Making AIDS Drugs Affordable With Prizes, Not Patents

from the monopolies-don't-lower-prices dept

Wed, Dec 7th 2011 3:41pm — Glyn Moody

Of all the dysfunctional parts of the patent system, drug patents are arguably the worst, since the exorbitant prices that patent monopolies allow mean that millions of people simply cannot afford medicines that would keep them alive or would improve their quality of life substantially.

One riposte to this criticism is that such high prices are needed in order to pay for costly research, but as Techdirt has noted before, that's just a myth. Another is that even if the system has its problems, there's no other way. But there is. In both the US and EU, the idea of replacing pharma patents with pharma prizes is gaining adherents.

One of the early attempts to do that came from Senator Bernie Sanders. At the time, we were rather sceptical because of the bureaucracy that seemed to be involved in this $80 billion scheme. Now he's back with a slimmed-down version of his idea:

I introduced a bill in the Senate that would test this new approach on drugs developed to treat one disease: HIV/AIDS. The measure (S. 1138) would eliminate legal barriers to generic competition for HIV/AIDS drugs and reward innovation directly, through a $3 billion a year prize fund.

< ...>

The prizes would be funded by the federal government and private health insurers in an amount proportionate to their share of the HIV/AIDs drug market.

Sanders claims the savings would significant: he hopes that the $10 billion US market for AIDS drugs could be supplied at generic prices for between $500 million to $1.5 billion. He also notes other benefits:

It will give larger rewards for drugs that improve healthcare outcomes and smaller or no rewards for duplicative, "me-too" drugs that are medically insignificant. It also would eliminate incentives to engage in wasteful marketing activities. Prize fund rewards will be based on evidence that drugs actually work and work better than alternatives.

Those "me-too" drugs and the huge marketing efforts that have to be put behind them to get them used instead of similar products from competitors are further symptoms of the patent system's failure to promote true innovation. The present scheme still leaves the problem of how to decide when drugs work "better than alternatives," and how much to pay for them, but at least the field has been narrowed down, which should make judgements easier.

As with his previous proposal, Sanders' latest bill doesn't stand much chance of being realized in the current political climate. But it's good to hear a US senator framing the issue in terms of patent monopolies and their distorted pricing:

The cost of the prize fund would be considerably less than the cost of buying drugs at monopoly prices.

Once people recognize that patents (and copyright) are monopolies, with all the disadvantages and abuses that implies, they might want less of them.

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Filed Under: bernie sanders, drugs, patents, pharmaceuticals, prizes

41 Comments

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A Guy (profile), 7 Dec 2011 @ 3:47pm

:slow clap:
Finally, someone in government showing a modicum of common sense. So, of course, it will never pass.
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Anonymous Coward, 7 Dec 2011 @ 4:26pm

Rewards for production
Personally, I massively prefer the prize approach for progress to the patent approach for progress. We can judge ahead of time what we're willing to reward someone, and they can judge ahead whether it's worth doing, with 100% certainty of the agreement. And nobody is prevented from doing things with it afterward.

I also prefer this approach for books and music; request reasonable payment amount up front that's direct, and don't require your ideas to be protected from others in perpetuity. If we don't keep others from doing what they want, we don't need the government's heavy-handed information after the transaction is complete.
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- danthestone (profile), 7 Dec 2011 @ 4:27pm
  
  Re: Rewards for production
  Sorry, heavy-handed intervention.
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- Chosen Reject (profile), 7 Dec 2011 @ 4:51pm
  
  Re: Rewards for production
  Applying prizes to copyrights is a little more difficult though. It's much easier to judge whether a drug is more effective than another (not easy, just easier) or solves some as yet unsolved problem. It's much more difficult to determine if one musical piece should deserve a prize more than some other.
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  - Prisoner 201, 8 Dec 2011 @ 12:52am
    
    Re: Re: Rewards for production
    "Applying prizes to copyrights is a little more difficult though. It's much easier to judge whether a drug is more effective than another (not easy, just easier) or solves some as yet unsolved problem. It's much more difficult to determine if one musical piece should deserve a prize more than some other."
    
