Bill Proposed To Make All Pharma Patents Public Domain

from the well,-that-would-shake-things-up... dept

We've written a lot about pharmaceutical patents, since pharma is often area that's a sticking point for fans of the patent system. There are a number of reasons why patents in the pharmaceutical industry don't make sense, despite protests from many. Studies have shown that patents are actually holding back the development of new drugs, making research more difficult and skewing research efforts away from what's most important for helping keep people healthy, to what's patentable. Nobel Prize winning economist, Joseph Stiglitz, for years has been talking about how patents harm medical innovations. One of his proposed solutions is to set up a bounty system for important cures -- and it appears that at least someone in Congress thinks this is a decent idea. Against Monopoly points us to the news that Senator Bernie Sanders has proposed a law in Congress that would set aside $80 billion a year to give to pharmaceutical companies in exchange for putting their patents in the public domain, in order to create competition for developing the drugs.

First of all, there's almost no chance that this proposed bill goes anywhere, so any discussion over the pros and cons isn't likely to make much of a difference. There are some interesting ideas set forth by the bill, but in the long run, it's not a very good idea and would likely fail for a number of easily predicted reasons. What I do like about it is the idea of encouraging competition within the drug space, so that the pills may be more affordable to a wider audience. Competition tends to be a good thing, and it can also create more incentives for real innovation.

Unfortunately, just about everything else about this bill would likely cause problems. It's not entirely clear how this bill gets funded. $80 billion is pretty significant chunk of change. If the plan actually worked, and created new, more affordable drugs that saved many more lives, you could make a compelling argument that the net benefit to the economy would far outweigh the $80 billion (see Murphy and Topel's research for support on that). However, it's still not going to be easy to get people to buy into it. More importantly, it's not entirely clear how you'd allocate this money fairly. Any system like this where the gov't is giving away money is going to be gamed by the pharma companies in one way or another. It'll be so lucrative that it will be nearly impossible not to have the system gamed -- especially when it's going to involve a bunch of bureaucrats trying to determine the value of a specific drug. Finally, the bill seems to be entirely focused on pharmaceuticals -- which is part of the problem today. With so much healthcare policy focused on pharma, people forget that new technologies may start to make pharmaceuticals obsolete. Then we're left with an $80 billion subsidy for an industry that should be going away. I'm all for the economic incentives that come from innovation prizes, but building a huge mis-targeted gov't bureaucracy around them seems risky. Really, it seems to just be replacing one system of gov't subsidies with a different one, and that hardly seems likely to fix the problems currently facing the healthcare space.


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  1.  
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    Max, Oct 26th, 2007 @ 6:24pm

    So, you have areas without patent protection where there is no development and on the other hand areas where there is patent protection and there is development. Why would you think that removing all patent protection would get you anything other than the current non patent non development regime applied everywhere?

     

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    Mike (profile), Oct 26th, 2007 @ 6:31pm

    Re:

    So, you have areas without patent protection where there is no development and on the other hand areas where there is patent protection and there is development. Why would you think that removing all patent protection would get you anything other than the current non patent non development regime applied everywhere?

    I'm not entirely sure I understand what you're saying here. Are you implying that without patents there would be no development? Because, historically that's not true. When patents are present, of course R&D money goes towards them, because it's a guaranteed monopoly. So you get an artificial subsidy to focus on that. So all we're saying is that patents distort the market, and there's no evidence that patents create the best solution for encouraging real innovation in the healthcare space.

     

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    Anonymous Coward, Oct 26th, 2007 @ 6:33pm

    "Competition . . . can also create more incentives for real innovation."

    But in the pharma industry competition mostly breeds "me to" drugs that offer nothing medically unique. That's what they compete and innovate on.

    I don't see the incentive to really innovate when there is so much to be made on sleeping pills - most of which don't do very much, according to studies written about in the NY Times on Tuesday October 23rd.

     

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  4.  
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    Cancer Patient, Oct 26th, 2007 @ 8:25pm

    I have Stage IV Kidney Cancer (Renal Cell Carcinoma). My cancer isn't rare but uncommon (3% of all cancers). Within the last few years four or five drugs have been developed to combat the disease when surgery isn't an option.

    My Doctor at the Cleveland Clinic explained that if I had tumors in more than one area (say one in the lung and one on the liver) than we would use one of the drugs to essentially double my projected life span from 12 months to 24 months.

    With several different drugs to choose from now, it is possible to try two or three in the hope that one has the desired effect.

    How does this relate?

    Which, if any of these drugs would collect this bounty? Would prolonging life count or only a cure?

