Yesterday I had the pleasure of debating Jamie Love on the issue of replacing pharmaceutical patents with a “prize†system wherein the government pays an innovator a lump sum amount for its innovation that is then placed in the public domain.
No, really, he’s serious.
The “prize†model has been used in the past – in the old Soviet Union. It didn’t work. The Soviet experience was characterized by low levels of monetary compensation and poor innovative performance. The US experience isn’t much better. The federal government paid Robert Goddard (“the father of American rocketryâ€) $1 million as compensation for his basic liquid rocket patents. A fair price? Not when you consider that during the remaining life of those patents, US expenditures on liquid-propelled rockets amounted to around $10 billion.
Certainly not what Schumpeter had in mind when he wrote about “spectacular prizes … thrown to a small minority of winners.†Creative destruction indeed!
Jamie wants to replace a patent system that has allowed the average American lifespan to increase, over the past 50 years, by almost a full decade with a prize program that has a solid record of complete failure.
My argument to Jamie was that, as Joe DiMasi (Tufts University) and Henry Grabowski (Duke University) have argued, under a prize program, pharmaceutical innovators would lack the incentive to innovate. To quote DiMasi and Grabowski, “The dynamic benefits created by patents on pharmaceuticals can, and almost surely do, swamp in significance their short-run inefficiencies.â€
In other words (and to paraphrase Winston Churchill) our pharmaceutical patent system is the worst way to stimulate and support health care innovation – except for every other system. On a list of 100 ideas for ways to improve innovation and access, Jamie’s prize program isn’t even on the list.
Is it a crackpot idea? Well, consider the fact that Mr. Love’s idea is going to be introduced in federal legislation by the new Socialist Senator from Ben & Jerry’s, Bernie Sanders.
Who could support such an idea? Nobody? Wrong! Dangerously wrong. Again, as DiMasi and Grabowski presciently observed in 2004, “The main beneficiaries in the short-term would be private insurers and public sector purchaser of pharmaceuticals … Governments and insurers are focused myopically on managing health care costs. They are not likely to be strong advocates for funding new drug development that can increase individual quality of life and productivity."
Sound familiar? Correct. Europe.
Remember these three words: Evidence-based medicine.
There are, to be sure, other unworkable, ill-considered, and precarious aspects of Mr. Love’s child – but we’ll save that for later. Suffice it to say that a prize system is not a Crackerjack idea. In the meantime, I did tell Jamie that I would gladly comment in detail on the Sanders legislation via a thoughtful and considered edit.
I await the attachment.
No, really, he’s serious.
The “prize†model has been used in the past – in the old Soviet Union. It didn’t work. The Soviet experience was characterized by low levels of monetary compensation and poor innovative performance. The US experience isn’t much better. The federal government paid Robert Goddard (“the father of American rocketryâ€) $1 million as compensation for his basic liquid rocket patents. A fair price? Not when you consider that during the remaining life of those patents, US expenditures on liquid-propelled rockets amounted to around $10 billion.
Certainly not what Schumpeter had in mind when he wrote about “spectacular prizes … thrown to a small minority of winners.†Creative destruction indeed!
Jamie wants to replace a patent system that has allowed the average American lifespan to increase, over the past 50 years, by almost a full decade with a prize program that has a solid record of complete failure.
My argument to Jamie was that, as Joe DiMasi (Tufts University) and Henry Grabowski (Duke University) have argued, under a prize program, pharmaceutical innovators would lack the incentive to innovate. To quote DiMasi and Grabowski, “The dynamic benefits created by patents on pharmaceuticals can, and almost surely do, swamp in significance their short-run inefficiencies.â€
In other words (and to paraphrase Winston Churchill) our pharmaceutical patent system is the worst way to stimulate and support health care innovation – except for every other system. On a list of 100 ideas for ways to improve innovation and access, Jamie’s prize program isn’t even on the list.
Is it a crackpot idea? Well, consider the fact that Mr. Love’s idea is going to be introduced in federal legislation by the new Socialist Senator from Ben & Jerry’s, Bernie Sanders.
Who could support such an idea? Nobody? Wrong! Dangerously wrong. Again, as DiMasi and Grabowski presciently observed in 2004, “The main beneficiaries in the short-term would be private insurers and public sector purchaser of pharmaceuticals … Governments and insurers are focused myopically on managing health care costs. They are not likely to be strong advocates for funding new drug development that can increase individual quality of life and productivity."
Sound familiar? Correct. Europe.
Remember these three words: Evidence-based medicine.
There are, to be sure, other unworkable, ill-considered, and precarious aspects of Mr. Love’s child – but we’ll save that for later. Suffice it to say that a prize system is not a Crackerjack idea. In the meantime, I did tell Jamie that I would gladly comment in detail on the Sanders legislation via a thoughtful and considered edit.
I await the attachment.
