The biggest value protector arguably of the patent-FDA approval process is on the FDA side, who create massive barriers to entry that mitigate close unpatented chemical competitors from outside the pharma oligopoly from competing.
This is a much better compromise. The company will end up with more money(and faster!) as a result of this prize than under a patent system - since the patent system induces dead-weight losses, and the government will end up with more lives saved.
The US has an enormously large higher education system with all the expertise and manpower to facilitate large trials of novel medicines. The only thing missing is political will to spend the money, so instead, Eli Lilly or Novartis or Pfizer etc spend investor’s money to do it.
And then taxpayers pay for it in a super convoluted way.
Since the people with the money don't understand the science, these possibilities must then be assessed by bureaucrats, and this causes our best to spend half of their time writing proposals instead of working and researching. A complete waste of time. Let the people who know the most about their subject freedom to take risks, and then they are given the spoils of their rewards if they are proven correct.
Prizes are much more efficient than grants. Prizes should be given to academics according to the value they produced. I have no issue if the academics choose to spend some of the windfall profits of their prizes on trials.
What part of this changes when a company is paying for the research, and why can't that same part be used in a government office? It's not like drug company CEOs and CFOs are also world class medical researchers. And if the funding decisions are entirely done by a CTO who is, then why would this model not be possible in a government office?
Ultimately someone needs to pay for all of the trials that don't work, and someone needs to do a cost/benefit/likelihood analysis on any research to decide whether it will be funded or not. With a public funding scheme, the benefit analysis could be based on public health interests. With a private company funding scheme, it has to be based on profitability. In healthcare, there is usually a huge gap between these two, unlike other more traditional markets.
With a prize based approach, what you want is for researchers to make small targetted gambles early in their career, earn their prize profits from those gambles, and work their way up into bigger gambles. There's nothing crazy about this scheme, it's how businesses have formed for hundreds of years. If a company wants to buy equity in the prizes of an independent researcher, I see no issue with this.
> then why would this model not be possible in a government office
I see no issue with governmental workers, or those from a university medial research center, or any other persons who can achieve the results from receiving this prize.
> someone needs to pay for all of the trials that don't work
The researchers. They are the one taking the risk. They are the one who would get the rewards. Skin in the game.
> With a public funding scheme, the benefit analysis could be based on public health interests.
Yes, we should directly pay the organization, or persons, based on the value they generate from their own. The bigger the public health interest, the more they should be paid. Right now we give a tiny piece to these people, and thus harm our incentives. Fully fund the results. It's risk-free.
Whatever you do, you can't get around the fact that the people with medical knowledge need to convince the people who have the money to invest in them before any research can take place. There is simply no way to get rid of the pitching to bureaucrats step here, not even in the most idealized societies - research just needs too many resources for any one individual to control.
You're trying to give individual researchers, who believe they have a chance at a new strategy, to take their new strategy and sell equity to the prize they might win to a new firm.