    You pay before it is created, so the price of the musical piece is known.
    
    The value is subjective, but could affect the price (as in a well recieved artist is more likely to get a better offer).
    
    Since we are most likely talking about private actors rather than government actors, there doesn't have to be any formalized rules for what music is deserving or not. The market will handle that.
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    - Chosen Reject (profile), 8 Dec 2011 @ 9:44am
      
      Re: Re: Re: Rewards for production
      What you are talking about is a different than the article. The article is talking about the government granting prizes based on the effectiveness of drugs. You're now talking about private parties paying for creation before hand. I'm not opposed to such a system (that's pretty much how artists were paid before copyright), it's just I was under the impression that you were suggesting a different system, one where the government grants prizes to people for better works.
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      - Anonymous Coward, 8 Dec 2011 @ 9:55am
        
        Re: Re: Re: Re: Rewards for production
        I'm sorry, I was not suggesting that the government pay for creation of works. Similarly, there is no need for the government to pay for these patent-substitutes; it could more easily be a prize offered by a private endowment, or a large health insurance company, or a bunch of pledges from individuals. Contributions from those same groups could apply to music or book creation, not the government. There's no reason the government needs to be involved at all.
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Kevin Carson, 7 Dec 2011 @ 4:26pm

Nah.
Even proposing prizes as a substitute buys into the IP-hawk argument that some special extra-market mechanism is necessary to enable innovators to charge higher than marginal cost in order to amortize R&D outlays. I ain't buyin' it. The vast majority of actual development costs comes, not from testing the actual variant of the drug which is marketed, but from testing all the major variants in order to secure patent lockdown and prevent the emergence of a competing version. IOW, most drug R&D cost comes from gaming the patent system itself.

I say just abolish patents -- period.
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- vancedecker (profile), 7 Dec 2011 @ 4:56pm
  
  Re: Nah.
  Innovators? Please.
  
  A large majority of these drugs are developed in government funded university research labs, then basically given away for pennies on the dollar to drug companies, who supposedly can 'more efficiently' produce and distribute these drugs. Instead they end up hiking up the price and claiming it's to fund 'research' which has already been done.
  
  I'm not saying all drugs are developed in this manner, but a substantial portion of HIV drugs have been, so it's bizarre/stupid/ignorant to hear these market forces arguments about drug development.
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vancedecker (profile), 7 Dec 2011 @ 4:52pm

More corporate welfare?
Why not instead, give prizes to gay people for abstaining from sexual intercourse. I know that if I got money for not having sex, then I would definitely abstain more often, depending on how much money it was.
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- abc gum, 7 Dec 2011 @ 5:03pm
  
  Re: More corporate welfare?
  Yeah, because that is the only way to contract the disease.
  If that one vector is eliminated, then the entire virus just simply vanishes ... why doesn't everyone see the light on this?
  [ link to this | view in chronology ]
  - vancedecker (profile), 7 Dec 2011 @ 5:12pm
    
    Re: Re: More corporate welfare?
    What other significant vectors are there? Mosquitoes?
    
    That could be solved by simply being proactive about pools of standing water around the house and yard.
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    - abc gum, 7 Dec 2011 @ 8:57pm
      
      Re: Re: Re: More corporate welfare?
      "What other significant vectors are there? Mosquitoes? "
      
      dense or willfully ignorant ... it's so hard to tell sometimes
      
      How about transfusions?
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      - Anonymous Coward, 7 Dec 2011 @ 8:59pm
        
        Re: Re: Re: Re: More corporate welfare?
        Contaminated medical instruments like needles, denstistry instruments, tattoo guns etc.
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        ChrisB, 8 Dec 2011 @ 7:33am
        
        Re: Re: Re: Re: Re: More corporate welfare?
        No. The risk groups for AIDS are, and have always been, homosexual males, haemophiliacs, and intravenous drug users. For 30 years, this risk group has not changed. What other disease refuses to cross risk groups? The urban myths about getting AIDS from needle sticks or dentists are utter bullshit.
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- That Anonymous Coward (profile), 7 Dec 2011 @ 7:52pm
  
  Re: More corporate welfare?
  As the main transmission method in Africa is heterosexual sex, it is nice to see your wide understanding of the topic.
  
