[Ip-health] Summary of the Medical Innovation Prize Fund - H.R. 417

[James Love]

-------- Original Message --------
Subject: Summary of the Medical Innovation Prize Fund - H.R. 417
Date: Wed, 2 Feb 2005 15:53:30 -0500
From: Behan, Michael <Michael.Behan@mail.house.gov>
To: cipih@astro.lyris.net

Members of the WHO Commission on Intellectual Property Rights,
Innovation and Public Health:

I include below a summary of H.R. 417, legislation I recently introduced
in Congress that would change the paradigm for financing medical
research and development and for pricing prescription drugs in the
United States.  Rather than rely on high drug prices as the incentive
for R&D, the bill would directly reward developers of medicines, on the
basis of the incremental therapeutic benefit to consumers, through a new
Medical Innovation Prize Fund.  Prices for prescription drugs to
consumers would be at low generic prices immediately upon entry to the
market.  By breaking the link between drug prices and R&D, it would
provide more equitable access to medicine, end rationing and restrictive
formularies, and manage overall R&D incentives through a separate
mechanism that can be increased or decreased, depending on society's
willingness to pay for medical R&D.  The bill, by rewarding only truly
innovative products that provide new therapeutic benefits to consumers,
would also dramatically reduce wasteful expenditures such as those on
research, development and marketing of "me-too" medicines.

The legislation would also address global health care problems in the
following ways.  First, a fixed proportion of the Medical Innovatin
Prize Fund created by the bill would be set aside to reward inventions
for neglected diseases and global public health problems.  Second, by
driving US prices low, it would help lead to a new trade policy focused
on R&D spending, rather than high drug prices.  This would ensure that
developing countries and other trading partners could protect consumers
and expand access to medicines, as long as they were providing
appropriate levels of support for R&D through other, more appropriate
mechanisms.

I hope you find the below summary of interest.

Sincerely,

Representative Bernard Sanders
US House of Representatives
Washington, DC


Summary of the Medical Innovation Prize Fund

The current system for financing Research & Development of new medicines
is broken.  High prices are a barrier to access.  Companies invest too
much in non-innovative "me-too" products and too little on truly
innovative medicines.  Massive expenditures on marketing of products
consume too many resources with very little if any net social benefits.

My legislation, H.R. 417, creating the Medical Innovation Prize Fund is
an attempt to fundamentally restructure this system.  It presents a new
paradigm for R&D of new medicines.   This is how it would work:

* The legislation would separate the markets for products from the
markets for innovation.  Products would become generics immediately
after FDA approval.

* The innovators would be rewarded from a massive Medical Innovation
Prize Fund (MIPF).

* The MIPF would make awards to developers of medicines, based upon the
incremental therapeutic benefits of new treatments.

* The MIPF would also have minimum levels of funding for priority
healthcare needs such as:
1. Global infectious diseases
2. Diseases that qualify under the US Orphan Drug Act
3. Neglected diseases primarily affecting the poor in developing countries

* These pay-outs would take place over the first ten years of use of a
medicine.   The payments from the MIPF would always go to the developer
of the new medicine, regardless of who actually sells the product to
consumers.

* The legislation proposes to set the MIPF pay-outs at .5 percent of the
national income of the United States (as measured by GDP).

* An independent Board of Trustees would manage the MIPF.   Trustees
would include key government officials, as well as persons from the
private sector, representing industry, patient groups and medical
researchers.

* Inventors would be free to obtain patents, and to use patents
normally, until the FDA approves a new medicine.  At that point, the
patent owner would be remunerated from the MIPF, rather than from
royalties on high drug prices.


________________
Michael T. Behan
Senior Legislative Aide
Representative Bernard Sanders
202-225-4115
www.bernie.house.gov