Defense Of Pharmaceutical Patents Still Not Adding Up
from the something-doesn't-seem-right-here dept
The pharmaceutical industry is a very interesting one when it comes to discussions of intellectual property. Even among those who dislike patents in other places, the pharmaceutical industry is held up as an example where it absolutely does make sense. However, there are reasons to question this -- and two recent stories help highlight some of the questions around the belief that patents are necessary in pharmaceuticals. The question, of course, is complicated greatly by the moral questions involving lives on the line -- but even setting that aside, there are reasons to believe patents aren't just unnecessary, but potentially damaging. Nobel Prize winning economist Joseph Stiglitz has been on quite a rampage over the past few years, publishing articles every few months pointing out how patents slow down pharmaceutical innovation. Meanwhile, economists David Levine and Michele Boldrin have a whole chapter in their book on intellectual property that shows that pharmaceutical industries have done fine even in countries that don't allow drugs to be covered by patents. Within our own government, the GAO released a report late last year noting that patents are harming drug development.More recently, this has flared up with the stories about pharmaceuticals in Thailand. Thailand has decided to ignore the patents on an AIDS drug and a heart-disease drug for the good of its own people -- leading some to bizarrely suggest that "it's a wonder" that drug companies still invest in drug research. As David Levine points out, does anyone actually believe that no one would have invested in AIDS research if they knew that Thailand would ignore the patents? The story is made even more ridiculous by one pharmaceutical firm's announcement that it will no longer sell drugs in Thailand because of the government's decision. This seems doubly stupid. By refusing to market their own drugs there, they simply guarantee that the entire market goes to other providers.
And, as for the biggest question about how pharmaceutical companies can make back money if exact replicas in the form of generic pills are on the market, it appears that's not quite as big a problem as the pharmaceutical industry (and patent system fans) would have you believe. Stephen Dubner over at the Freakonomics blog has a post about differential pricing in the pharmaceutical industry that points to a Wall Street Journal article on the same topic. While the core of both articles is about how the difference in drug prices (mainly for generic drugs) between pharmaceuticals is huge, a secondary point of interest is that the brand name off-patent drugs still command a noticeable premium over the generic copycats. It turns out that brand certainly does matter for drugs (especially in the US, where direct consumer advertising of drugs is allowed). So with all of that, it's hard to see how the claims that generic drugs (being identical to the patented versions) destroy the market for the original drug holds up. Just like any other competitive industry, being first and having an identifiable brand (even with identical copycat products) allows the originator to command noticeable premiums.
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Patents - the American dream
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There will be 'miraculous' innovation out of the pharmcos, with 8 years to recoup all investment, manufacturing costs and to finance the next hundred drug attempts; they will have little choice but to increase development - as it should be. As an added benefit, all of the terrible commercials advertising the next miracle drug will no longer bother me so and the advertising costs can be better spent elsewhere.
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sceptic
it seems to me, however, that patents may be the wrong form of protection. The biggest investment by drug companies seems to be in proving that a drug is safe and effective, not in discovering the drug in the first place. There have been recent stories in the press talking about a discovered new use in fighting cancer for an old (off patent) drug used for metabolic disorders. The concern expressed is that no company will put up the money for testing to prove that the drug works to fight cancer because the oatent has already expired. This example demonstrates both the need for some protection and the inappropriateness of the classic patent model for providing appropriate protection for drug companies.
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Patent Trade Offs
Then, for no apparent reason, people who use your technology start falling over dead, or they start giving birth to children with birth defects, or other random but serious issues appear. Tens or hundreds of thousands of people world wide join in class-action lawsuits and wipe out all of your profits over night.
Not likely? Of course not, because technology doesn't usually affect people in that way - pharmaceuticals do.
You can test a new potential drug on 100,000 people for 10 years and never see a single issue - because 100,000 people doesn't account for every possible genetic combination, medical family history, potential life threatening illnesses that won't show up until later in life, etc.
The only way you can get a pharmaceutical company to drop it's "as-long-as-possible" patent protection is to offer immunity from all possible lawsuits resulting from people using the new drug assuming that clinical trials are run to a certain specified standard (i.e., 10,000 people use the drug for 18+ months with no side effects). Otherwise the pharma companies need to squeeze every last cent out of every drug they develop to offset the potential losses from a huge lawsuit (think Vioxx, Phen/Fen, etc.)
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Brand
Very few drugs in fact, and dispite what watching an evening of television might lead you to believe, are marketed directly to the public. If you're not convinced of that, go to the library and browse through the PDR sometime. If you recognize, say, 1 in 50 I'll be VERY impressed (and wondering where you did your premed).
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You never heard of insurance?
If you've never studied a prescription drug's package insert, you'd be shocked to learn that the studies they do for safety, side effects and efficacy usually are done on only a few hundred people - and for relatively short periods.
Efficacy is ordinarily compared only to placebo, rather than competitive products. How hard is is to beat placebo?