  If you got money for not having sex, you'd be getting paid for doing what you do now?
  
  Being part of the culture that you blame I'd just like to point out how long it took for anyone else to notice the epidemic spreading. How the blood banks whined they couldn't test blood for these things while infecting people with the products. How people did not know they had it because there wasn't any money to create a test. How years of research were wasting in a pissing contest over who discovered the disease rather than working on stopping it. That it had been killing people for years before Reagen said the word out loud. That the government counted cold research in the budget to stop it, because they are both viruses. That it wasn't playing well the the moral majority until they were getting it from the hookers they saw behind their wives backs. That the spread had dropped significantly in the gay community until the drug companies were showing ads of people leading "normal" lives while on the cocktail. That the patent on AZT was awarded to a corporation for production, but the drug had been discovered years before and not used as it was to toxic for chemotherapy.
  
  So my response to you is learn some history before trying to blame this all on 1 group.
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  - abc gum, 7 Dec 2011 @ 9:02pm
    
    Re: Re: More corporate welfare?
    "If you got money for not having sex, you'd be getting paid for doing what you do now?"
    
    Lol - is masturbation considered to be having sex?
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    - btrussell (profile), 8 Dec 2011 @ 1:48am
      
      Re: Re: Re: More corporate welfare?
      Deadly assault on a sexual weapon!
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  - ChrisB, 8 Dec 2011 @ 7:41am
    
    Re: Re: More corporate welfare?
    > main transmission method in Africa is heterosexual sex
    
    Really? How many Africans get HIV tests? Did you know the majority of "diagnosis" of AIDS in Africa is based on symptoms like "weight-loss". The "AIDS" epidemic in Africa is likely just misdiagnosed tuberculosis. How can you explain why developed countries have one risk group and Africa has another? I'll tell you the answer. Pharmaceutical companies have to have somewhere to sell the toxic AZT somewhere, because it was killing too many patients in developed countries.
    
    Also, it didn't look good for funding that very few people die from AIDS in developed countries. In Canada, the number is miniscule. But as a test, I defy you to find how many people died in Canada of AIDS last year. Try and find it.
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- Anonymous Coward, 7 Dec 2011 @ 9:44pm
  
  Re: More corporate welfare?
  Hmmm
  
  That was actually an awesome troll.
  
  It was ignorant, dumb, on topic, and just believable enough to get a response.
  
  8/10
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  - vancedecker (profile), 14 Dec 2011 @ 11:28pm
    
    Re: Re: More corporate welfare?
    you're welcome.
    
    I always thought that as more people became internet savvy that their identification and appreciation of quality workmanship would be commensurate. Instead they go to geek squad to have their computers 'fixed' and still think that mosquitoes are the primary vector for HIV transmission.
    
    That's why instead of working hard to make things better here in my IT department (...within a large studio starting with the letter 'N' owned by an even larger conglomerate starting with the letter 'g') I'm sitting instead posting on some internet technology news blog.
    
    Why put in the effort, when the entire department is full of bobble headed fakers who can't tell the difference between buggy but cheap H1B VISA labor made code and something which is professionally developed and elegantly done.
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- Cooldak, 7 Dec 2011 @ 11:48pm
  
  Re: More corporate welfare?
  + child birth + straight sex
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Thomas (profile), 7 Dec 2011 @ 5:10pm

sure...
like the pharma industry is going to allow Congress to do that; they pay way too much money for protection as it is.
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Anonymous Coward, 7 Dec 2011 @ 5:45pm

Space & now Drugs
$10M for the first private company to reach space worked and is moving forward. Drug prizes will be the future.

People that are currently working on hair restoration will switch to viruses for $3B.

Huge Virus Breakthrough Could Mean a Cure For the Common Cold
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Anonymous Coward, 7 Dec 2011 @ 7:28pm

Once people recognize that patents (and copyright) are monopolies, with all the disadvantages and abuses that implies, they might want less of them.

for how many years, and how much effort have you guys been banging away trying to get people to recognize what is not really the case.

