Not only that, but also a source of funds to pay x-prizes. Gilead will sell close to $10B worth of Sovaldi/Harvoni in 2014 alone. Probably close to $30-50B over their patent lifetime.
Considering most pharmaceutical companies have profit margins of ~30%, you'd need an x-prize of $10-$15B to equal their current "prize". The NIH total budget is under $40B.
If the choices offered to pharmaceutical companies are x prizes or the current patent regime, then sure, you need multi-billion dollar prizes. I'm not convinced patents are a good thing to continue to offer, in which case the option of the 30-50 billion dollar payday won't be available.
That would likely mean fewer baldness treatments, which I'm fine with. What's unclear is whether we'd get a more socially optimal investment level for DALY improvements. I tend to think we would.
The example I gave was a cure for hepatitis C, not a baldness treatment.
What you're suggesting is limiting the upside for investment. How do you think investors (the ones giving money to develop a drug) would react if you told them that the best they can do is a 2x return on their money when before they could get a 5-15x return?
Considering most pharmaceutical companies have profit margins of ~30%, you'd need an x-prize of $10-$15B to equal their current "prize". The NIH total budget is under $40B.