The Health Impact Fund: Creating Altruistic Motives for Pharmaceutical Companies

Lucy Chen


Drugs save lives and improve health when they are available, affordable, of good quality and are appropriately used. However, under the current incentive program that pharmaceutical companies operate under, millions of people all over the world are dying due to lack of access to proper medications. The problem is aggravated amongst the poor, who can barely afford basic human needs.
Right now, governments create incentive for pharmaceutical companies to develop new drugs by providing patents for innovations. A patent grants a company exclusive rights to the drug, and enables them to sell it at high prices. Pharmaceutical companies can profit tremendously through this scheme if the drug is in demand, but the ethical implications of this system are debatable.
Patent holders justify high prices by claiming that the high cost of pharmaceutical research and development prohibits them from lowering prices. Nonetheless, the patent system does not encourage companies to develop drugs for diseases that mainly affect the poor. There are billions of people in the world who to not have access to the resources that would allow them to have access to expensive new, life-saving medicines.
A complementary source of incentives and rewards for the development of new drugs may address this issue by providing a way to meet both the health needs of the people and monetary needs of pharmaceutical companies. The Health Impact Fund is a new global agency that creates this avenue by offering pharmaceutical innovators the option of being paid for their drug developments based on the health impact (i.e. number of lives that their product saves). In this way, HIF pulls research towards the drugs that can do the greatest good for the greatest number of people.  All patients, rich and poor, would benefit from innovation and marketing priorities geared toward health benefits rather than generating the most profit.
The HIF reward pool would be financed by national governments through taxes and other avenues. Each pharmaceutical company participating in the HIF would be given a share of the reward pool. In exchange, they would need to sell the medicine at no more than the lowest feasible cost of production and distribution, and offer free licensing for generic manufacture and sales.
For HIF to become a reality, this proposal will need to be examined in greater detail. Currently, HIF is planning the launch of a pilot project. The HIF reimbursement model is being tested using a specific drug product in a developing country in partnership with company partners in Sydney, London and Seattle. The Pilot will provide insight in the process of making the worldwide Health Impact Fund a reality.