Thread by @RazaWerner

Critics of #TRIPSwaiver for #covid19 #vaccines stress importance of IPR protection for pharma industry and see future #innovation at risk. But the empirical evidence gives few indications of this. This thread explains why & proposes alternative innovation incentives.

Empirical evidence that increased patent protection leads to more innovation justifying its social costs is surprisingly thin: Little support in the literature that higher patent protection increases rate of innovation. Full references of citations: ÖFSE WorkingPaper linked below

Some studies even found statistically significant negative relationship between patent protection & productivity growth. Led to sharp increase in transaction costs&legal disputes -->discourages smaller firms&start-ups -->reduces technological innovation

IPR regime leads to rent-seeking behaviour on the part of big pharma companies (e.g. patent evergreening). From economic point of view, this represents costs without social benefits and thus a waste (@JosephEStiglitz 2008).

At around 40 % pharma companies’ expenses for advertising&marketing are on average twice as high as those for research&development. However, pharma industry belongs to sectors with highest profits (Ledley et al. 2020).

And lion's share of R&D expenditures goes into development of "me-too" drugs: only slightly varied drugs based on known active ingredients with no or at best little additional therapeutic value. Only 1/4-1/3 goes into development of actually new active ingredients (Angell 2004).

Total R&D spending by global pharma industry increased by around 25 % from 2007 to 2017 (Evaluate Pharma 2017: 19). But stagnation in approval of novel therapeutically valuable drugs indicates ineffective innovation system: only about 31% (doi.org/10.1136/bmj.m3…).

Most real innovation is happening in start-ups & small technology companies, receives massive public support and is often done in coop. with universities. Big pharma companies then exploit research results or resulting treatments. (-->See especially @MazzucatoM’s work.)

-->No clear link between increased IPR protection & medical innovation. Private R&D money mainly flows into redundant research with little added health value. New therapies focus on diseases mainly prevalent in higher income countries with purchasing power (e.g. #CancerResearch).

Research expenditures for diseases mainly affecting #GlobalSouth are almost negligible. Also coronaviruses were long neglected: Only 4.6% of R&D spending on emerging infectious diseases (see figure) and mainly publicly funded, no significant effort by pharma companies.

In total, at around USD 4 billion p.a., R&D for neglected diseases accounts for only about 2% of total R&D spending in the global pharmaceutical sector. Funding is mainly driven by US public agencies. Share of pharma industry was only 17% in 2018.

With “emerging infectious diseases”(Ebola, Zika, Lassa fever, MERS, SARS, #Covid19) its similar. R&D expenditure increased significantly since 2015, but remains modest ≈$1 bil. (2018). Pharma’s commitment declined strongly over this period ≈only 8% of total expenditure in 2018.

Global enforcement of high intellectual property rights protection standards since 1995 through #TRIPS has not accelerated pharmaceutical innovation for these diseases. #COVID19 shows:only with high political pressure&public funds,pharma innovation can happen quickly&successfully

Main lesson: Major reform of pharma innovation system necessary!
Alternatives w/o downsides of economically&politically problematic monopoly power include: Incentives via public awards,value-based pricing,public funding of clinical research,product development partnerships (PEPs)

Continue reading in my ÖFSE Briefing Paper “COVID-19 and the failure of pharmaceutical innovation for the Global South: The example of "neglected diseases" and emerging infectious diseases”:

oefse.at/publikationen/…

@GFelbermayr @MartinBraml @MSchularick @_HassanF @sanjaygreddy @Correa_CEIDIE @DeanBaker13 @MSF @Jayati1609 @MazzucatoM @JosephEStiglitz @WallachLori @nothilfe