Reimagining pharmaceutical innovation | Thomas Pogge at TEDxCanberra

Translator: Camille Martínez
Reviewer: Brian Greene I hope you’re all healthy, and I hope we will all remain healthy
for the indefinite future. But that hope is a little bit unrealistic, and so I’ve got a second back-up hope. The second back-up hope is that,
insofar as we have health problems, we will have good medicines
to take care of them. Medicines are very cheap to produce
and they’re very effective — much more pleasant, actually,
than the alternatives: hospitalization, operations,
emergency rooms, the morgue … None of these are good things. So we should be very grateful
that we have pharmacologists around, people who research these things
and develop new medicines. And we should be grateful
that we have a pharmaceutical industry that supports their activities. But there is a problem,
and you can tell from the fact that the pharmaceutical
industry isn’t well-loved. In fact, in terms of popularity, they rank
just about with the tobacco companies and the arms manufacturers. So that’s the problem
I want to talk with you about today. How would you organize
the pharmaceutical industry? If we did it all over again,
how would you do it? I think we would think
of three main principles. The first one is: we want patients to have access
to all the important medicines. Remember, these things
are very cheap to produce. So everybody in the world
should have access to all the important medicines. Secondly, we want innovative activities, the research and development
that pharmaceutical companies do, to track the diseases that are
the most important, the most damaging. We want them to aim
for the greatest health impact. And thirdly, we want
the whole system to be efficient. We want as little of the money
that goes into the system to go to waste, to go for overhead,
for red tape, and so on and so forth. Very simple three points. Now what about the existing system? I think it does poorly
on all these three counts. First, universal access: forget about it. The vast majority of human beings
do not have access to medicines, at least while they’re still under patent. There are extremely high markups,
and that’s the problem. The problem is that even though
these medicines are very cheap to produce, they cost a great amount of money
during the time that they’re under patent, and the reason for that is
that rich people can pay a lot of money. Pharmaceutical companies
have a temporary monopoly; they price for the rich,
they forget about the poor. The second problem is innovation. Again, we don’t focus on the diseases
that do the most damage, and that’s often put
into the phrase “the 10/90 gap.” Ten percent of all the money spent
on pharmaceutical research is focusing on diseases
that account for ninety percent of the global burden of disease. And vice versa — ninety percent
of the money is spent on diseases that account for only ten percent
of the global burden of disease. So there’s a huge mismatch between
where we spend the research money and where the greatest problems are. Now, both these problems — the problem with innovation
and the problem with access — have to do with this: the distribution of money in the world. It’s extremely unequal. The blue area here is the top quarter
of the human population. They have more than ninety percent
of the global household income. The bottom half of humanity,
on the other hand, has not even three percent
of global household income. So if you’re a pharmaceutical company
and you look for profit opportunities, you look at this sort of chart and say,
“Where’s the money? What am I going to research? Who am I going to provide with medicines?” And again, that is in the context
of there being only one way in which pharmaceutical companies
make money under the present system, that is, through patent-protected markups. That’s how they make their money,
through markups. And if you make money through markups, then obviously, you will go to where
the people have the most income. Now in terms of overall efficiency, the system also does very, very poorly. A lot of money goes
for lobbying politicians in order to extend patent periods —
to “evergreen,” as it’s called. Data exclusivity and so on. A lot of money goes for gaming, where brand-name companies pay generic
companies to delay entry, for example. A lot of money goes to take our patents
in all the different jurisdictions. Money goes – even larger
amounts – for litigation. They’re litigating endlessly — brand-name company
against brand-name company, brand-name company
against generic company … Enormous amounts go there. People say pharmaceutical companies
make a lot of profit. Well, yes and no; they do, but a lot of it
goes to these wasteful activities. Deadweight losses — I won’t
even tell you what they are, because it’s too complicated. But there’s also wasteful marketing. A lot of the money
that pharmaceutical companies make goes into advertising campaigns, trying to win favor with doctors, trying to persuade patients
to try this medicine. And these marketing battles,
of course, are a pure waste, because what one company spends
to get patients over to their drug, another company spends to win them back. And then there is counterfeiting
in the developing countries. A lot of the drugs there, often more than
fifty percent of what’s sold, are counterfeit drugs, where people say, “Because the drug is so expensive,
I can offer you a cheaper version.” But of course it’s not the real thing, it’s either diluted
or it’s completely inert. So on the whole, all the money
that is spent on pharmaceuticals — and it’s roughly a trillion dollars
