Prizes + patents are too costly
Fisher III & Syed 17 *WilmerHale Professor of Intellectual Property Law, Harvard University, **Assistant Professor of Law, University of California at Berkeley (William W. Fisher III and Talha Syed, “Chapter 5: Prizes” in Infection: The Health Crisis in the Developing World and What We Should Do About It, https://cyber.harvard.edu/people/tfisher/Infection_Prizes.pdf) AM
Currently, we rely almost entirely on the patent system to stimulate and channel drug research.108 What adjustments should we make in the patent system if a prize system were introduced?
There are three possible answers to this question. This first is: none. Neither the content nor the coverage of the patent system should be altered at all. The prize system would thus be cumulative, offering drug developers rewards in addition to those they could receive by patenting their creations.
Several of the proposals we have already encountered take this general form. For example, the Advance Market Commitments advocated by Michael Kremer and others – and recently adopted by the G-8 countries – presume that the developer of a qualifying vaccine would patent it and then earn both the revenues guaranteed by the AMC and revenues from traditional sales of the patented product. Similarly, the new federal statute that will give “priority review vouchers” to the developers of drugs aimed at tropical diseases presume that those drugs would be patented in the usual way. Finally, Doug Lichtman’s ingenious proposal seeks to supplement, not supplant, the patent system.
The major benefit of this approach is political feasibility. Pharmaceutical firms can be expected to endorse proposals of this kind, for the obvious reason that all such proposals provide the firms new sources of revenue without affecting their old sources of revenue. The pharmaceutical firms have enormous political power. It is thus unsurprising that the only prize systems that thus far have made much headway have been cumulative systems of this general sort.
The major disadvantage of this strategy is equally obvious: it is very expensive. All of the costs of the present patent system are retained. To them are added the new costs associated with the prize system. Thus, if possible, we should strive to avoid this approach.