‘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.

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.


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

“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.

More broadly,the Obama administration has pushed prizes for technological advances, sponsoring 150 contests across 40 agencies since 2010. NASA has helped lead the way, handing over $6 million to 23 prize-winning companies since 2005 for such items as better astronaut gloves and more fuel-efficient airplanes.

From 2000 to 2007, philanthropic groups have put up some $250 million to spur technologies as varied as robotic moon rovers and cheaper tests for tuberculosis, according to a recent report from the White House Office of Science and Technology Policy.

Despite this prize fever, even some AIDS activists say Sanders’s bill — which would offer a mega-prize for a big, big problem — is flawed.

“For drug companies, I don’t know how they will get a drug to market and then hope the prize fund will find out five years later they did a good deed and they’ll get this prize. It seems very indirect,” said Mark Harrington, executive director of the Treatment Action Group.

In December, former president Bill Clinton called for a more direct solution to the problem of high AIDS drug prices: He asked Congress to allow currently patented AIDS drugs to be made available in the United States as generics. That proposal has not been taken up by Congress.

Matt Bennett, senior vice presi­dent of the Pharmaceutical Research and Manufacturers of America, which lists 88 potential new anti-AIDS drugs under development by U.S. companies, said in a statement that Sanders’s bill has “many drawbacks,” including failing to reward companies for the “second, third or fourth versions” of drugs that may be more effective for some patients.

Sanders called these “me too” drugs and pointed to them as part of the problem: Drugmakers are encouraged by the patent system to make endless variations on a theme and cash in on them.

Through a spokeswoman, Bristol-Myers Squibb, which makes Atripla and other AIDS drugs, declined to comment on the bill. But public affairs director Sonia Choi said that the company is “acutely aware” of the problem of untreated AIDS patients and offers free or reduced-cost drugs to some patients.

With high drug prices and soaring disease rates eating at America’s economy, Sanders ultimately wants a prize system that funds research for all types of medicines.

“If it would work” for AIDS drugs, Love said at the hearing, “it would create enormous pressure to rethink the rest of this problem, for cancer drugs, diabetes —”

Sitting alone at the front of the Senate hearing room, Sanders pretended to shush the witness.

“Not so loud,” he said. “Somebody may hear you.”

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