The Bid Idea: Prizes to Stimulate R&(and)D for New Medicines

Abstract

I. BACKGROUND ON PRIZES AND THEIR APPLICATION TO MEDICAL R&D 1520 II. SHORTCOMINGS OF CURRENT “PRICE” INCENTIVE 1522 III. PRIZE SYSTEMS TO SIMULATE INVESTMENTS IN MEDICAL INNOVATION 1528 IV. MAJOR ISSUES IN THE DESIGN OF PRIZE FUNDS 1534 A. Voluntary or Non-voluntary? 1535 B. Relationship to the Patent System 1535 C. Fixed Total Prize Fund Obligations, or Obligation to Pay Fixed Prize Per QALY? 1536 D. Structure of Prizes (and Relationship to QALYs) 1536 E. Timing of Payoff 1539 F. Size of the Prize Fund 1540 G. Valuation of Inventions 1541 H. Allocation of Set-Asides for Priority or Neglected Areas 1542 I. Treatment of Follow-on Innovation 1542 J. Transition from Current to New System 1543 V. SOLVING THE GLOBAL FREE-RIDER ISSUE 1543 VI. COMPARISON OF THE PRIZE FUND APPROACH TO ADVANCED PURCHASE COMMITMENTS OR ADVANCED MARKETING COMMITMENTS 1544