now, per annum — much of that money
is absolutely going to waste, it’s not going to where
it should be going, namely, to the development
of new medicines and to the manufacturing
of ones that we already have. Now, many people think
that the solution to the problem is moral pressure
on pharmaceutical companies. And, sure — pharmaceutical companies
have moral obligations, just like we do. When we have to make a choice, often between having a little extra money
and saving a human life, we often feel that we have a duty
to spend the money and save the life. And why should pharmaceutical
companies be any different? But really, it isn’t realistic
to expect pharmaceutical companies to act as well as you
or maybe I might act. And the reason is threefold. One is that pharmaceutical companies
are bound to their shareholders. The executive of such a company
wouldn’t last very long if he gave a lot of money away,
or she, for good purposes, and thereby lost money
for the shareholders. They would be replaced. Also, pharmaceutical companies stand
in fierce competition with one another, and if you do more, if you are nicer
than the other company, sooner or later, you’ll be
driven out of the market. You will not survive. The other company will gain market share. And finally, remember — the entire industry
is dependent for its income on one thing and one thing only: markups. And ultimately, you have
to be sustainable. If you spend a lot of money
on helping poor people and you don’t get paid for it,
and you lose this money; you cannot continue
with your innovative activities. So for these reasons,
it’s just unrealistic to expect that pharmaceutical companies
will solve the problem on moral grounds. Who, then, should solve the problem? I suggest it has to be us. We, citizens and politicians,
have to do better in terms of regulating
the pharmaceutical industry, focusing them,
giving them the right incentives, focusing them on the problems
that really matter. The potential gains here are enormous. About one third of all deaths
each day, each year, are due to the diseases of poverty
in the developing world. Fifty thousand people every day
die prematurely from these diseases. And that’s not even counting
all the diseases that we know only too well
in the rich countries: cancer, heart disease and so on. Again, poor people die often much earlier, because they don’t have good medical care,
including good medicines. And even in rich countries, many patients
are not getting the best medicine. That’s sometimes due to the fact
that insurance companies won’t cover it, because the price
is so absolutely ridiculous. And it’s also due, sometimes, to the fact that doctors
and patients are falsely influenced by advertising campaigns
of pharmaceutical companies. So what can we do?
How can we change the system? I want to show you a way
in which we can better incentivize pharmaceutical innovation and
the provision [of] medicines to poor people and rich alike. And that is the Health Impact Fund. The Health Impact Fund is basically
opening up the second track with which pharmaceutical innovators
can be rewarded for their activities. They have a choice. They can either go with the old system,
with patent-protected markups, or they can go with the new system, being rewarded on the basis
of the health impact of the medicines that they develop. And with each particular medicine,
they have their choice. So they can be partly on one track,
partly on the other, with different products. Now, how would
the Health Impact Fund work? There would be a fixed
reward pool every year. We start with maybe six billion dollars, but that can eventually be revved up. Remember that the total money
that the world spends on pharmaceuticals is a trillion. So it’s a thousand billion;
six billion is a drop in the bucket. It’s relatively small,
but it would work with six billion, and we’d get a lot of bang for the buck
if we introduced the Health Impact Fund with just six billion dollars. If you have a product
and you want to register it with the Health Impact Fund, you will be rewarded
for a period of 10 years. During these 10 years, you get a share
of these annual reward pools. That share would be proportional to
your share of the health impact achieved by all these registered products. So if your product accounts
for eight percent of the health impact of all the registered products, you get eight percent
of the reward money that year. That repeats for 10 years, and at the end of the 10 years,
your product goes generic, so you basically lose
any further income from it. Each year, the health impact
from your product would be evaluated, and you would be paid on that basis. Now, if you take that reward
from the Health Impact Fund, you can’t claim the other reward,
you can’t mark up the price. You have to sell at cost. What does that mean? Well, it doesn’t mean
that the pharmaceutical company tells us what their cost is; but rather, our preferred way
of determining what the real cost is of making a medicine, of manufacturing it, is to ask the registrant to put
the production of the medicine out for tender, let generic companies
compete for the production, and then the innovator would buy
the product from the cheapest supplier and would sell it at that same
lowest possible price to patients. So the innovator would make no money
at all on selling the product, but would make all its money
from the health impact rewards. Now, how do we assess the impact
of the introduction of a medicine? Well, we assess it relative
to the preceding state of the art. So some people,
before the medicine came along, had no treatment at all. Now for the first time, they have
