[Congressional Record Volume 151, Number 9 (Wednesday, February 2, 2005)]
[Extensions of Remarks]
[Page E149]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     MEDICAL INNOVATION PRIZE FUND

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                          HON. BERNARD SANDERS

                               of vermont

                    in the house of representatives

                      Wednesday, February 2, 2005

  Mr. SANDERS. Mr. Speaker, I wanted to share with you a summary of 
H.R. 417, legislation I recently introduced that would change the 
paradigm for financing medical R&D and 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 a 
drug's 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, we can 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.


              Summary of the Medical Innovation Prize Fund

  The current system for financing research and 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 U.S. 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.

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