My question was about the open source ness or "open scienceness" of the prize fund model and your thoughts and considderationss when yyou're considering multiple IP involved in drug development. Let's say there's a proprietary piece of .. for your drug dev model, and an open source patent, or an open access piece of information, there are complexities when you're trying to license things in open source, it depends on your licensing structure. Do you have any considerastions about that?

I can try, so it's clear that in the current system, the open soruce innovators are in a sense disadvantaged because they are not going to get paid, their contribution is captured and so, it's clearly, the open source dividend that Jamie is being takling about, is for. We haven't tried to implement any of that, and the goal of just keeping the health impact proposal as streamlined as possible, just for rewarding firms for bringing products through market approval and making sure they get sold and distributed. We'd be in the same place as we are now in the open soruce stuff, however the open source knowledge would be abused where you end up with extremely high prices, thanks to the open source contribution that would be developed.

Historically, there's been a logn tension between the grant and prize system and the patent monopoly in different parts of history. And yuo see that in the current prize proposals, the French in the 19th century used a lot of prizes, and that was typical of European implementation of prize systems in the 19th century. The prize was in addition to the patent monopoly, it wasn't really a replacement for the patent monopoly. In the British and Dutch debate, and even in the US., could you replace the monopoly with prize money? Would you voluntarily choose one or the other, or eliminaet one in favor of the other, and you see this in several proposals- some of them are voluntary mechanisms, where yuo have to give up your IP in order to qualify for the prize money, and the X Prize foundation enver really interferes with the IP in their particular participants, as an example. One of the things that come up with open source is that, prizes is bad for openness, because under the current system you have to file for a patent, and there's protection. If you get a prize for an unpatented invention, then you have an incentive in some cases to have a trade secret and share even less. The open source dividend was an attempt to incentivize people to be much more open. In the US proposal for the Medical Innovation Prize Fund, you get patents on the inventions, but you wouldn't be able to enforce the patent as a monopoly but you would get it for the reward fund. If the reward was $4B, what's- who's going to get it? Something like a patent would be used to identify the proper people who would get the reward in the first place, and you have to license teh IP to develop the product to win the prize. The expectation would be that it would be a claim against the prize fund as opposed to a legal monopoly. One expectation is that if you raise the importance of the prize system as oppossed to monopoly, then patent reform would be easier to implement. The patent system determines how many billions or something you're going to get, well, with the prize fund the idea would be that there are certain reforms that would be implemented in the patent system- that would be easier since you'er shifting the reward system.

My question was originally more focused on the technicalities on the mingling of the licenses in the dev programs. Like an open source patent license, for the prize fund license, you have to license in other proprietary IP, and sometimes the open source could potentially infect and affect the incentive model that exists for the proprietary licenses. You could sort of.. copyleft strategy in the patent area, you could have different areas; most proposals right now, they are multi-lateral proposals for neglected diseases, where you have to make a voluntary decision to license a patent in order to participate in the prize fund. In a couple of proposals, the government would just mandatee that there's a shift. IPR will not go away as an issue that people have to deal with as something they have to manage. It would be fair to say also that htere's enormous complexity in each of these circumstances, rights are geographically split, there are thousands of different pieces of innovation going into a particular durg, and in Canada there are something like a thousand like, related to lipitor, ... so it's really complicated and every case would be different, and there would be no single rule to deal with everything, it would have to be dealt with on a case-by-case basis.

