Policy Tools for Stimulating Innovation and Access to Technologies for Developing Countries

Ann MotlAugust 1, 2012

Need for innovation incentives and cost reducing measures

Developing country specific problems+

Poverty conditions+

Lack of innovation=

10/90 gap “Only 10 percent of global health R&D is

devoted to diseases that affect 90 percent of the world’s population”

Agenda Innovation mechanismsCurrent policyAlternative innovation incentives

Patents Innovation inducement prizes Advanced market commitments (AMCs)

Alternative cost lowering mechanisms Differential pricing Humanitarian licensing

Recommendations

Innovation

http://ve-forum.org/apps/pub.asp?Q=3422&T=Living%20Lab%20Handbook

Push PullFederal Grants PatentsTax Credits PrizesGovernment Agency Contracts

Advanced Market Commitments

Priority Agency Review

General PolicyTraditional US policy - mix of push and pull mechanismsoGrantsoContractsoPatentsoHuman or physical infrastructure investments

Scope:Analyze pull, not push, mechanismsFocus only on US policy solutionsProvide a survey of select pull mechanisms and cost lowering mechanisms

Alternatives

Prizes AMCs

Patents

Humanitarian

Licensing

Tiered Pricing

Incentives for InnovationCost Reducing Measures

PatentsAgreement with government- 20 year exclusionary period for providing best mode knowledgeIncentive-exclusionary time period allows inventors to recoup research costs and invest in future R&D Patents are valuable only if they can be enforced, difficult internationallyMarket exclusivity on a product of low return is not very attractive because still no large market

PrizesLong historyInducement prizes - “designed to encourage scientists and engineers to pursue scientific and technical societal goals not yet reached” Renewed interest - America COMPETES Reauthorization Act of 2010

Prize Benefits

Success-contingent rewards

Address neglected markets

Reach a wider

community of problem solvers

Identify new or

unorthodox ideas

Focus attention of

policymakers and public

Prizes ConsSecrecy and less collaboration due to competition

Open Source DividendChallenging to design and financeChallenging for sequential inventions

Multi-step prizesLow or too high reward (Soviet Union)

Advanced Market Commitments (AMCs)

Purchasers (government or private foundations) commit to purchasing a specific quantity of a product when it is developedAMC funders can then make the product available to developing countries at no or low cost

Advanced Market CommitmentsProsFunds only pay for desired outcomePossible lower costs for end usersPublic-private partnership opportunity

ConsInappropriate reward amountsSkepticism of reward appropriation

Legally binding contractsDifficulty for sequential inventors

Tiered (Differential) Pricing

Companies charge low prices in low income markets and high prices in high income markets

Aravind Eye Care System

http://www.npr.org/2011/11/29/142526263/india-eye-care-center-finds-middle-way-to-capitalism

http://in2eastafrica.net/uganda-arvs-shortage-soars-as-sh43-9b-lies-idle/

ARVs

Tiered (Differential) Pricing

ProsIncrease access to essential technologies through financially affordable measuresAdd to companies’ revenue as they are reaching new customers

ConsParallel importing possibilitiesDeveloped country consumer discontentIncome varies widely in any country

Intra-country differential pricing

Humanitarian Licensing

A humanitarian license reservation is a provision in a license where inventors protect in advance the possibility of sharing their proprietary technology with third parties for the benefit of people in needS.4040, Public Research in the Public Interest Act - mandatory humanitarian licensing Humanitarian use exemption (HUE) - “would provide an exemption for use of a particular IP product in developing countries while protecting that IP in wealthier countries”

Recommendations1. Expand use of prizes in a variety of technological

industries, especially focused on developing country specific technologies.

“We still have much to learn about the strengths and limitations of prizes, but the time to start additional experiments is now.”

Encourage agencies to create prize competitions and provide them with resources.

Promote public-private partnership prize competitions to increase resources and knowledge.

Recommendations1.Enter into at least one advanced market

commitment.AgResults Initiative from G20 Summit

http://www.ilri.org/ilrinews/index.php/archives/4142

Recommendations2. Differential pricing should be

encouraged and expanded to increase access to essential technologies for those in developing countries.a. Maintain and if necessary and add

additional safeguards to prevent parallel importing

b. Be fully transparent

Recommendations3. Federally mandated humanitarian

use exemptions should not be required for technologies, federally funded or otherwise.a. Voluntary humanitarian licensing should

be encouragedb. AUTM’s (Association of University

Technology Managers) “9 Points to Consider in Licensing University Technology”

Questions?Thank you-

Melissa Carl Bill Behn Noha El‐Ghobasy Paul Fakes ASME DC WISE coordinators Interviewees

For inquiries, please contact Ann Motl at annmotl@gmail.com