Law & Society Blog

Joseph Stiglitz succinctly outlines his views on prizes as alternatives to patents in this article Scrooge and Intellectual Property Rights in the British Medical Journal.

Intellectual property differs from other property—restricting its use is inefficient as it costs nothing for another person to use it. … Intellectual property rights, however, enable one person or company to have exclusive control of the use of a particular piece of knowledge, thereby creating monopoly power. Monopolies distort the economy. Restricting the use of medical knowledge not only affects economic efficiency, but also life itself. We tolerate such restrictions in the belief that they might spur innovation, balancing costs against benefits. But the costs of restrictions can outweigh the benefits. … Research needs money, but the current system results in limited funds being spent in the wrong way. … A medical prize fund provides an alternative. Such a fund would give large rewards for cures or vaccines for diseases like malaria that affect millions, and smaller rewards for drugs that are similar to existing ones, with perhaps slightly different side effects. The intellectual property would be available to generic drug companies. The power of competitive markets would ensure a wide distribution at the lowest possible price, unlike the current system, which uses monopoly power, with its high prices and limited usage. The prizes could be funded by governments in advanced industrial countries. For diseases that affect the developed world, governments are already paying as part of the health care they provide for their citizens. For diseases that affect developing countries, the funding could be part of development assistance. Money spent in this way might do as much to improve the wellbeing of people in the developing world—and even their productivity—as any other that they are given.

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