GSK’S Andrew Witty: Addressing Neglected Tropical Diseases and global health issues-“The pharmaceutical patent pool”

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Every day, Non Governmental Organization NGOs is confronted with the lack of access to adequate or affordable medical tools in the field. They face two major challenges the high cost of existing medicines on the one hand, and the absence of appropriate or effective treatments for many of the diseases affecting our patients on the other, we are talking about Neglected Tropical Disease NTD in the Least developed Countries LDCs.
Andrew Witty, Chief Executive Officer of Glaxo Smith Klein (GSK) delivered a speech at the Harvard Business School in Boston on February 2009 entitled “Big pharma a catalyst for Change” focused on two issues: a) promoting innovation to prevent or treat NTDs in the world’s Least Developed Countries by creating a “pharmaceutical patent pool”; b) improving the access to medicine in the poorer countries by lowering the prices of GSK’s medicines.
In deed, we are assisting a radical change in pharma Business model, we are moving from conflict to collaboration through the Medicines Patent Pool in the hope that it speed up access to newer medicines, and boost initiatives that make use of alternative financing mechanisms in order to develop new, more appropriate treatments that respond to medical needs.
On the other hand the pricing strategy dilemma facing the generic manufacturers and the non inclusion of HIV which is a major neglected disease in LDCs in the patent pool may compromise the success of such business model.
In order to deal with that two issues, GSK should include HIV drugs in their patent pool as other manufacturers and NGO are doing, and concerning the pricing strategy they should emphasize on the high quality of the original drug mandatory to eradicate this NTDs and communicate more on the fact that GSK will invest 20% of these drugs profit to improve the infrastructure of these LDCs.

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GSK’S Andrew Witty: Addressing Neglected Tropical Diseases and global health issues-“The pharmaceutical patent pool”

  1. 1. Chair of Therapeutic Innovation ESSEC Business School Paris Singapore GSK’S Andrew Witty: Addressing Neglected Tropical Diseases and global health issues-“The pharmaceutical patent pool” Jemaa Nejmeddine
  2. 2. Table of contents Sommaire Table of contents ..................................................................................................................................... 1 Executive Summary ................................................................................................................................. 2 Introduction :........................................................................................................................................... 3 Intellectual property protection and the classical R&D business model: ............................................... 4 A new Business Model based on managing the Intelectual Prperty and the creation of Patent Pool: . 5 Pricing Strategy:....................................................................................................................................... 6 The non inclusion of HIV in this program: ............................................................................................... 7 CONCLUSION ........................................................................................................................................... 8
  3. 3. Executive Summary Every day, Non Governmental Organization NGOs is confronted with the lack of access to adequate or affordable medical tools in the field. They face two major challenges the high cost of existing medicines on the one hand, and the absence of appropriate or effective treatments for many of the diseases affecting our patients on the other, we are talking about Neglected Tropical Disease NTD in the Least developed Countries LDCs. Andrew Witty, Chief Executive Officer of Glaxo Smith Klein (GSK) delivered a speech at the Harvard Business School in Boston on February 2009 entitled “Big pharma a catalyst for Change” focused on two issues: a) promoting innovation to prevent or treat NTDs in the world’s Least Developed Countries by creating a “pharmaceutical patent pool”; b) improving the access to medicine in the poorer countries by lowering the prices of GSK’s medicines. In deed, we are assisting a radical change in pharma Business model, we are moving from conflict to collaboration through the Medicines Patent Pool in the hope that it speed up access to newer medicines, and boost initiatives that make use of alternative financing mechanisms in order to develop new, more appropriate treatments that respond to medical needs. On the other hand the pricing strategy dilemma facing the generic manufacturers and the non inclusion of HIV which is a major neglected disease in LDCs in the patent pool may compromise the success of such business model. In order to deal with that two issues, GSK should include HIV drugs in their patent pool as other manufacturers and NGO are doing, and concerning the pricing strategy they should emphasize on the high quality of the original drug mandatory to eradicate this NTDs and communicate more on the fact that GSK will invest 20% of these drugs profit to improve the infrastructure of these LDCs.
