Thailand Law Journal 2009 Spring Issue 1 Volume 12

2. Difficulty in Negotiating Multilateral Efforts

The observation that neither poor countries nor rich countries can unilaterally implement drug development solutions creates the need to approach solutions to neglected disease problems from an international public good (IPG) perspective. That is, drugs and vaccines developed to combat neglected diseases are public benefits which accrue to multiple, not single, nations; therefore, responsibility for their provision must be a coordinated effort. From this perspective, however, a host of new problems are encountered, as IPGs are typically underprovided, with national public goods commanding between 200 and 400 times the funding of IPGs worldwide. [FN48] The costs of underprovision of aid to Africa for infectious diseases are expected to total $1.138 trillion in 2000 purchasing power parity, while the fully-remedial costs of action in 2007 are expected to be $93 billion and in 2015, $119 billion. [FN49]

The need for effective multilateral coordination of health concerns dates back to the nineteenth and early twentieth centuries when cholera and yellow fever made their way to the Americas. However, back then, coordination focused on border controls, not on disease control. [FN50] After Jonas Salk discovered a vaccine for polio in the early 1950s, industrial countries slowly became polio-free. However, developing countries lacked the health care infrastructure to distribute and the financial means to purchase privately-produced polio vaccine. Since industrialized countries had already succeeded in national elimination of polio, investment in the global public good entitled “polio eradication” seemed too costly. However, each industrialized country would be required to expend maintenance costs for pervasive vaccination as long as the disease existed somewhere in the world. Taken as a whole, the costs of inaction in eradicating polio include a financial maintenance component borne by developed countries and a health burden shouldered by developing countries. [FN51] To this day, citizens in developed countries are routinely vaccinated for a disease which could have been eradicated with a coordinated effort.

On the other hand, when efforts at multilateral coordination have succeeded, the rewards have been great. By 1967, smallpox had yielded 15 million infections and 2 million deaths. [FN52] However, multilateral contributions of $300 million led to the avoidance of 350 million infections and 40 million deaths between 1967 and 1998. It is estimated that the United States's individual investment in eradication pays itself off once every 26 days. [FN53]

Today, we witness an increase in the velocity of contagion for multiple diseases, with costs of financial prevention and health burdens increasing dramatically. [FN54] Consequently, the inflation-adjusted costs of coordination are orders of magnitude greater than they were in 1967. For this reason, international agencies like the Global Fund to Fight AIDS, Tuberculosis, and Malaria are alarmingly under-funded, with the Fund estimating a shortfall of $2.4 billion of its $3.3 billion 2005 mandate. [FN55]

Coordination at the level of research and development, as opposed to distribution, is even more complex. Since it is further upstream in the process of generating the critical public benefit (health), research and development is both more risky on a per-project basis than distribution, and it is more difficult to assign responsibility for various activities to particular countries. Though the World Health Organization was established explicitly to coordinate world health activities in a multilateral fashion, the WHO does not possess promising drug development capacity. Like individual governments, it is dependent on the private sector in its drug procurement activities. Ultimately, since no mechanism exists for governments to evaluate drug development investment decisions in a way which permits them to capture the social benefits of their investments, governments fail to individually correct market failures associated with neglected disease research and development.

3. Incapacity and Inability to Transact with the Private Sector for Mutual Benefit

In acceding to the primacy of the World Health Organization and related international agencies to administer our international public health priorities, we concomitantly reduce the responsibility of the private sector in public agenda-setting and control. The WHO cannot be sued. In its contracts, it essentially has carte blanche to proceed with a regulatory taking in the name of international health policy. This ability is supported by a governance structure endorsed by the WHO's 192 members and Article 66 of its constitution, which states that, “The Organization shall enjoy in the territory of each Member such legal capacity as may be necessary for the fulfillment of its objective and for the exercise of its functions.” [FN56] With such far-reaching powers, it is imperative that regulatory capture be avoided at all costs. Therefore, the WHO maintains strict guidelines for its relations with private industry. [FN57] In particular, Article 50 of the guidelines states that, “WHO shall maintain full control over the activity to which a contribution relates.” [FN58]

This arrangement portends poorly for interaction between the Organization and the private sector. It is hard to imagine an arrangement where any drug company would undertake investment in basic research or drug development while constrained by the overarching unilateral decisions of the WHO. Still, it is in the financial interests of industry to be so closely entrenched in the governance of the WHO that it has guiding influence over their public health decisions and, in particular, procurement of private products. This tension yields an incapacity for the WHO and international agencies of its sort to transact with the private sector.