treatment, because it’s cheap; people can afford it. So here, the impact is the difference
between being treated and not being treated. In other cases, the new product
is better than the old products, and so a person gets switched over
to a better product, and we pay for the impact,
for the difference the new product makes. If you have a product
on the Health Impact Fund and you simply switch somebody
from an existing product to another product, to your product,
and it’s no better, you get no money. That’s in stark contrast
to the existing system, where you get a lot of money
for switching somebody from one product to an equal product that is your product. The Health Impact Fund
does not pay for that. We quantify health impact in terms
of quality-adjusted life years. That method has been around
for about 20 years, and it’s very easy to explain. Just think of a human life
as a kind of plank. It’s eighty inches long, one inch high. And when you die prematurely
before you reach 80, well, the plank is a little shorter. And if you’re sick during
the time that you live, the plank is a little bit thinner. And what diseases can nibble away,
medicines can restore, or medicines can avert
the taking away of these parts. And they get paid for that. That’s the method, basically. Now, we look – of course,
each year, we have to assess. We have to spend
a considerable amount of money looking at how these various medicines that are registered
with the Health Impact Fund are doing in various countries. And here, statistics is extremely helpful. You all know how exit polling works.
This is a similar method. You look for a statistically
significant sample, and then try to figure out
what the health impact of the medicine is in different locations,
in different demographic groups … And, of course, you look very carefully
at the actual world — this is in contrast to how medicines
are today rewarded. Sometimes, there is a reward
based on performance, but it’s the performance in clinical
trials, in the laboratory, if you like, and not the performance in the real world. The Health Impact Fund
would look at real-world impact. It would look not just
at the quality of a drug, but also at how widely it is distributed, whether the innovator manages
to target those patients who can benefit the most, and also, how well the drug
is used in the field. So innovators would have much
stronger incentives than they do now to make sure that every patient
who takes the drug knows exactly how to take it
to optimal effect. Today, most packaged inserts are not even
translated into local languages, and so it’s not surprising that patients
don’t make the best use of the product. Now, how would the financing work? Basically, the Health Impact Fund,
as I said, could start with something like six billion dollars. It’s not nothing, but it’s also
not a lot of money, compared to what the world is already
spending on pharmaceuticals. So the best way to think of it
is as a new way of paying for what we are already paying for,
namely, new medicines. You pay with one hand
through the tax system, but you get something back
with the other hand, because you also get
these medicines for cheap. This is not just for poor people — everybody will have these Health Impact
Fund registered medicines at cost, at a very low price. One very important hurdle here,
politically, is that we have to make sure that we have long-term
visibility for innovators, that innovators know
that the money is actually there, and so we need governments
to fund the Health Impact Fund, because only governments can make
predictable commitments for a long period of time. Because the Health Impact Fund
registration is voluntary, you basically have
a self-adjusting reward rate. As the rate rises too high, innovators will come in
and drive the rate down. Conversely, if the rate falls too low, innovators would be reluctant
to register, and the rate will recover. So the rate will always be
at a reasonable level. The Health Impact Fund
is beneficial for all parties. It benefits innovators
by giving them a new market, and most importantly, by overcoming
their public relations problems that we started with. It benefits patients, because patients are much more likely
to get the right medicine, and also for these
medicines to be developed, the medicines that we most need. And it also benefits governments
or taxpayers, if you like, because it creates a permanent source
of pharmaceutical innovation that will be here for all future times. It’s a kind of machine that always
directs pharmaceutical innovation to where we have the greatest problems, maybe for diseases
that don’t even exist yet. The Health Impact Fund
will always channel innovation in the direction where it’s most needed. Now, we have a little bit of help already. You can see here the number of people
who have agreed to help us, but we want your help as well. We want you to join us,
maybe to talk with your government to help us with publicity, to help us with your ideas in perfecting
the Health Impact Fund scheme. And what we most urgently need
for the moment is to start a pilot. The pilot would introduce one medicine
into one jurisdiction on the Health Impact Fund model. The innovator would get paid according
to the cost of the medicine for the sales, and would then get additional money
on the basis of the health impact. Here, we need funding for the rewards,
funding for the assessment, and in particular, we need
political support to get politicians to support
a pilot of that sort. If you have any further questions,
don’t hesitate to write us and contact us at this address. Thank you very much. (Applause)