Mike Gretes. I like people interested in drug development for neglected diseases, and we are impatient for this. I wonder if, this is a difficult question, if you could commetn on how ready we are to implement these, and what time frame we're looking at, and an easier question, not only the preparedness of this, but drug development is 10+ years, it seems to be not just having a high dollar pay off, but an insurance to the drug developers that the money will be there, and the credibility will be fully funded, especially with the HIV global fund hasn't really had a .. hasn't really had a track record for being fully funded, can you comment on this? We're thinking of a timeline of trying to run a number of pilot projects under the next few years, for rewards dependent on health impact. The key stumbling block on this and de-linkage is that you have to demonstrate that you can make the rewards depend on something other than what people are going to pay, so we think that this needs to be, the first step, and in order to really build on the political and .. towards.. the interest in these kinds of proposal, and that's going to take at least a couple of yeaars to demonstrate credibility. Feasibility studies. Maybe we can expect another couple of years towards.. the timeline in terms of whhen this kind of thing wwould bee credible oover a long ttime per it's whhy it's useful to havee a voluntaryyy fund, wherre if thhe fund iss not fuunded,, it's vvolunttary, you cann just ggo aand selll the product withhout thhe fund,, and you can just sell the pproduct at high ppricess like uusual.. Frrom our pointt of viiew, one set oof oppportunities for impplemenntation of de--linkage conncepts iis the areas oof markeet faillures, like neeglected disseasess, liiike the Chagdsaaaaas proposal, and several coountries in Latin America, Doctors without Borders, and large public heatlh groups; it's a quarter billion dollar proposal. Theree's one prize that is kind of wwacky and alreeeady implemented, the priiiior review..... development iin.. you haave a reeeward which iiis an acceleration of your approval of another good drug. And that's mostly has a value of a couple hundred million dollars, and it was implemented last year by the US Congress, just a few weeks ago or last week. So, uh, uh, that thing is actually - raised people's interest, because it has created an incentive to create drugs for neglected diseases not related to the price of the product. Unless you get licenses of the newer products, for generic production, so there's some countries have put a forward, we're very active in this, that you should take 10% of the Pfifer and global fund for contributions- put the prize payments only to the people who license their patents to the pool. Gilliaed, largest seller of AIDS drugs, and Johnson&Johnson which has a good portfolio, they both endorse this paradigm shift, and that has created a lot of interest in the idea, and the context of.. anothejr thing that has areas of opportunity is antibiotics where Europe has put this de-linkage concept in the policy paper, and where the antibiotic.. commercial system.. and uh, there's I think a movement in developing countiries in implementing a fraction of the reward system, .. ebcause they are cut out of the cancer market because they just don't have them oney and the monopoly on intellectual property, so those countries will be interested.

A question from backpanel: how do these proposal differ from .. for beurocreatucic ..... The health impact fund has no pickings by government. The other proposals have a bit more government about them because they force the products to be in a certain therapeutic class. The health impact fund is a non-it's essentially, the idea is to have no government control over which products get registered, only on the products that are registered and based on a fairly straightforward model on measuring the health impact. I think the pharmaceutical market, it's a very feasible place to implement the de-linkage strategy, because the payments are made by consumer themselves.. very few people pay out of pocket, they rely on third party payers like insurance companies and governments. You already have third parties evaluating the reimbursement rates for products. If yuo are going to pay $100k reimbursement for receiptin, or $20k for the HIV treatment, it's not the patients that are driving that market, it's the insurance companies and government. I would say that the government role for prize programs is different than grant programs, where you sort of have the established cast of characters- peer review, people, the French had a strong academy and they didn't like the prize system, and the prize system is kind of an unconventional approach, and the Longitude Prize in the UK, it was a watchmaker that was not a part of Oxford, it was not a greatly learned physicist that won the prize. The prize approach is kind of driven by performance not pedigree, it's something that is kind of enabling more independent entrepreneurial activity. These.. there is a role for the government, but it's the same role you have, if the government is going to fund the AIDS treatment in the US, it's a government run program, for people who buy the drugs. Has a cure.. Chagdas.. because of governments putting up the money. The idea is to make it as competitive and entrepreneurial as possible.

My name is Ron Bailey, Reason Magazine. Interested in.. As I understand with drug development, the first one, the second one comes along, and immediately, now you have lots of these diseases, so competition as a way to lower prices. You're talking about a competition in.. if you look at the patent system.. has a mroe dramatic rseult. The price of, you could routinely require the patented product of the generic suppliers, so you might have a slow entry and a very costly entry, for.. you get a bunch of quicker substantial price drop. The issue is what should the reward be for teh first, second, third mover? There are benefits of follow-on products, and you don't want to elliminate the follow-on products. You are over-rewarding the follow-on products and under- rewarding the first products. We're spending a half-trillion dollars a year on that monopoly. We had 9 approvals.. that's a lot of approval for a little small amount of products. There is another problem that we're not getting much investment based on patents into new important drugs, that's one of the most important tropical diseases.

