Frequently Asked Questions

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 agrees to provide its drug at cost anywhere it is needed, and in exchange for foregoing the normal profits from drug sales, the firm is rewarded based on the HIF’s assessment of the actual global health impact of the drug. Governments and other donors would finance the HIF.

The Health Impact Fund is designed to bridge an access-to-medicine gap created by the current system of medical research and development. Currently, the only way for pharmaceutical firms to recoup their substantial investments on research and development is to charge high prices for their drugs. Firms have incentives to focus on drugs that sell, rather than drugs that have the largest health impact. This system works well when these categories overlap, but it fails for diseases that are widespread primarily among the poor. For effective medicines to be widely accessible, prices need to be low, but low prices don't encourage innovation.

The HIF will provide long-term, stable incentives to solve this problem. By paying for assessed health impact, the HIF will create a new stream of funding for research that is not currently financially feasible. In addition, the HIF gives firms incentives to ensure that drugs actually reach and are correctly used by the patients who need them. (top)

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 The Origins of the Health Impact Fund. (top)

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 such as through editorials, articles, and blog posts. We are a tax-exempt nonprofit organization in the United States, and we are welcome contributions. You can also attend one of our many events around the world. If you have specialized skills and would like to talk about more ways you can help, please send us an email. (top)

Is the HIF currently operational?

No, the HIF is currently a proposal. We are working to implement one or more pilots of the health impact metric and the reward mechanism. More detail on next steps is available here. (top)

How can I receive HIF medicine?

Right now, you can’t. When they are available, HIF medicines will be distributed through the same channels as other medicines: private and public pharmacies, individual and national health insurance, nonprofit health organizations, and so on. (top)

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)

What is Yale University’s connection to the HIF?

Thomas Pogge, President of Incentives for Global Health, is Leitner Professor of Philosophy and International Affairs at Yale University and Yale hosts our website. Otherwise, the proposal is independent of the university. (top)

Who supports the HIF?

Support for the Health Impact Fund is wide 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)

What is the overall cost of the HIF, and how will it be funded?

The proposal estimates an initial annual budget of $6 billion. The budget is justified by a goal of enabling the HIF to maintain a reasonable portfolio of 20 drugs at a time. This portfolio implies that on average two new drugs are registered each year. With 20 drugs being rewarded at any given time, a HIF with $6 billion annually would have $300 million available per drug per year. This calculation is explained in more detail in chapter 5 of the book detailing the proposal.

To give companies the long-term incentives needed to induce research and development, funding commitments need to be stable. In practice, this means that the HIF must be financed by national governments. Since the HIF will be global, we propose that governments contribute to the budget in proportion to global income. As a point of reference, the President’s Emergency Program for AIDS Relief (PEPFAR) has a proposed budget of $7 billion for FY2011 and is expected to rise to $10 billion by 2014, financed entirely by the United States. (top)

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

While a substantial sum, $6 billion per year is a small fraction of medical research and development spending. Again, consider PEPFAR, created within the past ten years with a similar budget. Similarly, President Obama is devoting $5 billion of the U.S. stimulus package to medical research. Overall, the United States spends $100 billion per year on medical research. And this, of course, is just the United States; the HIF will be global. The HIF will also not necessarily be a separate entity. It may be linked to existing institutions. (top)

Is the HIF just another form of foreign aid? Does the HIF have anything to offer American or European 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)

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)

Why would companies agree to participate?

Companies will participate because they expect to profit. They will find in the HIF a new source of funding for drugs that would not currently be profitable under the current system. (top)

Will researchers be able to get up-front payments from the HIF?

No, the Health Impact Fund can achieve its purpose—to incentivize research and development and delivery of medicines with the greatest health impact—only if it strictly rewards assessed health impact. (top)

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)

Health Metrics like QALYs have a lot of methodological problems. How will the HIF solve them?

We recognize that there is no perfect metric for health or disease and no perfect algorithm for health impact assessment, and that any such assessment will inevitably rely on imperfect data. Perfection, however, is not the relevant standard. What matters is that pharmaceutical firms should have strong new incentives to deliver health improvements (and no strong new incentives to try to capture HIF rewards without health impact). HIF assessment must be sound enough so that the best strategy for firms to capture HIF rewards is to deliver health improvements. With a substantial investment in data collection and analysis, much larger than any national health system’s to date, the HIF would be in a position to make its assessments sufficiently consistent and reliable to ensure that payments were allocated fairly between registrants on the basis of health impact, and would thus provide meaningful incentives to innovators to develop products with large health impact. (top)

How is the HIF different from other global health efforts, such as prize funds or advance market commitments?

The HIF can be seen as a kind of comprehensive Advance Market Commitment (AMC) that addresses effectively the problems encountered by AMCs and prize funds. (top)

What is the HIF's stance on compulsory licensing?

Nothing in the Health Impact Fund proposal is intended to deny the right of countries to issue compulsory licenses. However, for HIF-registered products, prices would already be low and there would generally be little point in issuing a compulsory license. For HIF-registered products, there would be low prices and the patentee would be obtaining a reward based on the health benefits of the product. (top)

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)

Will the HIF pay for clean water, mosquito nets, and other nonpharmaceutical health improvements?

At this stage, the HIF proposal will only directly reward new pharmaceutical products. The provision of clean water, mosquito nets, improved sanitation, and off-patent medicines, among many others, can be extremely cost-effective health interventions. But the HIF proposal is politically realistic. Experience over many decades has shown that the world’s governments are not prepared to spend tens of billions of dollars on clean water or nutritious food supplements. In order to be politically sustainable over the long term, proposals like the HIF need to both protect the poor and provide business opportunities for large corporations. By aligning with the powerful interests of the pharmaceutical and biotechnology industries, the HIF has better prospects for success.

That said, there are two important qualifications to this limitation. The first is that the HIF will not “directly” reward nonpharmaceutical interventions. But by providing incentives to address the so-called last-mile problem, the HIF will reward companies that address the background limitations that limit the effectiveness of their medicines. The second is that the HIF is scalable. Once it proves successful in practice, the HIF can be expanded to cover other products. (top)