For decades, strong intellectual property systems have helped ensure that our most innovative industries are incentivized to bring groundbreaking products and processes to people around the world. This is especially true in the context of the biopharmaceutical industry, as the drug research and development (R&D) process is particularly risky, requiring extraordinary time and resource investments.
Recently, however, a few international voices have proposed that the decades-old system of intellectual property be replaced by a system of government-funded prizes, known as “delinkage.” Proponents of this approach claim that delinking the cost of R&D from the final price paid for a medicine and instead offering government-managed prizes to incentivize innovation, would lower costs and improve access.
But in reality, delinkage would increase costs, hamper innovation and create politicized, misaligned incentives.
A recent report from the Geneva Network explains why delinkage is just smoke and mirrors.
- Delinkage’s potential savings are offset by higher taxes. Proponents of delinkage overlook a critical question: how are prizes funded? The answer: taxpayers. The biopharmaceutical industry currently spends $141 billion on R&D annually—under a delinkage system taxpayers would be forced to foot the bill.
- Delinkage is bureaucratic and inefficient, creating unnecessary costs. Not only would taxpayers be asked to cover R&D expenses, they would also pay for the increased administrative costs and bureaucratic inefficiencies of the centralized government planning that a prize system would require.
- Delinkage’s “top down” R&D system creates politicization and bias. Who decides what a medicine is worth? How would government officials decide who gets prizes? These choices would not only impact the economic livelihood of researchers and factory workers, but also millions of patients suffering from diseases that require breakthrough medicines.
- Delinkage misaligns incentives and hampers innovation. Without the certainty of market dynamics, delinkage would strip away R&D incentives and undermine an intellectual property system that has long generated life-saving cures and treatments. Prizes that undervalue a new medicine would leave innovators and venture capitalists little reason to invest the substantial resources required over many years to produce a medical breakthrough.
Unfortunately, delinkage proponents are turning a blind eye to the full consequences of their approach. Given all the problems, it’s little wonder no government in the world has decided to replace intellectual property with prizes for new medicines.
International leaders should instead direct their solutions at the real barriers standing between people and the medicines they need, such as lack of health care coverage, poor health financing systems, and weak supply chains. Delinkage isn’t the solution; it’s a fool’s paradise that would have significant impacts on the lives of millions of patients worldwide.
