Economic Prizes: Filling the Gaps in Pharmaceutical Innovations

Abstract

This paper identifies the importance of creating a strong innovation policy to support industrial growth and strengthen Canada's competitiveness in a globalized marketplace. This paper summarizes market failures in the pharmaceutical industry that inflate the cost of healthcare in Canada and hinder research and development for treatments of diseases that primarily affect welfare sectors. This paper proposes a system of cash prizes to reward researchers upon production of demonstrably effective and tested products (or processes) that will improve healthcare. The prize authority would pre-specify diseases for which treatments are a priority and offer to pay a cash prize in proportion to the relative social value (cost savings) of any innovation that offers a solution, without pre-specifying the technical requirements. This approach is particularly innovative as it encompasses any type of healthcare innovation, patentable or non-patentable - thereby tapping into the enormous potential of overlooked but highly valuable innovations. In the long run, such a system will help control the high cost of healthcare in Canada, assist the economies of developing countries and improve Canada's international standing as a leader in industrial innovation and foreign aid policy.