Designing Prizes

The workshop explored a number of important prize design questions that need to be taken into account, including targeting, prize magnitude, and when to award a prize -- at the point of discovery, or following successful commercialization, for instance.

Other issues included how to deal with further innovation following the first breakthrough, and the relationship between prizes and the patent system.

A crucial question in the design of a prize is credibility: How to assure researchers that the winner will receive the promised prize and that the selection process will be transparent" Of concern as well is the question of the winner's participation in commercialization of an innovation.

Some participants noted that the board of an organization that awards a prize may become a target of lobbying and perhaps even lawsuits (though others argued that the same is true for the current patent-driven system, and is therefore not a problem specific to prizes).

Through a series of panel discussions, the workshop participants related thoughts on how prizes can be designed creatively to by-pass some problems presented by a monopoly-based system. Issues addressed included how to deal with sequential (follow-on) inventions and how to manage a fixed-fund prize fund; how to encourage incremental research by rewarding product development in stages; using Global prizes as an incentive for licensing to a pool, by requiring that the products be placed in the public domain; and prizes for solutions that cannot be patented.

Several case studies were highlighted, including:

• Innocentive, an open platform described as the 'eBay for prizes' that uses privately sponsored prizes to match research (seekers) to solutions (solvers) (see www.innocentive.com);

• Prize4Life, set up to accelerate research into ALS/motor neuron disease (see www.prize4life.org);

• A proposed Medecins Sans Frontieres prize for developing a low-cost point of care rapid diagnostic test for TB;

• Proposals for sustainable financing of neglected diseases including including global financing mechanisms such as UNITAID, an international drug purchase facility (see www.unitaid.eu ) and

• The Drugs for Neglected Diseases initiative (www.dndi.org).
  
  

Mixed views

The backgrounds of the participants varied widely; so too did their opinions on what constitutes a workable prize model.

Some of the participating economists differed, for example, on how replacing patents with prizes would affect innovation and effectivness of state funding.

Participants were in agreement, however, that the workshop was a seminal event and identified several required next steps:

• agreement on a common terminology to facilitate discussions;

• more awareness raising on prizes in both developed and developing countries;