Prizes, Not Patents, For Drug Discovery? // Pharmalot

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 Sanders.

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 fund.

?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?

Source: http://www.pharmalot.com/2011/06/prizes-not-patents-for-drug-discovery-2/

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