Frequently Asked Questions on the Health Impact Fund

What is the Health Impact Fund?

What are the origins of the Health Impact Fund proposal?

I would like to help. How can I get involved?

What is Incentives for Global Health? How is it different from the Health Impact Fund?

Who supports the Health Impact Fund?

Is it plausible that governments would create a separate fund on this scale?

How much will pharmaceutical companies be paid for their registered drugs?

How is health impact measured?

Is the HIF mandatory? Will the HIF replace traditional pharmaceutical research and development funding?

How will the HIF benefit taxpayers?

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What is the Health Impact Fund?

The Health Impact Fund (HIF) is a proposed new way of paying for pharmaceutical innovation. The HIF would incentivize the development and delivery of new medicines by paying for performance. All pharmaceutical firms worldwide would have the option of registering new medicines with the HIF. By registering, a firm would agree to provide its drug at cost anywhere it is needed, and in exchange for foregoing the normal profits from drug sales, the firm would beis rewarded based on the HIFís assessment of the actual global health impact of the drug. Governments and other donors would finance the HIF. (top)

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What are the origins of the Health Impact Fund proposal?

Many people have contributed intellectually and in many practical ways to the development of the HIF proposal. The proposal continues to be explored, improved and refined by the thoughtful suggestions and criticisms of people of various backgrounds. For a full exposition of the development of the HIF proposal and the key thinkers who contributed to the creation of the idea, please see Vision and Origin of the Health Impact Fund. (top)

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I’d like to help. How can I get involved?

The most important way you can help is to read about the proposal and spread the word including through editorials, articles, and blog posts. We are a tax-exempt nonprofit organization in the United States, and we welcome contributions. If you have specialized skills and would like to talk about more ways you can help, please send us an email at contact@healthimpactfund.org.

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What is Incentives for Global Health? How is it different from the Health Impact Fund?

Incentives for Global Health is a nonprofit organization founded to develop and promote the Health Impact Fund proposal. Incentives for Global Health has 501(c)(3) status in the United States. (top)

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Who supports the HIF?

Support for the Health Impact Fund is widespread and growing. The World Health Organization Expert Working Group on Research and Development Financing recently called the HIF a “promising” proposal and recommended further examination. The German Social Democratic Party has officially endorsed the HIF and called on the German government to support an HIF pilot. The HIF is also supported by a distinguished panel of advisors. The HIF has also received extensive media coverage. (top)

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Is it plausible that governments would create a separate fund on this scale?

While there is no “optimal” budget for the HIF, a reasonable minimum is $6 billion per year, which will roughly maintain a portfolio of 20 drugs. While a substantial sum, $6 billion per year is a small fraction of medical research and development spending and only represents 0.01 percent of global income. One can put the cost of the HIF in perspective by comparing its initial annual cost of $6 billion to global spending on pharmaceuticals which, in 2008, was around $735 billion. The United States alone spends $100 billion per year on medical research. Affluent countries such as Australia, Switzerland, and Norway could fund such a commitment on their own. A global commitment of $6 billion will not increase spending on medicines, but will merely change the way pharmaceutical innovation is paid for. (top)

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How much will pharmaceutical companies be paid for their registered drugs?

The Health Impact Fund will have a fixed pool of money to pay out annually based on the assessed health impact of registered medicines. Each participating company will receive a share of the pool equal to its share of the total health impact of all registered medicines. The HIF will estimate the incremental health impact of each product registered with it, setting the baseline at the set of technologies two years before the registered product became available. This incremental health impact will be estimated each year for ten years, during which the firm will be eligible for payments. In each of those years, the firm will receive a share of the available funds. (top)

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How is health impact measured?

The standard measure of health impact is the quality-adjusted life year, or QALY. A drug that extended a person’s life by ten healthy years would be recognized as having created ten QALYs. Assessing QALYs is difficult, and it will take a great deal of data to be able to make credible evaluations. The essence of the assessment process involves obtaining evidence on the incremental effect on health of the average consumer of the registered drug. When the registered drug simply displaces some existing medicine, the analysis is relatively straightforward. But typically a medicine’s QALY impact would be more complex, arising from an improved therapeutic profile, from increased use due to a lower price, and from more effective use due to better prescription and patient instruction practices.

The assessments will start from information that is commonly available about medicines today. In addition, registered firms would be required to provide information about their sales directly to the HIF, and will pass on such requirements to their distributors. At the same time, the registrant would have a strong incentive to provide comparative data on its product’s effectiveness relative to others, since this would provide evidence for payments from the HIF.

Incentives for Global Health is currently developing the health impact assessment methodology with a multidisciplinary team of experts. (top)

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Is the HIF mandatory? Will the HIF replace traditional pharmaceutical research and development funding?

No. Registering medicines with the Health Impact Fund will be purely voluntary. The HIF will be a complement to the current system, not a replacement. Companies will keep their patent rights and will only choose to register products with the HIF that are not profitable under the current system, but that would be profitable when payment is based on health impact. (top)

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How will the HIF benefit taxpayers?

The HIF is not just foreign aid. The Health Impact Fund will be a global institution with benefits to citizens of developed and developing countries alike. The drugs it incentivizes will be cheaply available everywhere. The HIF will, of course, make a huge difference to the health care of the world’s poor. They will gain immediate access to new, high-impact medicines at low prices, some of which would not otherwise exist. These medicines will also be available to the affluent.
While the benefits of the HIF in developed countries will be most obvious to those who lack health insurance, those who have public or private insurance will also see benefits. Drugs registered with the HIF will be priced lower, creating savings for insurers. This would result in lower taxes and insurance premiums. The HIF is desirable because taxpayers already pay enormous sums through taxes and insurance premiums to subsidize research on treatments that are of minimal health impact. Under the HIF, some of this money will go toward medicines with the greatest health impact rather than merely the greatest profit. (top)

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