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Technology & Innovation

Can Cash Prizes Incentivize Lower Prescription Costs?

Senator Bernie Sanders believes that creating massive cash rewards for drug companies will spur the innovation necessary to make new drugs and bring down the cost of prescriptions.

What’s the Latest Development?

Legislation proposed this year in the House of Representatives, called the Patients’ Access to Critical Treatments Act of 2012 (PACTA), aims to bring down the cost of prescription drugs for those suffering from chronic diseases. Currently, pharmaceutical companies price drugs according to different tiers, which requires that patients pay 25 to 33 percent of “tier 4” medications, defined by their customized biologics and lack of inexpensive generic alternatives. In many cases, out-of-pocket expenses for tier 4 medications are as expensive as house payments. 

What’s the Big Idea?

Prescription drug prices in America are a symptom of our unsustainable health care industry. Ethically speaking, the nation’s method of providing medical care is at odds with the rest of the developed world. On average, Americans pay 85 percent more for prescription drugs than in Canada, and 150 percent more than in France, Italy, Sweden and Switzerland. One solution proposed by senator Bernie Sanders of Vermont is to create a “$3 billion fund to award large cash prizes to drug companies for developing innovative new HIV drugs in lieu of the long-term (usually 20-year) monopoly patents the government now awards them.”

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