Diseases and Health Burden in Poor Countries” Multinational Monitor, 23:6 _______, Nelson, R., and Walsh, J., (2000) “Appropriability Conditions and Why Firms Patent and Why They Do Not in the American Manufacturing Sector” NBER Working Paper 7552 Danzon., P., and Furukawa, M.F., (2003) "Prices and Availability of Pharmaceuticals: Evidence from Nine Countries" Health Affairs Web Exclusive, October 29 Deardoff A.V., (1992) "Welfare Effects of World Patent Protection" Economica, 59(233) February, 33-51 Desowitz, R.S., (1991) “The Malaria Capers: Tales of Parasites and People” New York: W. W. Norton DiMasi, J.A., Hansen, R.W., and Grabowski, H.G., (2003) "The Price of Innovation: New Estimates of Drug Development Costs," Journal of Health Economics, 22(2) March, 151-85. Diwan, I., and Rodrik, D., (1991) "Patents, Appropriate Technology and North-South Trade" Journal of International Economics, 30(1-2) February, 27-47 Global Alliance for Vaccines and Immunization (GAVI) (2004) “Health, Immunization, and Economic Growth, Research Briefing #2, Vaccines are Cost-effective: A Summary of Recent Research” Glennerster R., Kremer, M., and Williams, H., (2006) “Creating Markets for Vaccines” Innovations, Winter pp: 67-79 Grabowski, H., (2003) “Increasing R&D Incentives for Neglected Diseases – Lessons from the Orphan Drug Act” Durham: Duke University. Helpman, E., (1993) "Innovation, Imitation and Intellectual Property Rights," Econometrica, 61(6) November, 1247- 1280. Kremer, M., (2000) “Creating Markets for New Vaccines. Part I: rationale” Cambridge: Harvard University, The Brookings Institution and NBER. Lanjouw, J.O., (2002) “A Patent Policy for Global Diseases: US and International Legal Issues” Harvard Journal of Law and Technology 16(1):85-124. _______, (2004) Outline of the foreign filing license approach. Washington: Brookings Institution. _______, and Cockburn, I.M., (2001) "New Pills for Poor People? Empirical Evidence after GATT" World Development, 29(2) February, 265-289 _______, and MacLeod, M., (2005) “Statistical Trends in Pharmaceutical Research for Poor Countries” The Economic and Political Weekly, Forthcoming Levin, C.T., Klevorick, A.K., Nelson, R.R., and Winter, S.G. (1987) “Appropriating the Returns From Industrial R&D” Brookings Papers on Economic Activity, 3: pp. 783-820 Lichtenberg, F., (2005) "Pharmaceutical Innovation and the Burden of Disease in Developing and Developed Countries" Journal of Medicine and Philosophy 30(6), December Mansfield, E., (1986) “Patents and Innovation: An Empirical Study,” Management Science, 31 Neumann P et al.(2000) “Are Pharmaceuticals Cost-Effective? A Review of the Evidence.” Health Affairs , 19(2): 92-109. Pécoul, B., Chirac, P., Trouiller P., Pinel, J., (1999) “Access to Essential Drugs in Poor Countries: A Lost Battle?” Journal of American Medical Association, 281 PRPP., (2005) “New EU Approaches to Funding R&D for Neglected Diseases” London: Pharmaceutical R&D Policy Project. Presentation by Mary Moran Reich M, (2000) “Public-private Partnerships for Public Health”, Nature Medicine, June, Vol. 6(6) pp: 617-620. Scherer, F.M., (2002) "A Note on Global Welfare in Pharmaceutical Patenting" Federal Reserve Bank of Philadelphia Working Paper No 03-11 _______, and Watal, J., (2002) "Post-TRIPS Options for Access to Patented Medicines in Developing Nations" WHO Hosjbor Conference Background Paper. Schumpeter J (1942). Capitalism, Socialism, and Democracy. Harper & Row, New York So, A., Rai, Arti, K., and Cook-Deegan, Robert M. (2005) Intellectual Property Rights and Technology Transfer: Enabling Access for Developing Countries (Commissioned Report, World Health Organization). Taylor, C.T., Silberston, Z.A., (1973) “The Economic Impact of the Patent System” Cambridge, England: Cambridge University Press Towse, A., Mestre-Ferrandiz J., and Renowden, O., (2004). Estimates of the Medium-term Financial Resource Needs for Development of Pharmaceuticals to Combat ‘Neglected Diseases’. Geneva: The initiative on Public-Private Partnerships for Health, Global Forum for Health Research. 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Table 1: Diseases of Low- and Middle-income Countries

Country Share
of Total DALYs
Notes: DALYs are estimates of years of life lost or lived with a disability, adjusted for its severity. Source: Lanjouw and MacLeod (2005) Table 2: Major Public Private Partnerships
European Partnership Project on Tobacco Dependence

Global Alliance for TB Drug Development

Global Alliance to Eliminate Lymphatic Filariasis

Global Alliance to Eliminate Leprosy

Global Alliance for Vaccines and Immunization

Global Elimination of Blinding Trachoma

Global Fire Fighting Partnership
Global Partnerships for Healthy Aging

Global Polio Eradication Initiative

Global School Health Initiative

Multilateral Initiative on Malaria

Medicines for Malaria Venture

Partnership for Parasite Control

Roll Back Malaria

Stop TB Initiative

UNAIDS/Industry Drug Access Initiative
Source Public-Private Partnerships for Public Health Michael R. Reich


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