Also, what happens to the incentive to actually invest in manufacturing, distribution or communication of infromation about the drug when the innovator can just take the prize money and run? Why bother with actually selling drugs to sick people?

When a manufacturer applies for a NDA their manufacturing facility is inspected and pharmacokinetics are a big part of the drug profile. So this in essence takes R&D companies out of manufacturing. So there is no standard to compare against - everyone has their own yardstick from each generic company. When a generic company files a ANDA they must approve approximate bioequivalence (80%-125% AUC) and manufacturing control. ANDA’s take 36 months. So say GSK discovers a new compound, given its track record, no one is lining up to manufacture due to their poor track record. So if it does come out, either only 1-2 companies are ready to go - giving them monopoly pricing; or no one is ready and it takes a couple of years to get it on the market

The interview and comments are interesting. I can contribute an article that my colleague Henry Grabowski and I have recently had published that discusses some problems in implementation and in practice that we believe this and related proposals would likely create if enacted (http://www.nature.com/clpt/journal/v82/n5/pdf/6100393a.pdf). The article was written post the introduction of a Sanders prize fund bill in the House, but just prior to the introduction of his Senate bill. Earlier (2004) we had submitted a longer critique of proposals like this to the WHO’s Commission on Intellectual Property Rights, Innovation and Public Health. That paper can be found here: http://www.who.int/intellectualproperty/news/en/Submission3.pdf

People should be careful when tinkering with drug prices and drug safety together – the two are very interdependent and progress in one area is often to the detriment of the other.

I feel like he fell back on, “well it’s complicated to determine prices now.” I didn’t read the bill, but what he proposes, to have an esteemed group of impartial, cross-functional experts award 10s of billions of dollars fairly sound impossible to me. It also seems like a system primed for corruption. The devils in the details.

One problem I see with the comments above is their emphasis on the profit incentive and declaration that there is no possible replacement for it. But the problem with this mindset has been and is the fact that it does not take drug safety into account. Pharmaceutical companies each have a line item to pay individuals or their families when a family member is harmed or killed by a drug. This is just factored into doing business - the ethic is just not there. This is an industry that is not selling soap, though that is how it seems to behave.

There is no replacement for the profit incentive. Currently, drug innovators are motivated to develop drugs that best meet the demands of consumers. The better their drugs do this, the more profits they earn. Patent laws help to achieve this process, because they assure innovators that their efforts (if successful) are rewarded commensurate with their ability to provide the most desired treatments.

Sanders’ bill attempts to replace the profit motive with a government granted reward – which, by the way, has to come from somewhere, i.e. taxpayers. If you were developing a life-saving treatment, which would you rather receive? A cookie-cutter reward from the government, or the right to exclusively market your drug and directly reap the benefits of your ingenuity?

Does this bill plan to reward treatments based on how well they meet the needs of the general public? Not a chance. At best, such a program would attempt to reward the more “important” discoveries with higher amounts of cash. Making such decisions would require extensive research and pharmacoeconomic analysis, and even then would probably not match up with the needs of the general public.

What about the $200 billion in annual savings, you ask? I’m assuming this savings refers to the benefits consumers would receive from lower drug prices as a result of the bill. Fine. Prices would indeed be much lower. What this methodology fails to take into account, is the less obvious costs of imposing a law like this. As mentioned, taxpayers are forced to fund the program. It erodes IP rights and therefore erodes incentives to innovate. In the end, the taxpayer, the patient, and yes, big pharma – we all lose. (Except for politicians and generic companies, who I might add aren’t all that worse for the wear in their current circumstances).

Yes, as Love says, business models do change. But the basic laws of economics do not. Please don’t remove my drug innovator’s motive to keep providing me and my family with life-saving treatments.

To Ed: I understand your point about Sanders’ socialist leanings or beliefs. I simply listed as I did because he was voted in as an independent, as opposed to as a Republican or Democrat on a formal basis. If I’m incorrect about that, though, I will gladly make the correction.

To Nathan: I posted this interview simply because the legislation is provocative and I’m interested not only in the reactions but the larger issues it raises. You make some good points in response and I hope that others will do the same thing. Whether the bill lives or dies, perhaps some greater understanding can be achieved.

Thanks to you both for writing in,

ed at Pharmalot

Fortunately for all of us, I think that this system has virtually no chance of passage. For starters, the entire world would have to simultaneously shift to this new paradigm, which is very unlikely. Moreover, it represents a huge shift away from free-market driven research to government driven research. When is the last time the NIH developed a real drug that is currently on the market?

Bernie Saunders should not be referred to as “an independent from Vermont.” He is an avowed socialist and the only one in U.S. Congress to my knowledge.