  1. Nothing will change within the monetary system. I think guys like these are great, but they are naive to think that things will actually change. His hearth is in the right place, but his logic is flawed. Rich owners of companies don't care. Resource based economy is the way to go!

  2. Every time there is a video about innovation or environmental problems someone suggests a resource based economy.
    Sorry, but it seems like a stupid idea, you have no evidence that it would work, there are some ~10min vids about it that dont explain anything and may get a few teenagers excited. You need a bit more to reasonably propose another system for world economy.

    As for this, a few pieces of legislation can make it happen, granted that people will push for it and oppose corporate lobbying

  3. @sweYoda2 I was thinking the exact same thing as soon as I started to watch this. People like him will always get drowned out. Even the idea of a RBE will get drowned out because not enough people will ever know about it and fully understand it and advocate for it. The only solution I have worked out is that things will change the same way they have always changed…Just a slow and steady progression so eventually technology will free us. Watch the documentary Transcendent Man.

  4. @MunaEndel If a RBE isn't put to test how would one know if it would work or not? Have you actually studied the details of it beyond watching 10 minute videos?

  5. @GoldwireIT That is its main problem, people wont switch onto something, that 'might' work, on a dare. Can you provide some links to discussions/details that arent from Zeitgeist movies, youtube vids or the RBE website, cause those are way too simplistic.
    Dont get me wrong here, it can be a great idea but atm it seems like "lets live in peace and harmony" – a nice thought but you should show how it would work in the real world with all its complexity and how to get there.

  6. I enjoyed listening to him speak. I would raise the point though that another hugely effective way to drastically lower disease and illness is to pressure religious institutions into allowing members to use (and furthermore promote) condoms and other forms of protection. This would also to no small degree combat poverty.

  7. @kezzy234 Some do. Many are also unwanted but made because of religious beliefs on contraception. Those greater size families also mean more feeding, medicine, financial investment, emotional care.

  8. I was greatly saddened by this presentation. Thomas Pogge consistently uses the word 'health' as if it were 'not sick'. Health is independent of illness and can be measured and improved independent of illness and independent of drugs. Most of the people in the world are not dying from 'illness that should be cured by drug', they are dying from illnesses that should be cured by healthiness. Fixing the drug systems will not improve health. We need a health paradigm, not an illness paradigm.

  9. @tracychess While I agree, to a certain extent, with the idea that the first world indeed needs to think of health in this way, the third world is far too hindered by terrible living conditions, sanitation issues, food and water access, mis-education on diseases and their transfer, war, genocide, corruption, slavery, etc. etc. and so on and so forth. No issue this big has a bandaid quick-fix, and unfortunately life-threatening disease is still the primary concern of most of the world.

  10. Thomas Pogge is a professor of philosophy. How does he know so much about the pharmaceutical industry? I can guarantee he spent 0 minutes talking to anybody who actually works in the industry, half the shit he says is so unbelievably off the mark it rivals Paris Hilton level thought.

    Those of you that want to drink his Kool-Aid, be my guest. You can't be convinced. Those of you with genuine curiosity, I encourage you to research how/why pharma $ are spent the way that they are.

  11. @aganon77 Yes, low developed areas do need more condoms, however, did you consider the fact that it's also the poverty, illness, education, culture, and their bad situation in general that influences breeding rate? This is a mechanism of many living organism on Earth – if survival rate drops, the number of offspring grows.

  12. @catch22af You wouldn't be asking that question if it was you who was sick with an easily treatable condition, but you had to die because you couldn't afford the medicine.

  13. @sweYoda2 That's why the system he designed would benefit private pharmaceutical companies as much as benefit everyone else, weren't you paying attention?

  14. @GoldwireIT The future is not set, techology might lead to massive famine and/or enslavement. Hopefully mankind is past bullshit like that and we will become free.

  15. @sweYoda2 So you only came here to preach? That's sad, you'd benefit much more from TED if you had your mind open to different ideas that you had not considered before.

  16. Nice system but you know what? The US will never adopt it because a lot of people have been sucessfully convinced that a governmental health care system is socialism. Sad world.

  17. Look up Socialism on wikipedia. It's got nothing to do with health care or public services in general. It's just very convenient for politicians to transfer the bad connotation of socialism to anything social to get rid of it.

  18. The best innovation in healthcare is that medicine become obsolete. 90% of current disease can be cured with a paleolithic diet. Traditional living hunters and gatherers get old without disease common in the western world. You want to eat like a hunter-gatherer.

    Remove grains, diary, vegetable oils, sugar and excessive omega-6 and see your autoimmune disease, allergies and inflammation of any form dissapear.

