[Ip-health] Pharmalot: Prizes, Not Patents, For Drug Discovery?

Krista Cox krista.cox at keionline.org
Thu Jun 2 15:25:00 PDT 2011


Prizes, Not Patents, For Drug Discovery?

By Ed Silverman // June 2nd, 2011 // 11:33 am

Once again, Bernie Sanders, the independent Senator from Vermont, is
proposing legislation that would eliminate market exclusivity for new drugs
and, instead, would give inventors or developers cash rewards from a pair of
prize funds. A separate fund would similarly offer rewards for those who
develop drugs specifically for HIV and AIDS.

The first bill, known as the Medical Innovation Prize Fund Act, would
eliminate legal barriers to making and selling generics, including vaccines,
and create a fund equal to .55 percent of the US Gross Domestic Product,
which would be worth an estimated $80 billion annually at current levels.
The HIVAIDS Prize Fund would be funded at .02 percent of US GDP, or equal to
more than $3 billion a year (you can read each bill here and here).

Where would the money come from? The federal government and private health
insurance companies would fund the prizes, according to formulas contained
in the bills. And supporters maintain the cost of these funds would easily
be offset by savings generated by the availability of lower-cost generics.
However, there are some differences from earlier bills introduced by
For instance, an open source dividend would give at least 5 percent of prize
money to any person or community that contributes knowledge, data, materials
or technology into the public domain, or provides royalty free and
non-discriminatory access to patents and other intellectual property rights.
Both bills also permit creation of competitive intermediaries to manage
prizes for interim technologies. These intermediaries would be non-profits
that compete for funding from private insurers that share the cost of the

“By de-linking research and development incentives from product prices, and
by eliminating legal monopolies to sell products, it is possible to induce
investments that are medically more important, procure products at low
prices from competitive suppliers, radically lower pricing barriers for
access to new medicines, reduce wasteful marketing and research and
development activities, and dramatically lower the overall costs of
acquiring innovation, while expanding access to that innovation,” according
to the Medical Innovation Prize Fund Act.

As we noted, though, Sanders has attempted this before and his efforts went
nowhere. So it remains unclear whether his ideas are more likely to gain any
traction this time around.

“We believe that the smaller prize fund bill is the one that may gain
traction first. There is a significant access problem for HIV/AIDS drugs in
the US and if the AIDS community sees the de-linkage approach in S.1138 as a
good thing, economics will begin to drive policy makers to consider this
approach,” writes Krista Cox, a staff attorney with Knowledge Ecology
International, a non-profit advocacy group that focuses on intellectual
property issues that affect access to medications.

“The United States has over a million persons living with HIV, and about
1,000 persons per week in new infections. With prices for new drugs at $24
thousand and up per year for the newer treatment regimes and growing waiting
lists for treatment, it is time to consider new approaches. The Prize Fund
approach is the best possible way to reconcile innovation and access, and at
some point, having a logical solution will make a difference.”

“The Sanders prize fund bill would go far toward eliminating the problems
that pervade the drug industry. First, it would end the nonsense around
getting insurers or the government to pay for drugs. If drugs cost $5-$10
per prescription, there would be no big issues about who pays for drugs.
This would eliminate the need for the paperwork and the bureaucracy that the
insurance industry has created to contain its drug payments,” Dean Baker,
the co-director of the Center for Economic and Policy Research, wrote in The
Huffington Post.

“We would also end the phony moral dilemmas we create for ourselves with
drug patents. Should Medicare pay $100,000 a year for a drug to treat a rare
cancer in an otherwise healthy 80-year-old? This dilemma becomes a quick
no-brainer when the drug is available for $200 a year in the free market
with no patent protection.”

What do you think?

Krista Cox
Staff Attorney
Knowledge Ecology International
(202) 332-2670

More information about the Ip-health mailing list