"get them to drop"?
I don't care if they agree or not. Pass a law - assuming enough politicians can pass up pharma money, and can muster the courage.
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Is nationalization of the drug companies the goal?
This of course is meaningless to the question at hand. Anyone who puts forth this argument should either be dismissed out of hand or someone should dig for their real agenda. The argument is meaningless because there is still a large US market driving the innovation. The rest of the world can piggy-back on the US market, but the US market cannot piggy back on the US market.
Remove the incentive for developing drugs and over time the task will be nationalized because it no longer makes economic sense. I suspect that this is the real goal here.
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yeah right Frank.
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I'm also old enough to remember when none of these drugs existed, and how a lot of people died who would now take some pills and be fine.
Last, I live in a small city with a big pharm-co. Everyone knows people who work there, and we all known something about the economics of drug companies. Getting a drug to market takes close to 10 years, and 95% fail in the sixth to ninth years. If the drug companies don't hit home runs on a regular basis, they go out of business. Take away patents, and home runs turn into singles. The rhetoric that the pharm-co's won't be harmed by taking away their patents is just as stupid as politicians saying that the California electric companies wouldn't be harmed by deregulati Sorry, a brown out caused me to lose a few letters.
** Only new drugs are truly expensive because of patents. No high prices, no new drugs. This is a lose/lose situation. **
This entire discussion, while it is very important, is about politicians pandering to the AARP. I hope it stays talk, because my city, which I like very much, will be screwed if this goes anywhere.
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Take the Thailand example you used. Will they keep companies from researching AIDs drugs, of course not. If every country in the world ignored patents, would that change the situation? Of course it would.
What that example proposes is to force the United States to subsidize drug research for the rest of the world, a thing we do a pretty good job of doing right now.
The example of generic drugs not hurting branded drugs has to come out of either ignorance or lies. When Prozac was under patent, it was a huge blockbuster drug for Eli Lilly. Want to take a guess what its marketshare was after 6 months of being off patent? In those 6 months, it lost over 90% market share.
Now, I do believe that if there is a generic drug available, that is what a consumer should buy, no questions asked. Without patents, we will have no future "new" drugs, because generic companies do not do research.
Tell me, what country that ignores patents are out there researching drugs? Which one? I know of a few that just copy others drugs, but tell me, what drugs have they invented?
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Chilling Effects
Indonesia recently refused to continue supplying bird flu samples to the WHO.This was because they didn't want to contribute free research that would be used to create a patented vaccine or drug that would then be sold back to them for a hefty fee.
I think the whole health/pharmaceuticals industry is just about the worst example in the world of free-market capitalism in action.
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Re: Chilling Effects
That makes sense to you?
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As for the loss of profit margin due to other countries egnoring patents, why do you thing drugs cost so much in the USA? One of the big reasons besides the huge income per capita is the need to make up for loss of revenue from the countries that do not recognize patented property.
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A typical drug patent is 20 years and the clock begins ticking at the moment the molecule has been discovered. Then it must be developed and tested for safety in 3 or more phases of trials. On average, these testing phases last 12-14 years. Once the drug hits the market, it has 6-8 years to recoup not only its development costs, but also the development costs of all the others that failed along the way.
Oh, don't forget this: the lawsuits and patent challenges begin usually 1-2 years after the drug hits the market, so now their are huge legal fees on top of it.
Do you get it? Don't trivialize this topic unless you dig deeper. Don't mess with the development of new cures. I am selfish. I want whatever it is that may kill me later in life erradicated before I can get it!
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Proper design
Which is one of the reasons the current patent law may not be the best way to protect pharmaceutical companies research efforts. It should be possible to come up with a revised system which leads to more research and lower prices. The success of any property rights regime will depend on whether the property rights are designed in a way which meet the needs of the market.
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Once again you've missed the point
Wrong headed platitudes.
Patents impede innovation.
Companies impede innovation to maximize return, they simply use a ridiculous patent system to do it.
If it wasn't patents it would be something else.
Companies search for new life saving drugs.
Companies search for new money making drugs.
If you want a healthy life you must take drugs.
If you want a healthy life you must have a healthy lifestyle.
If you want better drugs give the companies more money.
If you want better drugs spend money researching how to lower the cost of the clinical trials.
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MJR1007, so drug companies should not spend money on drugs but on how to make their clinical trials cheaper? Trust me, they are investing in making clinical trials more efficient, but clinical trials will only get more expensive as the FDA and the general public requires larger and larger trials to ensure that drugs don't hit the market and ends up killing subsets that might have been missed in a smaller trial.
Lifestyle I agree with, lead a healthy lifestyle and you will be healthier.
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Re:
Don't recall specifying drug companies. Why not focus all of NIH to delivering more cost effective treatments. Trials should be automated, so rather then risk humans why not risk bits and bytes.
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FDA Drug Registration
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