Tools to Incentivize Research and Development for Pharmaceuticals

Pull Mechanisms and Differential Pricing

Authors

  • Kishen Anand
  • Luca Maini Mentor, University of North Carolina at Chapel Hill

DOI:

https://doi.org/10.47611/jsrhs.v10i3.1569

Keywords:

Pharmaceutical Development, Pull Mechanisms for Development, Healthcare Economics, Differential Pricing

Abstract

This article is a review of the current state of pull mechanisms and differential pricing in relation to incentivizing pharmaceutical research and development. In many developing nations, there is a shortage of pharmaceuticals for their specific infectious diseases because these markets are not always viewed as profitable to firms. To combat this issue, governments and organizations need to work with firms to incentivize research and development for medications and vaccines for these diseases. Pull mechanisms are one way to achieve this goal as they only reward successful products; through the use of tax credits, patent buyouts, purchase agreements, or a combination, we could reward firms which makes the market more attractive to other developers too. We could also use differential pricing for the same purpose. Allowing firms to charge varied prices based on specific factors like a country's real gross domestic product per capita would increase access to needed pharmaceuticals while still keeping the market attractive. The synthesis of current literature shows that although these strategies have been moderately successful on their own, such as with the GAVI fund, they have also failed because of a lack of support, such as with the Vaccines for the New Millennium Act. Therefore, we might need to develop new strategies, such as combining policies, to spur innovation and development.

Downloads

Download data is not yet available.

References or Bibliography

Antiretroviral therapy coverage (% of people living with HIV). (2021, March). https://databank.worldbank.org/source/wdi-database-archives-(beta)#.

Cooper, M. A., & Shlaes, D. (2011). Fix the antibiotics pipeline. Nature, 472(7341), 32–32. https://doi.org/10.1038/472032a

Cuckler, G. A., Sisko, A. M., Poisal, J. A., Keehan, S. P., Smith, S. D., Madison, A. J., … Hardesty, J. C. (2018). National Health Expenditure Projections, 2017–26: Despite Uncertainty, Fundamentals Primarily Drive Spending Growth. Health Affairs, 37(3), 482–492. https://doi.org/10.1377/hlthaff.2017.1655

Danzon, P. M. (1998). The Economics of Parallel Trade. PharmacoEconomics, 13(3), 293–304. https://doi.org/10.2165/00019053-199813030-00004

Danzon, P. M. (2018). Differential Pricing of Pharmaceuticals: Theory, Evidence and Emerging Issues. PharmacoEconomics, 36(12), 1395–1405. https://doi.org/10.1007/s40273-018-0696-4

Denti , V., & Beck, M. (2021). (rep.). ADVANCE MARKET COMMITMENT FOR PNEUMOCOCCAL VACCINES. Retrieved from https://www.gavi.org/investing-gavi/innovative-financing/pneumococcal-amc

Fisher, W. W., & Syed, T. (2014, January). Infection: The Health Crisis in the Developing World and What We Should Do About It. Infection (Fisher & Syed). https://cyber.harvard.edu/people/tfisher/Infection.htm.

Gilchrist, S. (2009). Pull Mechanisms for Value-Added Technologies for Vaccines: An Evaluation of the Issues Influencing Vaccine Producer Willingness to Advance, Adopt, and Commercialize Value-Added Technologies for Vaccines for LowIncome and Lower-Middle-Income Country Markets. PATH.

Gonsalves, G. (2019, October 30). Statement on the Vaccines for the New Millennium Act of 2000. Treatment Action Group. https://www.treatmentactiongroup.org/statement/statement-on-the-vaccines-for-the-new-millennium-act-of-2000/.

Kremer, M. (1998). Patent Buyouts: A Mechanism for Encouraging Innovation. The Quarterly Journal of Economics, 113(4), 1137–1167. https://doi.org/10.1162/003355398555865

Martins-Melo, F. R., Ramos, A. N., Alencar, C. H., & Heukelbach, J. (2015). Mortality from neglected tropical diseases in Brazil, 2000–2011. Bulletin of the World Health Organization, 94(2), 103–110. https://doi.org/10.2471/blt.15.152363

Nathan, C., & Goldberg, F. M. (2005). The profit problem in antibiotic R&D. Nature Reviews Drug Discovery, 4(11), 887–891. https://doi.org/10.1038/nrd1878

Pneumococcal AMC. Gavi, the Vaccine Alliance. (2020). https://www.gavi.org/investing-gavi/innovative-financing/pneumococcal-amc.

Pneumococcal Vaccine is Launched in Africa, But Are Donors Getting a Fair Deal from Companies? Doctors Without Borders - USA. (2011, February 23). https://www.doctorswithoutborders.org/what-we-do/news-stories/news/pneumococcal-vaccine-launched-africa-are-donors-getting-fair-deal.

Rao, A. (2011). (rep.). R&D Tax Credits A Tool to Advance Global Health Technologies? (pp. 20–22). Washington, DC: Results for Development Institute.

Scherer, F. M. (2004). The Pharmaceutical Industry — Prices and Progress. New England Journal of Medicine, 351(9), 927–932. https://doi.org/10.1056/nejmhpr040117

Schoonveld, E. (2019, December 9). International Price Referencing: Stacking the Deck with Lower Income Economies. PharmExec. https://www.pharmexec.com/view/international-price-referencing-stacking-deck-lower-income-economies.

Siagian, R. C., & Ayuningtyas, D. (2019). Gap analysis for drug development policy-making: An attempt to close the gap between policy and its implementation. PLOS ONE, 14(8). https://doi.org/10.1371/journal.pone.0220605

Snyder, C. M., Hoyt, K., Gouglas, D., Johnston, T., & Robinson, J. (2020). Designing Pull Funding For A COVID-19 Vaccine. Health Affairs, 39(9), 1633–1642. https://doi.org/10.1377/hlthaff.2020.00646

Sonderholm, J. (2009). Wild-Card Patent Extensions as a Means to Incentivize Research and Development of Antibiotics. Journal of Law, Medicine & Ethics, 37(2), 240–246. https://doi.org/10.1111/j.1748-720x.2009.00368.x

Webber, D., & Kremer, M. (2001). Perspectives on stimulating industrial research and development for neglected infectious diseases. Bulletin of the World Health Organization, 735–741.

World Health Organization. (2012, November 23). Active pharmaceutical ingredients of ARV drugs. World Health Organization. https://www.who.int/hiv/amds/api/en/.

Yadav, P. (2010). Differential pricing for pharmaceuticals: review of current knowledge, new findings and ideas for action. Great Britain, Dept. for International Development.

Published

10-10-2021

How to Cite

Anand, K., & Maini, L. (2021). Tools to Incentivize Research and Development for Pharmaceuticals: Pull Mechanisms and Differential Pricing. Journal of Student Research, 10(3). https://doi.org/10.47611/jsrhs.v10i3.1569

Issue

Section

HS Review Articles