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by davmre 2988 days ago
What do you think about government-financed prizes for private-sector drug development, e.g., the government pledges $X billion if you develop an Alzheimer's cure and place it in the public domain? Bernie Sanders has a proposal like this: https://www.vox.com/2015/9/25/9397069/bernie-sanders-drug-pr....

It seems like that retains most of the advantages of the current system, incentivizes private-sector development, but also eliminates the problem of high prices at the point of delivery. (i.e., it correctly prices the marginal cost of treating someone at the marginal cost of producing the drug, which is generally low).
2 comments
rayiner 2988 days ago
I think they would work if the government priced them appropriately. But the government is terrible at pricing things. E.g. how nearly every government under prices water/sewer and public transit, leaving those systems in a state of decay.
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Firadeoclus 2987 days ago
Government provided services are not necessarily meant to be profitable in the business sense. It is enough if their global benefits are worth the cost, even if those benefits cannot be captured as direct profits.

For example public transit is worth a lot more in external benefits than just the fares paid.

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rayiner 2987 days ago
It’s not about making a profit versus not—these prizes would almost certainly not be profitable for example. But you have to set high enough prizes to create the right level of incentive. Likewise, your (prices + subsidy) for transit or water/sewage must be high enough support an efficient level of infrastructure spending. With transit, the government underpriced and undersubsidizes. With water/sewage, the government under prices and doesn’t subsidize at all.

The government underprices for the same reason it underfunds pensions and over promises pension benefits. It’s a way of pushing costs into future generations while buying votes in the short term.

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refurb 2988 days ago
The idea of a prize is interesting a first glance, but it also creates a lot of additional risk.

If you get $1B for creating the first drug that cures X, what does the person who creates the 2nd drug get? $0? What if it's better than the first? Who makes the judgement as to which is better drug?

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