WASHINGTON -- Sen. Bernie Sanders (I-Vt.) is promoting a new plan to encourage the development of better, cheaper prescription drugs: an innovation fund rewarding companies for inventing important new HIV and AIDS medications. In exchange for accepting an innovation award, drugmakers would agree to sell their new medicines at low prices.
Drugs developed over the past two decades have dramatically improved life expectancy for those living with HIV, but the medications remain unaffordable in many nations hit hardest by the epidemic. High drug costs also hamper relief programs In the U.S., where 2,759 low-income Americans are currently on waiting lists seeking treatment, according to the National Alliance of State and Territorial AIDS Directors.
"One of the great moral issues of our day is that there are people in our country suffering and in some cases dying because they are not able to afford a medicine that can be produced for pennies per treatment," Sanders said during a Tuesday hearing in Congress. "The simple fact is that the prices of patent medicines are a significant barrier to access to health for millions of uninsured and underinsured Americans and people die because of it."
Drug prices are dramatically inflated by the restrictive American patent system, which grants companies long-term monopolies on new drugs they develop. The problem is particularly acute for AIDS drugs, which require decades of constant use to be effective. During the hearing, Sanders discussed one such drug, Atripla, which he said costs roughly $25,000 a year for a single patient in the U.S., where it is marketed jointly by Gilead Sciences and Bristol-Myers Squibb. In countries that allow generic drugs to compete with Atripla, treatment is just $200 a year.
Each patient enrolled in the taxpayer-funded AIDS Drug Assistance Program costs an average of about $9,400 a year, said Mohammad N. Akhter, director of the Washington, D.C., Department of Health, at Tuesday's hearing. HIV medications cost more than $300,000 per person over the course of a single patient's lifetime. The U.S. Centers for Disease Control and Prevention estimates 50,000 Americans are diagnosed with HIV every year.
Drug companies say patents allow them to recoup the hefty costs associated with researching and developing new drugs and winning regulatory approval to sell them. But public health experts say the existing system leads to needless death. Although many countries reject patents for important medications, developing nations face intense political pressure to adopt American-style drug patents in order to receive trade perks and other economic benefits from the U.S.
"Current incentive systems fail to generate enough research and development, in either the private or public sectors, to address the health care needs of developing countries concluded an April report by the World Health Organization. "There is therefore an economic case, based on market failure, for public action. There is also a moral case. We have the technical means to provide access to lifesaving medicines, and to develop new products needed in developing countries, but yet millions of people suffer and die for lack of access to existing products and to those that do not yet exist."
Sanders has introduced legislation that would offer companies a big up-front prize for developing new, innovative AIDS drugs. In return for the big payday, pharmaceutical firms would agree to allow generic versions of their medicines to hit the market immediately. The fund would total $3 billion for its first year.
"Moving from a patent system to an effective prize system, using the power of the competitive marketplace to ensure the efficient dissemination of medicines, is a critical step in creating [a] more efficient innovation system," Nobel Prize-winning economist Joseph Stiglitz said at Tuesday's hearing.
Despite the big prize fund, some economists said they expect the plan would actually reduce the federal budget deficit. By making much cheaper generic versions of expensive drugs available to government programs like Medicare and Medicaid, Sanders said he hopes to ultimately save taxpayers money. According to economist Dean Baker, Americans pay a total of $270 billion more each year on prescription drugs than they would without patent-granted monopolies on medicine. The Congressional Budget Office has not scored Sanders' proposal for its budget impact, and is unlikely to do so barring pressure from Democratic Party leadership.
Sanders' proposal enjoys support from public health experts. Pharmaceutical companies that profit handsomely with the status quo are resistant.
And so is the Obama administration. The White House agency responsible for negotiating trade pacts, the Office of the U.S. Trade Representative, is currently pushing for restrictive intellectual property standards that would not only cement the American drug financing system abroad, but actually go further in establishing intellectual property-based monopolies on medicine abroad. The trade representative is currently negotiating intellectual property and other issues with eight nations, in a deal dubbed the Trans-Pacific Partnership. House Oversight Committee Chairman Darrell Issa (R-Calif.) leaked the text of the draft intellectual property chapter to his website on Tuesday, out of separate concerns that the trade representative's position would undermine Internet and technology innovation.
The Office of the U.S. Trade Representative emphasizes that it is seeking to eliminate tariffs on medicines, which should play some role in lowering prices, but said that robust intellectual property standards encourage the development of useful new drugs.
Intellectual property rights "provide important incentives for the invention and development of new medicines to treat a wide range of diseases and conditions -- medicines that should and do become available for generic production," trade representative spokeswoman Carol Guthrie told HuffPost. "The United States is working with stakeholders across the spectrum to strike the right balance" in the Trans-Pacific Partnership.
"It's a nightmare for global health advocates," said Judit Rius, U.S. manager of Doctors Without Borders Access Campaign. "It's one of the biggest threats we've seen promoted by the U.S. government to the sustainability of public health in the developing world. ... They say they are trying to save more lives, treat more people as soon as possible with newer and better drugs." But the intellectual property proposal in the Trans-Pacific Partnership "would delay access to these drugs for a very long time," Rius said.
Watch recorded video of the hearing.