ISSUE48: FEBRUARY-APRIL 2007
network of research and training centres/programmes
Cash prizes good way to stimulate drug R&D, experts agree
International prize competitions can challenge researchers to find innovative medicines and ideas for improving global health and help break existing profit-driven patterns that mostly produce drugs for the rich, according to world experts attending a landmark meeting devoted to the topic.
More than 50 experts assembled in Maastricht January 28-29 focused on how to use prize competitions to stimulate medical and pharmaceutical R&D. Organized by UNU Maastricht Economic Research and training centre on Innovation and Technology (UNU-MERIT) and Knowledge Ecology International (KEI), the meeting attracted participants from a broad range of disciplines and stakeholder groups, including research institutes, government, UN organizations, NGOs, industry, patent organizations and funding agencies. The workshop was opened by UNU Rector Konrad Osterwalder.
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Harvard Law School Professor William Fisher (right) outlined several benefits of prize-driven competitions and important factors influencing the design of a prize system. He said prizes are a promising way to stimulate research into medical products to address neglected diseases.
Among the most compelling arguments in favour of medical research prizes is that they help eliminate economic and social costs imposed on society by patent holders who charge too much for drugs. Proponents argue that if the incentive for innovation can be divorced from the product's consumer price, knowledge can be placed in the public domain immediately, allowing competition to drive down prices and ensure greater access to new medical inventions.
Prizes can also help eliminate entrenched biases in patterns of research in the current system, such as the over-concentration of research and development resources on drugs to combat "diseases of the rich" and a tendency to produce "me-too" drugs that demonstrate little incremental health benefits over existing, and cheaper, alternative products.
In the US, the proposed Medical Innovation Prize Fund Act of 2007, introduced by Senator Bernie Sanders calls for an annual fund of $80 billion to support medical innovation through the use of prizes instead of patent-based monopolies.
As the success of the Ansari X-Prize to stimulate commercial space travel has shown, a well designed prize can also leverage significant additional private funding for public research. The Prize succeeded in generating $100 million in investment by groups competing for the $10 million prize.
Dr. Fisher pointed out a number of potential problem as well, including drawing an unwieldy number of teams into a competition, insufficient incentives to ensure the commercialization of innovations, and political unpalatability in countries where vested commercial interests are at stake.
The workshop explored a number of important prize design questions that need to be taken into account, including targeting, prize magnitude, and when to award a prize -- at the point of discovery, or following successful commercialization, for instance. Other issues included how to deal with further innovation following the first breakthrough, and the relationship between prizes and the patent system.
The backgrounds of the participants varied as widely as their opinions on what constitutes a workable prize model. Some of the participating economists differed, for example, on how replacing patents with prizes would affect innovation and effectiveness of state funding. Participants were in agreement, however, that the workshop was a seminal event and identified several required next steps:
- agreement on a common terminology to facilitate discussions;
- more awareness raising on prizes in both developed and developing countries;
- access to data on prices and markets, for instance the relative share of generic vs. brand name drugs, and R&D capacity in developing countries;
- concrete recommendations on optimum prize amounts to incentivize useful innovation;
- better understanding of the links between national priorities/programmes and international processes;
- more work on governance models for prizes;
- research into the real cost of monopolies on drug prices;
- dialogue with public research bodies and industry, including WIPO.
There was also consensus that action to stimulate medical research needs to be taken sooner, rather than later. "There are no neglected diseases, just neglected people. We have been talking for over 10 years. It is now time to act," concluded Kenyan health official Ahmed Ogwell.
UNU-MERIT is organizing a follow up panel discussion at UN Headquarters in New York in March.
© 2008 United Nations University