  4. 4. Introduction : According to the World Health Organization the geographical region with high prevalence of Neglected Tropical Diseases NTDs shared common features, such as low economic development, high population density and poor access to healthcare in general. Lack of trained public health professionals added further difficulty to the mass administration of medicines that were critical to the eradication of these diseases. Another common feature was the lack of effective and safe medicines for these diseases, and if such drugs were available they were toxic, expensive or not available due to poor supply or distribution channels. Those countries have a Least Developed Countries LDCs status and the WHO have listed 34 in Africa ,15 in Asia and one in Latin America. The LDCs population was estimated to be 750 millions in 2005 and expected to be one billion by 2015. A study published in 2002 showed that research and development for NTDs treatment was left behind other diseases such as central nervous system diseases and cancer, indeed, of the 1393 new chemical entities NCEs marketed during 1973-1999, only 16 were for tropical diseases. In February 2009,Andrew Witty, chief executive officer (CEO) of GlaxoSmithKlein (GSK) had delivered a speech in Harvard Business School Boston entitled “ Big Pharma as a Catalyst for Change” focused on two issues: the first one was promoting innovation to prevent or treat neglected tropical disease in the world’s least developed countries by creating a pharmaceutical patent pool, and the second one was improving the access to medicine in the poorer countries by lowering the prices of the GSK’s medicines. The patent pool was formed to aid in the discovery and the development of new medicines and to bridge the gap in the treatment of 16 neglected tropical diseases NTD, as defined in the USFDA’S voucher program. The patent pool would facilitate access to compounds and technologies for organizations that wanted to conduct treatment for these diseases. Was it the right use of GSK’s intellectual property? Is the Business model for the patent pool sustainable for pharmaceutical industry? The pricing strategy of GSK consisted at reducing prices for patented medicines in Least Developed Countries so that they will be no higher than 25 % of the developed world and GSK will reinvest 20 % of the profit made by selling medicines in LDCS in infrastructure projects. In the middle income countries the prices will be more flexible, to reflect more closely a country’s ability to pay. The critics stressed that the price reduction of 75% was no match for the prices of generic drugs, it had also criticized the non inclusion of HIV/AID in this program. Will this pricing strategy works? Would the menace of HIV continue to dilute the focus on NTDs?
  5. 5. Intellectual property protection and the classical R&D business model: “Intellectual property in the form of patents should be thought of as a very useful tool with a relatively narrow applicability rather than as a means for owning ever larger swathes of human knowledge which is the way it is being driven at the moment” Sir John Sulston, 2002 Nobel Prize for Physiology or Medicine (2008) The reason of existing for the patent system is based on the assumption that granting temporary monopolies to the inventor encourages innovation by allowing the inventor to cover R&D costs. The pharmaceutical industry argues that without patents there would be no innovation at all, the world would have been deprived of the innovative medicines which have saved countless lives. In the other hand one of the most important innovations of the last century was the polio vaccine. When Jonas Salk was asked who would own the patent, he replied: “Who owns my polio vaccine? The people! Could you patent the sun?” He considered his invention as a public good. There have always been fierce debates between the proponents of the patent system and its critics. However the question is: how strong is the evidence that patent protection in the pharmaceutical field leads to innovation that creates health benefits? This question is particularly pertinent now that patent standards have been globalised and the societal costs of the system are felt everywhere, with especially important consequences for the developing world. Another big issue is that the majority of newly developed medicines were “me-too” drugs, which are substantially similar to existing drugs, are less risky than NME drugs to develop, and offer little in the way of therapeutic breakthroughs. In April 2005, a study conducted by “La Revue Prescrire”, concluded that 68% of the 3,096 new products approved in France between 1981 and 2004 offered nothing new over previously available medicines. The different reasons responsible for such a decline in innovation are: * Regulatory uncertainty over what the health authorities would accept as safe and effective, *The business environment that favored the development of costly blockbuster drugs and less risky “me-too” at the expense of the development of innovative but less profitable products, * The abandonment of drug development efforts because of mergers in the sector In fact the priority setting is dictated by the need to answer to the shareholders. This leads to less risky behavior and conservatism in R&D. Companies prefer to invest in line extensions and me-too products, rather than riskier but more innovative pharmaceutical research such as drugs treating NTDs.
  6. 6. A new Business Model based on managing the Intelectual Prperty and the creation of Patent Pool: Nowadays, it is possible to manage intellectual property collectively through patent pooling. A patent pool is created when a number of patent rights, held by different owners (companies, universities, government institutions), are brought together (pooled) and made available on a non-exclusive basis to manufacturers and distributors of medicines against the payment of royalties. Third parties (e.g. generic manufactures of drugs) can make use of the patents against the payment of a royalty. Potential benefits of patent pooling include: *Elimination of blocking patents; * The potential to facilitate innovation and development; and * The potential to facilitate technology transfer and a sustainable access in the developing world I think that leaders are not fully exploiting the power of openness in their businesses and institutions. In fact, when it comes to innovation, competitive advantage and organizational success, openness is rarely the first word one would use to describe Pharmaceurical companies. However we assisting a radical change in this sector and the companies are opening up their innovation processes and treating their customers and partners as valuable sources of intelligence and new ideas. And rather than go to extraordinary lengths to control and protect proprietary resources and innovations, a growing number of companies are sharing intellectual property and releasing patents in the aim to accelerate research, foster relationships and stimulate progress in other areas where they will see profits. All this will conduct a shift in the way organizations from companies to social movements. Companies like GSK are strategically releasing patents and leading the charge toward more open models of drug development that will increase research productivity and stimulate medical progress. The crisis of innovation in drug development we are living where the basic model for inventing and commercializing potentially life-saving medications is broken and failing badly. The problems there have largely to do with a highly risk-averse that comes at the expense of opportunities to co-develop early-stage technology tools, establish data standards, share clinical trial data or pursue other forms of collaboration that could foster the productivity of the entire industry. It is all about collaboration, we are leaving a radical change in different disciplines in which cooperation, collective action and complex interdependences play a more important role. And the role of competition is shrinking.