To be sure, not all public-private interaction in the interests of public health occurs through WHO channels. Government institutions, public research universities, non-governmental agencies, and not-for-profit organizations also exist and attempt to partner with the private sector in the pursuit of accretive contributions which diminish the drug gap. For the most part, these organizations have regional domiciles and are subject to government policy and regulation. For example, the U.S. National Institute of Health pursues basic research with explicit policy aimed at attracting private involvement in commercializing its discoveries.

In the United States, the 1980 Stevenson-Wydler Technology Innovation Act made federal technology transfer to the private sector a national policy and a duty of federal laboratories. [FN59] Its amendment, the Federal Technology Transfer Act (FTT Act) of 1986, established formal Cooperative Research and Development Agreements (CRADAs), in which federal laboratories would provide personnel, services, facilities, or non-financial resources, with private firms supplying funds, personnel, services, facilities, equipment, or other resources for research and development. [FN60] These two policies, along with the Bayh-Dole Act, form the institutional framework within which U.S. public technology is transferred.

[FN48]. I. Kaul, P. Conceicao, K. Le Goulven & R. Mendoza, eds. Providing Global Public Goods: Managing Globalization (New York: Oxford University Press, 2003).

[FN49]. Todd Sandler, “Assessing the Optimal Provision of Public Goods: In Search of the Holy Grail” in Kaul et al., eds., supra note 48, at 159.

[FN50]. D. Arhin-Tenkorang & P. Conceicao, “Beyond Communicable Disease Control: Health in the Age of Globalization” in Kaul et al., eds., supra note 48, at 486.

[FN51]. Ibid. at 491.

[FN52]. Ibid. at 486.

[FN53]. Ibid.

[FN54]. M. Ferroni, “Reforming Foreign Aid: The Role of International Public Goods.” (2000) Operations Evaluation Department Working Paper Series No. 4, World Bank, Washington, DC available online: <http:// lnweb18.worldbank.org/OED/OEDDocLib.nsf/DocUNIDViewForJavaSearch35DF2A426763B974/ $file/RfrmFrAd.pdf>.

[FN55]. Aidspan, “An Updated Analysis of the Equitable Contributions Framework regarding the Global Fund” (21 May 2004) online: <http:// www.massiveeffort.org/Equitable_Contributions__may_23.pdf>.

[FN56]. Constitution of the World Health Organization. The Constitution was adopted by the International Health Conference held in New York from 19 June to 22 July 1946, signed on 22 July 1946 by the representatives of 61 States (Off. Rec. Wld Hlth Org., 2, 100), and entered into force on 7 April 1948. Amendments adopted by the Twenty-2 sixth, Twenty-ninth and Thirty-ninth World Health Assemblies (resolutions WHA26.37, NK“http://policy.who.int/cgi-bin/om_ isapi.dll?infobase =WHA&jump=WHA29.38&softpage=Popup42”\l“JUMPDEST_WHA29.38” WHA29.38 and) came into force on 3 February 1977, 20 January 1984 and 11 July 1994 respectively.

[FN57]. World Health Organization. “Guidelines on Working With the Private Sector to Achieve Health Outcomes” (2000) EB107/20.

[FN58]. Ibid., art. 50.

[FN59]. Mary Wiktorowicz, Regulating Biotechnology: A Model of Rational-Political Policy Development (Ph. D. Thesis, University of Toronto, 1995) at 66 [unpublished].

[FN60]. Ibid. at 67.

This article is published with the kind permission of Nathaniel Lipkus. The article originally appeared in Michigan State University Journal of Medicine & Law, Spring 2006 issue.