Medicine for tomorrow

The current models of pharmaceutical drug discovery display significant inefficiencies. One inefficiency is the widespread prevalence of me-too drugs. Second, some patents can act as barriers to knowledge, by slowing down the pace of new discoveries. Third, there are higher costs for the public, who end up paying double costs – subsidizing or funding research and development (R & D) that leads to new discoveries on the one hand, and, on the other, paying the social costs of restricted access to knowledge when the discoveries are privatized. Fourth, when the market returns are the sole guide to R & D of new drugs, diseases that are prevalent in markets with weaker buying power are neglected. Thus, policymakers need to identify a new, more cost-effective and innovative productive system for R & D. Policymakers are faced with very complex choices in designing their regulations. They want to promote access to medicines, to lower costs and to encourage research. Politically, they have to balance pressure from the industry with increasingly forceful demands from health advocacy groups. The article looks at four different sorts of policies that may be used to address some of the inadequacies in the current system, especially with regard to the management of R & D: promoting prizes over patents; directing innovation toward socially beneficial outputs by adopting some form of valuebased pricing; publicly funding clinical trials to reduce conflicts of interest while reducing costs; and actively managing frontier technologies to maximize positive social spillovers.