Results-based prize system incentivizes meaningful innovation
Love and Hubbard 9 – James Love, M.P.A., is Director of Knowledge Ecology International (KEI). Tim Hubbard, Ph.D., is Head of Informatics at The Wellcome Trust Sanger Institute, Cambridge, UK, and Joint Head of the Ensembl genome annotation project.
James Love and Tim Hubbard, Summer 2009, “Prizes for Innovation of New Medicines and Vaccines,” Annals of Health Law, https://lawecommons.luc.edu/cgi/viewcontent.cgi?article=1111&context=annals
To some prize fund proponents, the most important benefit is the improved targeting of R&D incentives. Today, most R&D spending is wasted on products that offer almost no realistic chance of offering significant health benefits over existing products.8 3 The prize fund would dramatically reduce incentives for investments in medically unimportant products, while making it highly profitable to invest in products that truly improve health care outcomes.
c. Incentives for Rational Marketing Practices Marketing practices today are rational responses to our system of R&D incentives. With a legal monopoly to sell and product, and returns based upon the number of units sold at monopoly prices, companies have enormous incentives to invest in marketing of products to doctors and consumers, even for uses where the drug is of marginal use or even dangerous. 84 If prizes are implemented as rewards for improvements in health outcomes, irrational uses of medicines become a negative rather than a positive.