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Trade deals are threatening generic drugs — we need new ways to incentivise affordable drug development, says health expert Daniele Dionisio.
Just under three billion people live on less than US$2 per day, in resource-limited countries where key medicines protected by patents are unaffordable.
Free-trade deals, such as the Trans-Pacific Partnership Agreement, and governments adopting intellectual property (IP) policies that favour the brand pharmaceutical sector are also threatening the trade of legitimate generic medicines.
In addition, India’s obligations to the World Trade Organization (WTO) prevent local companies from making generics for medicines introduced since 2005. Despite the country‘s recent decision forcing a drug manufacturer to license a generic cancer drug, these developments threaten the supply of generic medicines from India that serve as a lifeline to resource-limited countries.
To ensure long-term access to medicines, the WHO has called for operational models to finance research and development (R&D) for diseases of the poor.  But any one model will not be enough to ensure the availability of life-saving drugs.
The WHO’s models include direct grants, equitable licensing, pooled funds, prizes and patent pools, collectively called ‘best fitting’ models. They also include ‘less well fitting’ models such as priority review vouchers and a health impact fund.
With direct grants, for example, small- and medium-sized companies in developing countries are given funds to develop a product to the stage where they can more easily find other funders to take it to later stages of development.
Equitable licensing aims to ensure that medicines arising from public funding are licensed to make them affordable to the poor. Pooled funds aim to provide, on a long-term basis, funding to research organisations from sources including taxes or bonds. And prizes are rewards for developing a product or for completing a step in the R&D process.
As part of these recommendations, the WHO strongly insists that patent pools are established, where a number of patents by different owners are brought together and made available on a nonexclusive basis to generic companies.
The Medicines Patent Pool (or the Pool), is a major commitment to implementing this idea. Founded and financed by UNITAID and backed by the WHO, UNAIDS, the Global Fund, and the Group of 8, the Pool is focusing on cutting-edge antiretrovirals (ARVs) for HIV.
The Pool seeks to negotiate with patent holders for voluntary licences (VLs) on their ARV patents against the payment of royalties. Expected benefits include increased competition and affordable prices for generic ARVs licensed through the Pool. 
A need for universal buy-in
The Pool has signed two VLs with Gilead Sciences and the US National Institutes of Health, and is in talks with Boehringer-Ingelheim, Bristol-Myers Squibb, Roche, Sequoia Pharmaceuticals and ViiV Healthcare (a joint venture of GlaxoSmithKline and Pfizer). Meanwhile, generic companies have begun to take licences from it.
However, Merck and Abbott are not currently in negotiation with the Pool. And in December 2011 Johnson & Johnson said it would not license patents of its breakthrough ARVs for use through the Pool.
This is concerning because the participation of these companies in the Pool is necessary for generic companies to deliver appropriate ARVs formulations.
And it serves as a caution that, despite its promises and successes, the Pool is unlikely to be a self-sufficient solution — and this applies equally to all other models for financing drug R&D.
Towards a transaction tax
A combination of two or more models will be needed to ensure that the outputs of R&D, innovation and access are available without restrictions. To achieve that goal, all models should complement current IP regimes and include partnerships, open source and needs-driven rather than market-driven rules.
Product development partnerships (PDPs) meet these requirements. They provide a framework for cooperation between the public sector (governments, academic and research institutions) and the private sector (companies, nongovernmental organisations and philanthropic organisations).
PDPs already established include partnerships between the Drugs for Neglected Diseases initiative (DNDi) and companies Sanofi Aventis and Farmanguinhos/Fiocruz — which have produced innovative antimalarial products.
Similarly, a partnership between DNDi and Merck aims to roll out medicines for leishmaniasis and Chagas disease, and the TB Alliance has teamed up with Johnson & Johnson to develop new tuberculosis drugs.
PDPs enable both industry and governments to do what they could not alone. And their sustainability would be enhanced if governments financed them more effectively.
The foundation of all viable models is sustainable financing mechanisms, and we must find innovative funding sources.
A financial transaction tax (FTT), which aims to support development and health needs, is now under international debate, and has been endorsed by the EU Commission. A 0.05-per cent tax on all financial market transactions could raise €209 billion (US$273 billion) a year in the EU alone and would be sufficient to finance development priorities in the region and internationally. 
The FTT should be introduced, enforced and implemented worldwide. It would be instrumental, alongside the models proposed by the WHO, to promoting R&D to develop medicines for diseases of the poor.
Daniele Dionisio is head of the research project Geopolitics, Public Health and Access to Medicines (GESPAM); a member of the European Parliament Working Group on Innovation, Access to Medicines and Poverty-Related Diseases; and an advisor for the Italian Society for Infectious and Tropical Diseases (SIMIT). He can be contacted at email@example.com
 Draft WHO HIV strategy 2011–2015 (WHO, 2011)
 WHO, UNICEF, UNAIDS. The Progress report 2011: Global HIV/AIDS response (WHO, 2011)
 MEPs adopt report on EU-wide financial transaction tax (Parliament Magazine, 2011)