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There is lack of empirical evidence supporting the benefits of Some economists and legislators have advocated for a prize system over instead of a patent system for pharmaceutical drugs (see [[Medical Innovation Prize Fund Act]]) given the potential for price hiking and deterring R&D in our current patent system.<ref name= "Radical" /> Legislators have proposed bills that provide for prize systems for a small class of drugs (see [[Prize Fund for HIV/AIDS Act]]). Under this system, but several factors may be considered if companies that invent a new drug will receive a lump sum prize system is from a pool of up to $3 billion per year and no right to exclude would be implemented need awarded to the company. The money for the prize pool would be [http://wwwprovided by the federal government and insurance companies.buA panel of experts would determine which drug performs the best allowing research to be targeted towards a specific problem.edu<ref name = "Radical" /law> Proponents of the HIV/journals-archive/scitech/volume131/documents/wei_webAIDs Act including Bernie Sanders suggest that the prize system may lower barriers to entry and allow nontraditional parties to participate in finding a needed solution.pdf (BU)]:

'''Valuation Problems'''Proposed Prize Systems have taken many forms including: What is # Opt-in systems where the government pays at least the criteria for awarding a prize and how much prize money is each innovative drug worth? This is one of monopoly profits that the biggest problems in establishing a prize systempatent holder would expect to receive. Prize payments that # System where patents are too low won’t provide enough incentive, while payments that are too high may incur resource duplication costsexchanged for compensation through an auction. The prize payment amount also has to be individually tailored # Offer cash subsidy to the benefit of the drug. People suggest the consumers who value of the payment be dependent on patented product more than the ‘social value’ of a drug, marginal cost but how is that social value determined? Will cannot afford the patented product at a distinction be made between medically necessary drug inventions and lifestyle improvement drugs (e.g. acne medication)? Additionally, private investors such as Bill and Melinda Gates are able to supply similar prize systems for pharmaceuticals discoveries, but the government may struggle to find adequate resources for fundingmonopoly price.

'''Timing of Prize Payments'''The timing of the Many consider implementing a federal prize payment has system for inventions to be timed well; if awarded impractical for several reasons. Determining both the criteria for award winning products and the valuation of each winning drug may pose a significant challenge. Suggestions include valuation based on social value, lifestyle improvement, or medical necessity. Additionally, awarding a prize too early other may dissuade companies may not be incentivized to produce a drug that would’ve been higher quality than from commercializing products or pursuing R&D. Completely eliminating bias from the drug panel that won the prize. After decides awards may prove impossible and therefore decrease the prize is awarded, incentive competition needed to commercialize make the drug is reduced since there is no patent systemwork. One potential solution is to defer prize payment until there has been a certain degree of commercialization.<ref name="BU"/>

 ==References== <ref name="Radical"> [https://www.washingtonpost.com/national/health-science/radical-bill-seeks-to-reduce-cost-of-aids-drugs-by-awarding-prizes-instead-of-patents/2012/05/19/gIQAEGfabU_story.html] ''Radical'bill seeks to reduce cost of AIDS drugs by awarding prizes instead of patents', 'Administrative Problems'Washington Post''. </ref>The MIPF creates a board <ref name="BU"> [http://www.bu.edu/law/journals-archive/scitech/volume131/documents/wei_web.pdf] Marylnn Wei, 'Should Prizes Replace Patents? A Critique of trustees that has the responsibility Medical Innovation Prize Act of awarding prize payments2005'. Though the board "Boston University Journal of 13 members is designed to be unbiasedScience & Technology Law", it is unlikely that they will not be subject to political and external pressures, leading to a distorted allocation of resources. An appropriate screening mechanism to confirm the reported benefits of the invented drug has not been designed either and may be needed to preserve the safety of the consumer(Boston: 2007).</ref> [[Category: Internal]][[Internal Classification: Legacy| ]]