ESG Insight: The following is a quote from Alan Cassels, writing about Access to Medicine in the Canadian Medical Association Journal in 2008:

“The impact of company policies on the availability of patented products in poor countries is largely unknown, and it's all but a total mystery as to how much of a company's research budget  is spent on discovering cures for diseases that affect the poor.”

Do you believe this is still true? If not, how much of the industry’s evolution, in your opinion, can be credited to Access to Medicine?

Wim Leereveld: For Access to Medicine Index 2010, extensive efforts have been made to better measure the output and performance of the initiatives of the pharmaceutical companies. Index 2010 is built from indicators that that support a strategic pillar structure, and Performance is one of these pillars.

Regarding the quotation above, here is a relevant R&D indicator in the Performance pillar: “Portion of financial R&D investments dedicated to Index Diseases out of the company's total R&D expenditures.” As the Access to Medicine Index is an ongoing initiative, we will develop further comparative performance indicators in the future.

We do see that over the last few years, much progress has been made in improving access to drugs, vaccines and diagnostic tests in developing countries. Several new organizations and funding mechanisms have been established, and the pharmaceutical industry has shown increasing attention to both the need and the business opportunities.

The question about how much can be credited to the Access to Medicine Index is a difficult one. In general, company practices do not change only because of one external force. However, we are confident that we have made an impact, as shown by the large increase of company participation in 2010 compared to Index 2008.

ESG: Also in 2008, you told the Financial Times that there was “no middle ground” between the industry and its harshest critics. Do you still feel this is true, or does the Access to Medicine Foundation have more company in the “middle” today? On a related note, what do you think persuaded the Gates Foundation to change its mind and support the Foundation for 2010?

WL: In that article, I was referring to a lack of consensus as to the proper role of the drug industry in addressing the global Access to Medicine problem. The fact that the Index has found common ground between the industry and stakeholders around the world is a sign of success.

As to your related question about the Gates Foundation, immediately after the launch of Index 2008, Mr. Gates responded very positively, as reported by Time in a piece on “Creative Capitalism”. This enthusiasm and interest was confirmed by a Gates Foundation grant that we received in 2009.

ESG: The 2010 report says that only a small minority of drug-originating firms are engaging in non-exclusive voluntary licensing arrangements. Could you briefly explain why these arrangements are so important to ATM, and speculate about why more firms don’t engage in them?

WL: Non-exclusive voluntary licensing is the licensing of a firm’s intellectual capital to other companies, often generics firms, for manufacturing, distribution and sales of that product in the license territory, without provision of exclusivity to any one license-holder.

This is an important mechanism to help overcome the ATM burden associated with patented drugs. It increases affordability as it spurs competition, lowering prices and increasing supply, while the patent holder still receives its license fee.

I prefer not to speculate about companies’ strategic decisions regarding specific ATM-related activities. It is our role to measure and benchmark these activities, and to share information about best practices.

ESG: The upcoming Index 2010 report makes a point about the Index that may need further clarification:

“The Access to Medicine Index is a relative index. This Index does not evaluate the companies against aspirational best practices and provides only a comparison of the companies to each other.”

Why did your team choose to construct the Index this way, rather than setting an “aspirational” target and measuring how close each company could get to that target?

WL: Currently, lack of sufficient empirical research on best practices limits the use of absolute ratings for the Index’s quantitative indicators. Index 2010 will therefore use absolute ratings for the qualitative indicators and relative ratings for the quantitative indicators. We maintain our long-term goal for the Index to move towards an overall absolute rating system.

Moving forward, the Index would like to work with academia, industry, NGOs and independent experts to establish a set of best practices for all indicators. By moving toward an absolute rating system, the Index will continue to push low performers to improve their ATM strategies while also inspiring high performers to do more.

ESG: Can you comment on how the growth of developing-world drug companies, like those of India, is changing the dynamics of the global marketplace? Will their emergence force developed-world firms to change their ATM approach?

WL: In general, the geographical proximity of developing-world generics companies to Index Countries helps them to achieve a better understanding of these nations’ adaptive research needs. [Ed. note - "Adaptive research" is directed towards modifying existing drugs to better suit the needs of a particular population.]

An interesting outcome of the Index 2010 generics list is the emergence of developing-world firms as top ATM performers. A number of these companies have significant market presence in the Index Countries, and all focus on adaptive research for Index Diseases. As with drug originators, I think the high-ranking companies will lead by example, and I expect other companies will start implementing their best practices in the coming years.

ESG: The next question is about your comments as quoted in a 2010 Financial Times piece on the “trustworthiness” of pharmaceutical firms. The relevant passsge:

Wim Leereveld, head of the Access to Medicines Index, which is releasing an alternative ranking  system in June, warned that patients’ views should not be taken in isolation.

“Sometimes the perceptions are wrong,” he said, stressing the broader nature of his index. “I  think the [pharmaceutical] sector is relatively transparent compared with other industries.”

Do you believe that the Index can, or should, change perceptions of the entire drug sector, notwithstanding its focus on the relative performance of individual companies?

WL: Yes, definitely, and I would say that this change is very important. An unbalanced view on the industry is not wanted and may be destructive. If companies don’t get credit for good behavior they may stop their efforts. I see an unbalanced view of companies’ behavior as a risk for innovation.

As Bill Gates has said: “When I talk to executives from pharmaceutical companies they tell me that they want to do more for neglected diseases, but they at least need to get credit for it. The Access to Medicine Index does exactly that.”

ESG: Could you comment on the role played by the RiskMetrics ESG research team in developing Index 2010?

WL: RiskMetrics organized an excellent team headed by a very knowledgeable and talented man, Afshin Mehrpouya. The RiskMetrics team understood the very important role of this Index and played their role with character, vision and patience.

ESG: Thank you for your time, and best wishes to the Access to Medicine Foundation in its valuable work.