Years and years, the likes of you and masnic have spent the best parts of thier life trying to convince people that black is white..

How's it working for you ??? does not seem to be really going that well !!!!!

Maybe if you were able to support your claims with real fact and proof that would help but that would appear to be somewhat beyond you..

I guess spending your life whinning and bitching about it is much easier than actually trying to DO something constructive about it..

Do you honestly think that anyone who needs a life saving drug cares if it is from a monopoly or not ??

Especially if that drug would NOT be available AT ALL if it was not for that monopoly, so you might have to pay more, but at least you have to life saving drug, that was ONLY developed because the developer of that drug too on the risk of R&D and approval (and significant cost).

So you can have a monopoly and the drug to save your life, or no monopoly and NO DRUG and you DIE... thank goodness it is NOT YOUR fucking choice !!!

Lucky there is no monopoly on human stupidity... and greed
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- Anonymous Coward, 7 Dec 2011 @ 8:34pm
  
  Re:
  Or no monopoly and a crowdsource effort to develop something.
  
  http://www.opensourcediabetes.org/links.php
  http://www.fiercebiotechresearch.com/stor y/open-source-platform-spawns-cheap-insulin/2010-06-01
  http://tropicaldisease.org/
  
  How about that who knew people can do great things when they all come together.
  
  Look how healthcare could be to everyone.
  http://www.patchadams.org/
  
  Reducing surgery costs using open source software and Shapeways 3D printing.
  http://singularityhub.com/2011/11/15/surgeon-uses-3d-printer-to-make-models-of-bone-%E2%8 0%93-and-saves-hospital-bookoo-bucks/
  
  Crazy somebody made a DIY CT Scanner from scratch and posted the results on Youtube.
  http://www.youtube.com/watch?v=u5n6oSAmaGs
  [ link to this | view in chronology ]
  - Mat Todd, 9 Dec 2011 @ 7:43pm
    
    Re: Open source drug discovery
    We're running a very active open source drug discovery project in malaria - see e.g. https://plus.google.com/114702323662314783325/posts
    [ link to this | view in chronology ]
- Anonymous Coward, 7 Dec 2011 @ 9:49pm
  
  Re:
  Another awesome troll.
  
  It sounds just plausible enough to be convincing to, or piss off, many techdirt readers, but lacks any real substance or data behind its assertions.
  
  8.5/10
  [ link to this | view in chronology ]
  - Richard (profile), 8 Dec 2011 @ 3:04am
    
    Re: Re:
    It sounds just plausible enough to be convincing to, or piss off, many techdirt readers,
    
    I would like to moderate your marking. I don't think it is in the least bit plausible. He hasn't linked out to any of those phoney industry supported studies to add to his credibility - so it doesn't make it as a serious troll. He's not rude enough to have scored highly as an insulting troll and it's not funny (even in the Darryl/ootb sense) so I give only 4/10.
    [ link to this | view in chronology ]
    - Anonymous Coward, 8 Dec 2011 @ 3:25am
      
      Re: Re: Re:
      After consulting with Richard, I concur and reduce your troll rating to 4/10
      [ link to this | view in chronology ]
    - nasch (profile), 8 Dec 2011 @ 9:57am
      
      Re: Re: Re:
      I would like to moderate your marking. I don't think it is in the least bit plausible. He hasn't linked out to any of those phoney industry supported studies to add to his credibility - so it doesn't make it as a serious troll.
      
      Wait a sec, you're saying his trolling skills aren't very good... because he doesn't provide enough external documentation?? I have never heard that one before. Since when do trolls need to link to anything, phony or not? The M.O. is more to make vague references to the results of studies, without ever mentioning exactly which studies they are. I thought it was a pretty good troll.
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- Anonymous Coward, 8 Dec 2011 @ 1:37am
  
  Re:
  Did you forget to type your name in, darryl?
  [ link to this | view in chronology ]
  - The eejit (profile), 8 Dec 2011 @ 2:08am
    
    Re: Re:
    No, darryl is much less coherent.
    [ link to this | view in chronology ]
    - nasch (profile), 8 Dec 2011 @ 9:58am
      
      Re: Re: Re:
      Actually I thought it was darryl, until I saw that the capitalization is more ore less correct. And I don't remember darryl being profane, either.
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- Richard (profile), 8 Dec 2011 @ 2:50am
  
  Re:
  for how many years, and how much effort have you guys been banging away trying to get people to recognize what is not really the case.
  
