THOMAS POGGE| THE HEALTH IMPACT FUND the HIF does not obviate the need for the patent pool: even with the HIF in operation, UNITAID's patent pool would continue to be useful for facilitating access by poor people to HIF-unregistered products, including combination therapies. Similar points apply to compulsory licensing as provided for in the TRIPS Agreement as clarified in the Doha De ­claration. 8 The TRIPS Agreement permits a government to compel a patent holder to license a domestic com­pany to manufacture and sell its medicine, in exchange for a(typically small) licensing fee that is set by the government and paid by the generic manufacturer to the patent holder. The point of compulsory licenses is to enable governments to make important new medi ­cines accessible to their populations. Although compul­sory licenses are perfectly legal, they have been issued only rarely – mainly because pharmaceutical companies lobby strongly against them, often by calling upon the support of agencies of their own government(e. g. the office of the US Trade Representative, which can inflict various serious penalties upon countries deemed to be hostile to US economic interests presented as free trade principles). Compulsory licenses have given poor patients access to urgently needed medicines; and they might come to do so on a much grander scale if less­developed countries were to combine more effectively against political pressures from the leading pharmaceu­tical innovator states. But compulsory licenses do have a dampening effect on innovation by creating uncertainty about the extent to which successful innovators will be allowed to profit from their successes. Unlike the HIF, com ­pulsory licenses cannot stimulate innovation(especially against the diseases of the poor), nor can they provide incentives to market and promote medicines for optimal health impact. Even if compulsory licenses were de­ployed in the best possible way, they would not under­mine the need for the HIF. A leading species of innovation prize, Advance Mar­ket Commitments(AMCs) assure developers of a pre­defined vaccine or other medicine of profitable sales. An AMC may legally guarantee, for example, that the first 200 million doses of a new kind of vaccine – if they meet certain specific requirements and are sold into less­developed countries at$ 3 a dose – are rewarded with 8. See Article 31 of the 1995 TRIPS Agreement(www.wto.org/english/ docs_e/legal_e/27-trips_04c_e.htm) and the 2001 Doha Declaration (www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm). an additional subsidy of$ 15 per dose. The described AMC would incentivize innovator firms to work hard to collect as much of the$ 3 billion prize as possible: by de­veloping a qualifying vaccine more quickly than its com ­petitors and by selling doses of it sooner and faster into the developing world. Though AMCs are more similar to the HIF than the other three mechanisms, they are inferior in five significant ways: (1) Each innovation prize targets a specific disease, which is chosen by politicians, bureaucrats, or ex­perts – presumably with an eye to selecting that dis­ease against which the most cost-effective health gains can be achieved. The HIF, by contrast, would let each innovator company decide which disease(s) to target. The latter design is superior because insid­ers have proprietary information that gives them a much better understanding of how they can reduce the global burden of disease most cost-effectively. Insiders also have powerful incentives to get it right: if they do well in selecting research targets, they will end up with products that will bring large therapeu­tic benefits and hence large health impact rewards. Innovation prize designers lack such incentives: they lose nothing by selecting an inferior research target, and lobbying by companies and patient groups may then easily lead them to do just that. (2) Funding of innovation prizes depends on donor wil­lingness, which can easily dry up because the renew­als will be for different diseases. Guaranteeing an­nual reward pools far into the future, the HIF would be a permanent source of pharmaceutical innova­tion, supporting some 20-30 products at any given time(with 2-3 added and expiring each year). But this advantage comes at a cost: establishing the HIF in the first place is much harder than getting funding for an innovation prize. (3) Innovation prizes must specify rather precisely what is to count as a qualifying innovation. But such a precise»finish line« is difficult to specify optimally in advance of the research that the prize is yet to encourage. Suboptimal specification may lead to no qualifying innovation(with much wasted effort) or to qualifying products that, with a little extra effort, could have been substantially better. The HIF needs no advance specifications – it simply rewards each registered product according to its health impact. 5