Sunday, May 11, 2008

Pharmceutical Innovation Prizes

While the space community works with prizes in areas where traditional approaches haven't worked well, a bigger struggle is being waged worldwide in the area of health care and pharmaceuticals. Battles are waged over patents, price controls, and various alternatives to the regimes found in most countries. Some of the alternatives involve innovation prizes. You can get a glimpse at some of the competing ideas in the latest KEI Policy Blog prize post.

One of the alternative approaches that the U.S. government is actually trying is the priority review voucher. This is a "prize" where

the US Food and Drug Administration grant transferable "priority review vouchers" to companies that successfully obtain approval for a drug or vaccine against neglected diseases, which can then be used to jump the queue for a review of another of the company's FDA applications - shaving up to a year off the time to market for a potential blockbuster product. This accelerated approval could be worth over $300 million to major pharmaceutical companies; moreover, this also benefits smaller biotechnology companies (who could sell such a voucher to a larger company) and generic firms (who can also enter the market sooner given the earlier patent expiration).

BioWorld has more on neglected diseases and priority review vouchers.

For the space people reading this blog, that's like having the government choose some technical space goal it considers worthy (like the existing and proposed Centennial Challenges, or "get me detailed measurements of Shackleton Crater", or "demonstrate solving my Operationally Responsive Space problem by launching x y and z in w days"). Any company that solves one of the problems would, in addition to whatever business is inherent in the solution, get a transferable bump to the front of the ITAR review queue. It's an inexpensive way to offer innovation incentives.

Another proposal being discussed is the Health Impact Fund, which is a prize variant that's different from the space prizes we're familiar with in that it's a large, industry-spanning fund that tries to solve the guesswork of valuing an innovation before it's made. The HIF approach is to measure the social benefits of innovations after the fact (the advocates admit this is difficult and prone to political mischief, but contend that the existing systems that would be replaced are far from market-based anyway), and reward innovators that sell the resulting products at production cost (rather than patent monopoly rates) using the fund. The version described is optional (companies could choose to continue using patents), although other, more heavy-handed proposals exist. It tends to work better for neglected diseases (such as those that afflict poor countries) and orphan diseases (those that affect only a small population).

Here's more on the proposal: An Efficient Reward System for Pharmaceutical Innovation.

It's a good idea for the space community to keep an eye on these proposals and actual policies, since they may reveal good ideas and potential pitfalls that could also apply to space industry prizes.