Health Impact Fund

The Health Impact Fund (HIF) is a new proposal based on two simple insights: (1) privately funded pharmaceutical R&D responds to incentives, and (2) new drugs can have a much larger impact if their prices are low. At present, the most profitable research efforts are not the ones most needed to alleviate the global burden of disease. And high prices oft en put new drugs out of reach of most of the world’s population. The HIF seeks to correct both of these failings by offering to reward any new medicine, if priced at cost, on the basis of its global health impact. Any firm receiving marketing approval for a new medicine would be offered a choice between (a) exercising its usual patent rights through high prices or (b) registering its product with the HIF. Registration would require the firm to sell its product worldwide at an administered price near the average cost of production and distribution. In exchange, the firm would receive from the HIF a stream of payments based on the assessed global health impact of its drug. The HIF is, in other words, an optional pay-for-performance scheme for new pharmaceuticals.