  7. 7. A good story teller Howard Rheingold said:”Human have lived for much longer than the approximately 10,000 years of settled agricultural civilization in small family groups. Nomadic hunters bring down rabbits, gathering food. The form of wealth in those days was enough food to stay alive. But at some point, they banded together to hunt bigger game. And we don't know exactly how they did this, although they must have solved some collective action problems; it only makes sense that you can't hunt mastodons “. So the key message of pool patenting for the pharma industry is to stop fighting each other and being in competition and concentrate our effort to reach one unique goal, a noble goal which is providing an accessible and affordable healthcare, in a few words it’s about collaborating to save people lives.
  8. 8. Pricing Strategy: An estimated 30% of the world population does not have access to the medicines they need (WHO 2004). We have elicited the different reason for this situation, but price is a major issue. A Médecins Sans Frontières (MSF) survey of 122 people on AIDS treatment in Nigeria found that 72% had experienced treatment interruption, with financial difficulties as the leading cause. Before Trade Related Intellectual Property rules TRIPS, many developing countries did not grant pharmaceutical product patents and they limited patent terms, which allowed a generic industry and competition to flourish. Generic companies made relatively new products available in developing countries; these products have been costly or unavailable had they been patent-protected. Developing countries have for many years relied on countries such as India, Egypt, Israel, Jordan, Brazil, and Argentina for their supply of affordable medicines. We can see in this figure the huge difference in pricing between patent holders in the US and generic manufacturers in India: We can see that the average of Indian price represent from 4 to 13.2 % of the US price. Hence, GSK commitment to reduce the price in the Least Developing Countries LDCs for no higher than 25% is no match for the prices of generic drugs. Still the good points for GSK is that they can play the card of the high quality of the original drug especially regarding such critical tropical diseases, moreover the fact that they will reinvest 20 % of the profit to improve the infrastructure of these LDCs will be very welcome.
  9. 9. The non inclusion of HIV in this program: In the late 90s, when people in the LDCs discovered they had HIV, they was told that a cure did not exist. AIDS, he heard, was lethal, and treatment was not offered. This was at a time that treatment actually existed in rich countries. AIDS had become a chronic disease and people in Europe, in North America, were living with HIV a healthy lives. Not so for people in LDCs, they weren’t rich enough. Prices for antiretroviral treatment for HIV costs 12000$ per patient per year while generic makers offers it for 350$ per patient per year, and today it costs 60$ per year per patient. Today 34 millions are infected with HIV and 8 million people have access to antiretroviral drugs. Never has the number of infected people been so high, but actually this is good news, because what it means is people stop dying. People who have access to these drugs stop dying. In 2010, the UNTAID established the first patent pool and this is no longer a fantasy because in august 2012, the Food and Drug administration FDA approved a new AIDS medication and the company, Gilead, that holds the patents, has licensed the intellectual property to the Medicines Patent Pool. The pool is already working today with generic manufacturers to make sure that this product can go to market at low cost where and when it is needed. This is unprecedented. This has never been done before. As we can see the HIV dilemma is an important part of the puzzle when we talk about collaboration and the success of a patent pool business model, I think Andrew Witty should include the HIV treatment in his program because it’s still one of the most important neglected disease where large gaps still existed with regards to drug access. Otherwise, crtics will query about the GSK patent pool program and its true purpose.
  10. 10. CONCLUSION We are assisting to a radical change in pharmaceutical industry business model; it’s all about the goodwill of these companies to make that happen. Those companies that understand that it is in the interest, not only in the interest of the global good, but also in their own interest, to move from conflict to collaboration, and through the Medicines Patent Pool they can make that happen. The solution offered by the patent pool aims to speed up access to newer medicines, and boost initiatives that make use of alternative financing mechanisms in order to develop new, more appropriate treatments that respond to medical needs. This business model is affecting all kind of companies: Wikipedia which has used thousands of volunteers to create a free encyclopedia with a million and a half articles in 200 languages in just a couple of years. Google enriches itself by enriching thousands of bloggers by Adsense, Amazon has opened its Application Programming Interface to 60,000 developers, countless Amazon shops. ThinkCycle has enabled NGOs in developing countries to put up problems to be solved by design students around the world, including something that's being used for tsunami relief right now: it's a mechanism for rehydrating cholera victims that's so simple to use it, illiterates can be trained to use it. Why not it will not work for Pharmaceutical Industry ?

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