Hi, thanks for the great discussion, .. a voluntary mechanism, it seems- is it just going to get sort of .. that don't have a market? How does one deal with the idea, for some rich or poor disease, the makers would just take their chances with the regular patent monopoly, and then just for neglected diseases, is it really going to lower prices in the long term? We think that the health impact fund would basically attract the products that have the most health impact, but relatively low profitability under the ordinary patent system. That's what it's designed to do- a complement to what we already have. That means initially the most attractive products are those that are not protected by patents or are poorly protected by patents. And, so that's the direction of going first, and if it's successful in doing that, then it will have a eral impact on the world and it needs to expand, it needs to have more money, and it needs to focus on more diseases. On the other hand, it's just a relatively small amount of money that we think we can start with- $6B/year. That's not that big in the wrold of pharmaceuticals globally, but if it works well, then it cuold expand and address more diseases over time. $6B is pretty big relative to certain things. The criticism from our corners of the health impact fund is that it doesn't require an open license to get the money, so in the proposal that we're working with that people are favoring, you have to give up the monopoly to get the prize money. In the health impact fund, you keep the monopoly and get the prize money. What it's really about is marginalizing generic drug companies.. ther's .. there's been a lot of acquisitions and major.. companies.. in India and Brazil, there's been a .. from India, a lot of new IPR agreements, making it hard for developming countries... under the voluntary mechanisms .. you would have to give up the monopoly so that you could have generic suppliers. BEcause of economies of scale, the generic suppliers would have some market for the molecules. The health impact fund has been, a lot of people complain, it's like an anti- competitive strategy to marganilize the companies.. by taking the publi health.. for a subsidy for countries to inconviently compete in those markets (what??).

So let me just correct that. Actually, we actually have a view that that is necessarily; we think there are three different ways that you can deal with, following product approval. One approach is to require open license, another is, and you just say, whoever wants to produce the product gets to produce and sell it. Another is to provide tendering, where you have the product manufactured by anyone who could produce it at the lowest cost, and the innovator would still retian the marketing rights at the tender price. If he wanted to control the distribution, but couldn't raise it above the price of teh tender. A third approach is to allow the innovator to manufacture the product, and have the price regulated according to the cost of manufacture. These three strategies would apply in different cases. If you have a biologic drug, which is complicated to manufacture, if you want competition to drive the price down you'er going to end up with high prices, you will end up paying the rewards, plus the money on it, in other cases on it, a molecule- you might want a tender processes where the company is required to sell it at the tender of the cost of the product. I am not sure what to say to Jamie, we had a discussion paper on the web, we've stated publicly, it's on our website, I've stopped discussed this, I don't appreciate having the same thing said over and over- we think there are different ways of doing this, and we haven't decided which way is the best, and it would have to be dealt with on a case-by-case basis. We're not against competition, we think the real innovation here is actually rewarding based on health impacting while requiring low prices, and low prices can be achieved in different ways.

A lot of the tension- both Ed and Thomas were agreeing with otherp ublic health groups that there should be an open license. But then this version came out when the company would retain the monopoly, he did this because he thought this was necessary to get big drug companies to support the program. That's out of context. .... . we have not been taken over by the Drug Companies.. I kind of resent it. ... What I was going to say.. I am perfectly willing to listen to what yuo have to say.. if you don't thinkt hat the future of competition and low cost manufacturing of drugs in developing country, you'er just not paying attention. There have been people engaging this on a day-to- day basis. There's no argument for any product, inclujding those that are expensive to manufacture, and some of the biologics.. all the underlying IP.. even if ou .. you can pick multiple suppliers. . it's unambiguously, you're better off in picking that.. that's teh direction that we're trying to move things in. It's competition at the manufacturing area. They want to maintain a monopoly on the distribution. There are so many cases where they buy from suppliers but they hae enough control of the market, where they have, who they can sell to, has such taken place in the market for some of the anti-flu drugs. Anyway, it is a difference, there are some important differences, where the competition for J___ products, whether you think that Health Impact Fund is helpful or harmful .. if you're interested in what our view was, you should just look at our website. It's not a decision, we're not after all to decide how the health Impact Fund is going to end up. So there are different ways of thinkign about this, it's a complicated decision when you get into voluntary prizes, like the terms of those who are going to enter into the prize system. I want to emphasize like we're pro-monopoly, we're not particularly, we don't get funding from drug companies, we're not doing anything just to please them, we want a productive and effective way to proceed. I don't think we have disagreement except that, it seems like there's tension.