Prizes fail – not a big enough incentive, deters risk-taking, inefficient, and politicized

“Delinkage Debunked: Why Replacing Patents With Prizes for Drug Development Won’t Work,” 02/03/2020, Information Technology & Innovation Foundation, https://itif.org/publications/2020/02/03/delinkage-debunked-why-replacing-patents-prizes-drug-development-wont-work

WEAKNESSES OF THE DELINKAGE APPROACH

Prizes have a place, but as the following sections argue, there are many weaknesses with a delinkage approach that would make prizes the primary mechanism for incentivizing global life-sciences innovation.

The first and most significant is that it is extremely unlikely governments would truly adequately fund such prizes as the primary mechanism for underpinning global life-sciences innovation. If anything, a pure prize system would likely stimulate more free-riding by nations, and thus actually exacerbate underinvestment.

The second is a prize approach would be unlikely to engender the risk-intensive innovative activity necessary to develop new medicines, and certainly not in comparison with a global life-sciences innovation system that is generally working effectively today toward new drug discovery.

Third, there are significant administrative, mechanical, and operational challenges associated with administering prize systems that would likely introduce inefficiency and politicization.

Fourth, while there are certainly myriad challenges in the provision of global health care, other approaches can more effectively help solve many of these problems.

Put simply, while the use of prizes can make important and meaningful contributions to addressing some of these challenges, prizes cannot represent the “be all end all” approach to underpinning the global biomedical innovation system or tackling difficult public health challenges.