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Economics of Innovation: Econ 124/PP190-4/PP290-4. Finding Cures for Tropical Diseases: Putting Innovation Economics to Work. Stephen M. Maurer Goldman School of Public Policy Nov. 21, 2006. Theory and Practice . Teaching vs. Using. The Problem . 500 Million People
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Economics of Innovation: Econ 124/PP190-4/PP290-4 Finding Cures for Tropical Diseases: Putting Innovation Economics to Work Stephen M. Maurer Goldman School of Public Policy Nov. 21, 2006
Theory and Practice Teaching vs. Using
The Problem 500 Million People The Patent System Hasn’t Worked Selling HIV Drugs to Africa
The Opportunity Bill Gates’ Troubles Virtual Pharma AdvancedMarkets Price is Everything!
Basic Concepts Agency Problems – Researchers Agency Problems – Sponsors Eliciting Information Efficient Pricing
The Mantra No Institution is Dominant Pick the Best Institution for The Problem Be Agnostic!
New Wrinkles Efficient Pricing Revisited “Distributional Issues” Multi-Part Innovation Pay-As-You-Go or End-to-End?
The Innovation Environment Basic Research Finding Targets Optimizing Targets Finding Lead Compounds Optimizing Lead Compounds Process Development Pre-Clinical Testing Phase I Tests Phase II Tests Phase III Tests Approval Manufacturing Phase IV Tests Marketing & Distribution
Choices Patent Reform Harmonization & Targeted Interventions Supplementing Patents AdvancedMarkets Replacing Patents Virtual Pharma
Harmonization Depends on Disease TB vs. Malaria vs. Sleeping Sickness Inadequate Reward For Research? For Entering Particular Countries? Parallel Imports
Targeted Grants Virtual Pharma Strategic Investing Crowding Out
AdvancedMarkets Matching Payments Independent Adjudication Committee Why Not a Prize? Hybrid Cases Politics The Patent Mystique Avoiding Choices Hidden Taxes
AdvancedMarkets Is It Efficient?
AdvancedMarkets Picking the Best Institutions
AdvancedMarkets Getting the Best Price
AdvancedMarkets Getting the Best Price (Pt. 2) Estimating the Required Reward R&D Costs The Price of Guessing Wrong
AdvancedMarkets Getting the Best Price (Pt. 3) Estimating R&D Costs The Accounting Answer Drug Company Data Independent Estimates Market Arguments Is the Accounting Answer Right?
AdvancedMarkets Who Gets The Savings?
AdvancedMarkets The Agency Problem
AdvancedMarkets Why An IAC?
AdvancedMarkets Why An IAC? The Corruption Problem
Virtual Pharma Choosing Institutions
Virtual Pharma: Eliciting Information Basic Research Finding Targets Optimizing Targets Finding Lead Compounds Optimizing Lead Compounds Process Development Pre-Clinical Testing Phase I Tests Phase II Tests Phase III Tests Approval Manufacturing Phase IV Tests Marketing & Distribution
Virtual Pharma: Institutions for Eliciting Information Targeted Investment Prizes Grants Contract Research Targeted Tax Credits Government Equity Investments Open Source Harry Fox Licenses
Virtual Pharma: Agency Problems: Researchers Basic Research Finding Targets Optimizing Targets Finding Lead Compounds Optimizing Lead Compounds Process Development Pre-Clinical Testing Phase I Tests Phase II Tests Phase III Tests Approval Manufacturing Phase IV Tests Marketing & Distribution
Virtual Pharma: Institutions & Agency Problems Targeted Investment Prizes Grants Contract Research Targeted Tax Credits Government Equity Investments Open Source Harry Fox Licenses
Virtual Pharma: Efficient Pricing Getting the Best Price The Patent Problem Open Source & Grants Enforcing The Best Price Buying Power & Repeat Games
Virtual Pharma: “Can Government Pick Winners?” Is Pharma Efficient? Shareholders Are Foundations Efficient? Some History Foundations as Shareholders?
Do Hybrids Make Sense? Strategic Investing Picking Winners Splitting the Reward Politics
Choices AdvancedMarkets vs. Virtual Pharma Uncertain R&D Costs Two Stage Competition Big Pharma’s Buying Power Cold-Blooded Foundations
Economics of Innovation: Econ 124/PP190-4/PP290-4 Finding Cures for Tropical Diseases: Putting Innovation Economics to Work Stephen M. Maurer Goldman School of Public Policy Nov. 21, 2006