  I take that to refer to the 300 years of pro-IP propaganda - but still the general public carries on copying stuff regardless!
  
  Maybe if you were able to support your claims with real fact and proof that would help but that would appear to be somewhat beyond you..
  
  Au contraire - the facts and proof are all in place for our side - see http://www.micheleboldrin.com/research/aim.html
  
  It is your side that has no evidence.
  
  Years and years, the likes of you .. have spent the best parts of thier life trying to convince people that black is white..
  
  300 and counting on your side of the argument.
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- Daddy Warbucks, 8 Dec 2011 @ 9:53am
  
  Competition
  Do you honestly think that anyone who needs a life saving drug cares if it is from a monopoly or not ??
  
  Yes, if the drug costs $20k, the people & their families who can�t afford it will care they can�t get it.
  
  Especially if that drug would NOT be available AT ALL if it was not for that monopoly, so you might have to pay more, but at least you have to life saving drug, that was ONLY developed because the developer of that drug too on the risk of R&D and approval (and significant cost).
  
  The point of the post is to present ANOTHER method to reach the end game of having a drug by giving the inventor a Big Cash Prize of Millions or Billions.
  
  So you can have a monopoly and the drug to save your life, or no monopoly and NO DRUG and you DIE... thank goodness it is NOT YOUR fucking choice !!!
  
  Again, narrow-minded dumbass, competition is key and some will choose to search for cures to get a Big Cash Prize WITHOUT a Monopoly, Dumbass.
  [ link to this | view in chronology ]
Anonymous Coward, 8 Dec 2011 @ 11:14am

Why is it than when patents are discussed in relation to drugs nobody bothers to mention that a wide variety of similarly efficacious drugs are readily available?

I have yet to see a single drug covered by a patent that is the only one available anywhere in the world for treating a specific medical condition.

People are not dying because any particular drug is covered by a patent. They are dying for any number of unrelated reasons, not the least of which, in the case of undeveloped countries, is the absence of adequate medical care.
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- A Guy (profile), 9 Dec 2011 @ 8:17pm
  
  Re:
  "People are not dying because any particular drug is covered by a patent. They are dying for any number of unrelated reasons, not the least of which, in the case of undeveloped countries, is the absence of adequate medical care."
  
  Yes, if only we could somehow reduce the cost of adequate medical care so these people wouldn't die. Wait a minute, we can just take the monopoly that drives up drug costs away and reward researchers a different way.
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  - Anonymous Coward, 9 Dec 2011 @ 9:36pm
    
    Re: Re:
    Give the latest and greatest drugs to those in undeveloped/undeveloped countries and people will still die in large numbers because the problem is the lack of medical facilities and personnel. While we are at it, let's send some of these countries all the latest and greatest medical devices, surgical implants such as stents/pacemakers/etc. Of course, without facilities and personnel to use them they are simply paper weights.
    
    Your fixation with patents appears to blind you to what those in the medical community say..."We need facilities and people."
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    - A Guy (profile), 9 Dec 2011 @ 11:28pm
      
      Re: Re: Re:
      The problem is multi faceted. I agree that drug patents aren't the only problem. You are just desperate to divert attention away from drug patent reform.
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      - Anonymous Coward, 10 Dec 2011 @ 12:49pm
        
        Re: Re: Re: Re:
        I am not desperate to do anything, and where you got this idea eludes me. I am merely pointing out that whether people realize it or not, a drug covered by a patent is in competition with all other drugs useful for treating the relevant medical condition. Even if all the other drugs are patented (rarely the case), there still remains market competition among the drug manufacturers.
        
        Yes, it is a multi-faceted promlem, but I submit that the most important factor is that there is simply not enough adequate medical care to go around worldwide, and particularly in underdeveloped/undeveloped countries.
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