  19. this is a bad idea who is gunna evaluate the health effect how are they not gunna be a waste of money and target of lobbyist how is this gunna stop lobbyist its just gunna create a wasteful beaurcrocy and more companies having a bigger monopoly

  20. Diet will be an improvement on health. But what he is talking about has more to do with things like tuberculosis and malaria which are indirectly cause by conditions of poverty. How much omega-6 and trans fat are in a diet to someone from Haiti is largely irrelevant.

  21. Tell me again how you consider 35 years (the life expectancy for cave men) old? I might be prone to approve the concept of the caveman-diet, but claiming that 90% of diseases can be cured with diet and we would have a life expectancy equal to the one today is ridiculous!

  22. pharmisutical companies should make brand new anesthics as strong as it cnn possibly made.the stronger the better.for theev most strogest pain and or pains of them all.

  23. Our company has come up with a way to decrease pharmaceutical costs resulting from the drug supply chain.

    Check out our video on youtube: Just type in Pharmly

    Pharmly – is a pharmaceutical bidding marketplace that allows you to source product and obtain quotes from licensed vendors FREE of charge to you. Our compliance team handles making sure the vendors are properly licensed before they submit quotes to you.

  24. This would kill innovation in pharma. There's already huge pressure on the industry to produce more efficacious drugs, which has led to less meds getting to the market, if pharma companies will get less ROI, they'll just supply markets where they're making most money. In the end, it's the patients who will suffer. Think people are forgetting that producing pharmaceuticals is a BUSINESS and although cost of manufacturing "per pill" might be low, research costs are huge.

  25. Knowing human nature I feel it would also be of some use to force companies to name the lead researcher involved. Money is appreciated. But fame is sought just as widely. I can't imagine developing a cure for cancer and have it named by some asshole in marketing. Personally i'd rather have 10 million poor people know my name and that i saved their lives over having 100 thousand rich people pissed off at me for how much my pills cost them to save their lives. Not to mention my pills i sweated 10 years on… thanks to that asshole in marketing, are named Absoluepan, which means absolutely fuck all zero to even myself. Can you imagine if Einstein had been working for a corporation in 2015? He'd get almost no mention when their marketing drip came out touting their new E=mc^2. There might be 100 Einsteins out there today, even more brilliant, we can collectively name… Zero! 

  26. I like the idea. The current system doesn't work that's for sure. Perhaps we should just stop making public health based on a capatilist, profit-based system. Perhaps worldwide governments should just create government owned pharma companies with no other shareholders and employ researchers and produce medicines only in the public sector. A bit like they do with power companies in NZ. A government based monopolistic producer if you will. I think until you remove health from a profit based system there will never be equality because health will never be based on income but only on profit which, as we have discovered, is not in the best interest of the majority, only the wealthy minority.

  27. i think his hif  idea may be beneficial with some modifications but i doubt it will apply to the pharmaceutical industries in developing countries. There are so many potential hit and lead compounds available from natural sources that can be developed into drugs but due to financial constraints, these companies have no R n D departments and instead focus on generic manufacturing.

  28. What? Pharmaceuticals are expensive because rich people can afford them? Then he goes onto income inequality. Come on Ted, at least use facts and not dogma!

  29. I like it some clarification is needed. like how will you decide on what direction to go in? referring the last minute or so of the video. what will be your guide for making that decision.

  30. The reason drugs are expensive isn't because 'rich people put the prices up' it's because they take decades to develop, at huge expense, to ensure as far as possible that they are safe.

  31. In order to lower long term healthcare costs, there must be a relatively free market in healthcare. Socialized healthcare seems to only be a solution for short term problems such as ER visits etc. An example of a free market healthcare system would be the very unregulated market of lasik eye surgery where the price per eye has dropped significantly through the free market. Healthcare should be mainly treated as a commodity.

  32. Horrible track record for safety poorly tested sell dangerous drugs till they get caught they are good for severe infections period nothing else good about them

  33. Certainly a very interesting idea. I'm not educated enough on economics to know whether it's a viable alternative, but I definitely think that reform of the industry is needed, and I'm glad there are people out there working on it. Thomas Pogge makes some strong points, especially about the problems with the current system, such as 90% of funding going towards researching just 10% of the global disease burden.

    I used it today to teach an ESL lesson on pharmaceuticals, and it worked really well- got loads of discussion out of it! Thanks for the upload 🙂

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