‘Radical’ bill seeks to reduce cost of AIDS drugs by awarding prizes instead of patents

Prizes, not patents.

That could be the slogan for a radical idea that leading economists say would lower the price of new drugs for treating HIV/AIDS.

(Manuel Balce Ceneta/AP) - Sen. Bernard Sanders (I- Vt.), has introduced a bill to establish a prize system for the development of anti-AIDS drugs.

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Treating AIDS costs tens of thousands of dollars per patient annually in the United States, and more and more patients are unable to afford the life-saving drugs, according to figures from the AIDS Drug Assistance Program. The waiting list for the program, which is jointly funded by federal and state governments and provides medicines to low-income patients, now stands at 2,759, up from 361 in 2010. 

Academics have been saying for more than a decade that one way to lower drug costs would be to offer pharmaceutical companies a share of a multi-billion-dollar prize pool, instead of the current system of patents that give a company exclusive rights to newly developed drugs.

The notion surfaced in Congress last week at a hearing called by Sen. Bernard Sanders (I-Vt.), who has introduced a bill to establish a prize system for the development of anti-AIDS drugs.

“It simply blew me away — and would blow anyone’s mind away — that one drug, Atripla, costs $25,000 per year” in the United States, Sanders said at the hearing of the subcommittee on primary health and aging.

Generic versions of the same drug cost $200 in Africa and other parts of the developing world.

The huge price gap is a result of a deal struck with brand-name U.S. drugmakers under the President’s Emergency Plan for AIDS Relief, which provides anti-retroviral drugs to 3.9 million people in developing countries. In 2003, to reach more patients, brand-name drugmakers agreed to let overseas drugmakers sell generic, low-cost versions of their patented AIDS drugs outside the United States.

Under Sanders’s bill, newly developed AIDS drugs could immediately be made by any drug company as a low-cost generic. In lieu of patent protection, the company that invented the drug could win a prize from a pool funded by insurance companies and the federal government at $3 billion per year.

To win, companies would have to show that a drug performed better than older drugs. A panel of experts would evaluate claims.

If enacted, the bill would save private insurers, Medicaid and other government assistance programs money , Sanders said. Acknowledging that the plan would reduce drug company profits, he called it “fairly radical for the U.S. Congress.”

“This is like the nuclear option for the pharma sector,” said James Love, an intellectual property expert who testified in favor of the bill.

While Sanders acknowledged that the legislation isn’t going anywhere anytime soon — he is its sole sponsor — the idea of prizes to speed new medicines to market is gaining momentum.

Nobel Prize-winning economist Joseph Stiglitz and Harvard Law professor Lawrence Lessig testified in favor of the bill, and last month, an advisory committee to the World Health Organization broadly endorsed prizes for drug development. Via other legislation, Congress is poised to ask the U.S. National Academies to study the issue.