ARPA-H for pharma research solves pharma innovation better than patents – COVID research proves it’s possible

Health innovation is expensive, inefficient and unsustainable, while the pharmaceutical sector itself consistently puts profits before people. Largely, this is due to incentives which encourage pharmaceutical companies to set high prices and deliver short-term returns to shareholders instead of investing in riskier, long-term research that advances critical therapies. The high prices of medicines have prevented patients from using them worldwide, or have reduced access to them, with damaging consequences for human health and well-being. This is especially problematic given the very high public spending worldwide on drug innovation. In the USA alone, the National Institutes of Health spends $40 billion a year on it and yet drug prices do not reflect that, leading some to say – an idea we have encountered before – that while the costs are socialized, the profits are privatized.24

A case in point: the hepatitis-C drug Sofosbuvir was the product of over ten years of research funded by the US Department of Veterans Affairs and NIH-funded research at Emory University, as well as NIH small-business innovation grants.25 After acquiring the drug, Gilead Sciences originally marketed it in the USA at $84,000 for a twelve-week course at one pill a day. In the UK, the list price for a course of treatment was nearly £35,000 (excluding VAT).26 These prices presented a huge barrier to access, even in wealthy countries. But by the end of 2017, Sofosbuvir-based products had generated over $50 billion in sales for Gilead.27 And more recently, in July 2020, Gilead was charging $3,120 for its COVID-19 drug Remdesivir, which was co-developed with a $70.5 million grant from the government-funded NIH.28

Unfortunately, one of the reasons why the NIH itself has become less active in this area is because it scrapped the fair pricing clause in 1995.29 And even though there are march-in rights under the Bayh–Dole Act, which allowed publicly financed research to be patented, unfortunately the NIH seems not to be interested in using them effectively. Indeed, no federal agency has ever exercised its power to license patent rights to others. In particular, the NIH has received six march-in petitions and has denied each one.30 Interestingly, the Veterans Health Administration has been much more successful at getting good prices – highlighting again how military objectives seem to be better attuned to securing a good public–private deal.31

In 2018 I co-authored a report, ‘The People’s Prescription’, that advocated a mission-oriented approach to health innovation and a realignment of health systems to create public value. I argued that a thriving health system should generate new health technologies that improve public health, while ensuring access to effective treatments for the people who need them. In the report, I proposed resurrecting the idea of an ARPA-H for health to crowd in the solutions needed for health innovation goals – similar to how DARPA had done so well for defence-related goals. Key to the proposal was using a mission-oriented approach to link the upstream investment in research for new drugs to the downstream access to health care; public investment in health would attract private-sector activity, but also structure the governance of the process in a way that met public interest tests. This would mean ensuring as far as possible that patents are not abused to create monopoly profits and that prices are kept lower to reflect the public contribution.

In 2020, when the global pandemic hit, the need for a mission-oriented approach to health innovation became ever more urgent. Prior to the 73rd World Health Assembly, I joined over 140 public-health figures – including fifty former world leaders – in a call to ensure that a ‘people’s vaccine’ would be universally available to anyone across the world. The mission here was to develop and produce a COVID-19 vaccine that was affordable and globally accessible – and left no one behind.

Fortunately, researchers from universities and companies across the globe started racing to develop a vaccine as soon as the virus was identified. This mobilization was made possible only through substantial public investment, including by the NIH and the Coalition for Epidemic Preparedness Innovations, a publicly funded non-profit organization created after the West African Ebola epidemic to research and develop vaccines for deployment in outbreaks. The Biomedical Advanced Research and Development Authority, part of the US Department of Health and Human Services, also invested substantially in deals with US companies, such as Johnson & Johnson ($450 million) and Moderna ($483 million). But funding is not enough. What is needed is governance of the process in the public interest. In the UK, despite significant public funding towards a vaccine – going mainly towards twenty-five university-based projects – there are no safeguards in place to ensure that publicly funded products will be affordable and available to everyone who needs them, though the University of Oxford has made statements close to that effect. Unless such conditions are written into contracts, experience shows it does not happen.

Indeed, investing billions of dollars in R&D was, and is, just the first step in health innovation. Whether the goal is to develop a COVID-19 vaccine, an advanced treatment for cancer or an affordable medication for diabetes, governments have to radically transform the governance, structures and incentives of the health innovation model to meet the needs of patients and public health. For example, governments need to provide clear and transparent rules of engagement along the entire innovation chain. Public-health-interest goals and metrics have to govern innovation end to end, from R&D to public access to treatment. Urgent public-health needs must take top priority.