Senator Bernie Sanders (I-Vt.) proposed legislation (S. 1138, "Prize Fund for HIV/AIDS Act") to make AIDS drugs cheaper in the United States. He would eliminate patents for AIDS drugs but give prizes to the companies that discover and develop them. His bill aims "[t]o de-link research and development incentives from drug prices for new medicines to treat HIV/AIDS and to stimulate sharing of scientific knowledge." I commented on this proposal in a previous blog.
Under this legislation, the U.S. government would fund the so-called Prize Fund for HIV/AIDS by an annual amount equal to 0.02 percent of the gross domestic product, or approximately $3 billion per year. According to Sanders, the total market for HIV drugs in the U.S. is currently $9 billion. Sanders' bill would therefore cut the funds available to pharmaceutical companies by a factor of three. Of course, these companies would save on sales and marketing expenses--they would no long market these drugs--but sales and marketing expenses for HIV drugs are relatively small compared to other drugs and someone--the government--would need to pick up the slack for educating physicians about the availability and proper usage of HIV medicines.
So in one bold stroke, to solve the problem that HIV drugs are "too expensive," Sanders would cut revenues by 67 percent. Why stop there? Why not make the prize fund mere millions or even thousand of dollars? Look at how much money we would save. "Here's your prize of $873, Gilead Sciences, for developing a new nucleotide reverse transcriptase inhibitor. Thank you."
There's one obvious thing Sanders is missing. He opens his bill with a description of the devastation brought by the AIDS epidemic. The HIV virus is the problem and HIV drugs are the solution. We can't forget that HIV was seen as a death sentence in the 1980's and early 1990's while HIV is now treated as many other chronic conditions. What changed? HIV drugs. Who developed these drugs? Pharmaceutical companies. Why? To help patients and to make money. And even if the objective was purely to help patients, the money was needed to make it happen. If the objective was merely to make money, these companies still ended up helping patients.
It is in everyone's interest to give drug companies a sufficient incentive to invest in new HIV/AIDS drugs to produce next decade's better medicines to combat the AIDS epidemic. It is hard to imagine how Sanders' proposal would accomplish this when it reduces financial rewards by a factor of three. How would Sanders react to a proposal to reduce congressional salaries, benefits, and budgets by 67 percent?