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| Author: | Sebastian Mallaby, Director of the Maurice R. Greenberg Center for Geoeconomic Studies and Paul A. Volcker Senior Fellow for International Economics |
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May/June 2007
Council on Foreign Relations
My favorite underappreciated idea is the brainchild of Jean O. Lanjouw, a University of California, Berkeley, economist who died tragically two years ago. It is an idea that would improve access to medicines in poor countries, cost precisely nothing, and, unlike most plans to improve the world, involve no treaties, summits, or complex international coordination.
During the last half-decade or so, the world has made progress on two fronts of the problem of medical access in poor countries. The first addresses the problem that, even though vaccines for diseases such as polio, yellow fever, and hepatitis B have been around for ages, poor countries can’t afford to buy them, and, during the 1990s, vaccine makers stopped manufacturing them. The solution to this lack of consumer power is costly but conceptually simple: Led by the Bill and Melinda Gates Foundation, aid donors have begun to put money into a vaccine-purchase fund.
The second area of progress concerns the lack of incentive for drug companies to invent new cures for diseases that affect the poor. Practically all of the world’s drug development addresses the health concerns of rich people: Of the 1,233 drugs licensed worldwide between 1975 and 1997, only 13 targeted tropical diseases. The solution here is “advance market commitments,” wherein donors promise to buy a drug that tackles a “poor disease,” committing to purchase a set number of doses at a set price. The first such promise was issued in February. Donors declared they would buy drugs to treat pneumococcal disease, a major cause of pneumonia and meningitis that kills 1.6 million people every year.
Lanjouw’s idea tackles a third part of the drug-access puzzle. It is aimed at diseases that affect everyone in rich and poor countries alike. For these conditions—heart disease, cancer, diabetes—there is plenty of incentive to invent new drugs but little likelihood that any of them will reach poor patients. The drugs are protected by patents, and, thanks to U.S. trade policy, the patents uphold the inventors’ monopolies even in developing countries, meaning that nobody can afford them there.
Enter the Lanjouw solution: Amend U.S. patent law so that, as a condition of receiving patent protection in the U.S. market, a drug inventor must renounce patent rights in countries with a per capita income of less than, say, $1,000 per year. It would not destroy incentives for drug invention; innovators would still get monopoly profits in rich markets. Indeed, the patent rights that drug firms would give up are worth nothing to them, because leading cancer cures are not marketed in poor countries.
Lanjouw proposed this tweak to U.S. patent law about six years ago, at around the same time that the advance market commitment idea was first floated. But whereas advance market commitments have become a reality, Lanjouw’s proposal never took off. At first, drug companies didn’t want to hear about anything that diluted intellectual-property rights, even rights that had no value. Then the Gates Foundation, the main backer of innovative ideas on global health policy, proved similarly leery of the idea—apparently in the mistaken belief that conditions such as heart disease are rare in poor countries. And then, in 2005, Lanjouw contracted a particularly rare kind of cancer.
Rare diseases don’t attract much drug-company investment, so cures tend to be scarce. It is a logic that Jenny understood better than anyone.
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