An interesting idea to lower drug costs

bernie sandersby ursonate

Bernie Sanders introduces anti-pharma-patent bill, aims to replace drug monopolies with prizes
[Via Boing Boing]

Jamie Love sez, “Senator Bernie Sanders (I-VT) has introduced legislation in the US Senate that would use prizes to reward medical R&D, and eliminate all drug monopolies. It includes an open source dividend of $4 billion per year.”

Both bills would eliminate all legal barriers to the manufacture and sale of generic versions of drugs and vaccines. The more ambitious bill is the Medical Innovation Prize Fund Act, which would apply to all prescription drugs. The narrower proposal is the Prize Fund for HIV/AIDS Act, which would only apply to treatments for HIV/AIDS. The Medical Innovation Prize Fund would create a prize fund equal of .55 percent of US GDP, which is more than $80 billion per year at current levels of U.S. GDP. The HIV/AID Prize Fund would be funded at .02 percent of U.S. GDP, which is equal to more than $3 billion per year at current levels of U.S. GDP.

The federal government and private health insurance companies would co-fund the prizes, according to formulas set out in the bills. The cost of the prize funds would be more than offset by the savings from the introduction of generic competition for products.

Both bills have some similar features to Senator Sanders’ earlier prize fund bills, but there are also a number of changes. Among those changes are the introduction of an open source dividend element to the bills, which would have at least 5 percent of the prize money going to persons or communities that put knowledge, data, materials or technology into the public domain, or provide royalty free and non-discriminatory access to patents and other intellectual property rights. Annually, this would be more than $4 billion for S. 1137, and $147 million for S. 1138, at 2010 levels of GDP, as an incentive to open source research.


You can read a little more in depth from this PDF.

What this is doing is decoupling research from development, providing substantial rewards to the creators of new drugs but promoting competition for the manufacture of those drugs.

It will also create competition for the sort of research that continually succeeds in finding products.That is, the groups that can be innovative and continue to win prizes again and again will be recognized while those that simply throw money at projects (such as Big Pharma) will fall.

The companies that are best at producing and manufacturing drugs will win in the marketplace while those who are best in research will be rewarded by the prize money. Which will be about $80 billion a year at current levels.

And it also includes competitive intermediaries who will help divvy the prize up for groups that take care of intermediate steps in the process – such as clinical trials, open source databases, etc.

I do not see this substituting for current government funding of basic research. This will be funded by insurance companies and the government but the added competition will provide cost savings that pays for it all.

It would be a win-win in many ways. But I imagine it will have no chance of becoming law.

It is a creative way of working around the problem of high drug costs,introducing competition in ways that would positively benefit not only those with the most efficient processes but also all of us.

We shall see.