    What about the numbers? There are a relative few of us with Kidney cancer - why develop for us when there are many more people suffering from colon cancer, breast cancer, lung cancer...

    What about the politics? What will be the impact of Lance, Christopher, Michael J, Cheryl, Bob and others? My guess is that having a celebrity spokesperson would be beneficial to a particular group. What if you were a member of the Senate and your wife had breast cancer? What if your party had control of congress and could allocate bounties based on your supporters?

    I am content having the market place pick winners and losers.

    It sucks that the drugs cost a small fortune (mine cost $6000.00 for 28 pills - taken over a six week period). The other available pills have similar price tags. I have heard that one is 10k per month.

    I am fortunate that I have insurance that will cover the cost. Having insurance isn't an accident. I joined the military at the age of 17 and served for 20 years earning medical benefits. I also hold down full time job and pay my premiums every month so that I don't have to deal with the hassles involved with military health care.

    I feel sorry for people that don't have the options that I have. I feel sorry for the ones that can't afford decent insurance. I also feel sorry for the ones that are stuck in countries where the government is the only option. In the UK eligibility for certain drugs (including the one I will start next week) is based on a persons postal codes.

    http://icliverpool.icnetwork.co.uk/0100news/0100regionalnews/tm_headline=what-price-life%2 6method=full%26objectid=19919184%26siteid=50061-name_page.html

    The goal is admirable, but bounties aren't the answer.

     

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  5.  
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    Jim Harper, Oct 26th, 2007 @ 10:21pm

    But How do People Really Feel? The WaWa.com Widge

    Dangit - wanted to use this post to show off WashingtonWatch.com's new widget - with real-time vote information reflecting WW.com visitors' opinions on this bill. The page for S. 2210 is here and the code for the widget is here but your comment system wisely snips out javascript, so I can't actually show you the widget right here in this comment!

     

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    Morgan, Oct 27th, 2007 @ 12:51am

    "making research more difficult and skewing research efforts away from what's most important for helping keep people healthy, to what's patentable."

    So if you can make money with no patents at all, that would apply to the unpatentable as well. So where are the firms jumping into this low-hanging-fruit market you're describing? If there's no competition in there, easy money.

    I guess what you say may be true, but patents are the least problem in pharmaceuticals. The reason no one can afford to research drugs unless there's a major payoff? FDA approval. It's hugely expensive, it's not a sure bet, and it's unnecessary.

    Maybe I'd think about the finer points of patents and incentives once the market was actually a market.

     

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    Anonymous Coward, Oct 27th, 2007 @ 1:31am

    Anyone wanna bet that this congressman also owns stock in a smaller pharma company?

     

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    ipanema, Oct 27th, 2007 @ 6:57am

    Re:

    You are indeed fortunate to foresee difficulties that goes with insurance. Poor people who can not afford medicine in developing countries wait to die. India for sometime manufactured cheap drugs which helped many in developing countries. When Big Pharma felt their markets threatened, India was told to comply with some patent laws [can't remember now].

    Big pharma companies have raked fortunes, why place the $80bn with them? Why not fund other groups that desperately need funding?

    I'm perplexed with the NHS and its lottery system as well. Last week, there was news that some Brits pull their own decayed tooth. Imagine if you have raptured appendix and no insurance. Where would you go? Will the NHS pay if one undergoes emergency operation out of the country?

    If only businessmen know the humane side of medicine, I think more people will be saved.

     

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    Anonymous Coward, Oct 27th, 2007 @ 8:24am

    India makes quite a few generic drugs that are not licensed due to their laws, but all it has really resulted in is lower priced generics. They are not innovating with their patent freedom.

    If I understand you right you are in favor of a drug company spending millions in research and development(the greatest cost) to develop a drug then when it markets it give the formula to anyone else who only has to endure the cost of processing it? I dont see this as comparable to the other cases made for patent disregard. Patents for medications expire...that allows both the company to make a profit on their research and for generics to follow a few years down the road.

    In this case I think the argument has gone from altruist to socialist or downright anti-market. Where is the incentive man? Selling T-shirts with your drug name, pill concerts, a cool sleeve for your medication bottle? In this case there is no second (possibly more profitable) market for the product as there is for the entertainment industry.

     

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    Another Anonymous Coward, Oct 27th, 2007 @ 9:51am

    Anonymous Coward:

    I am no economic but I believe there is already incentive. It is called the first-mover advantage. The first person who get to the market first win significant advantage over the competition. Since the firm did the research, it also know more than everybody.

    They get to charge higher prices and such. Also, they gain a nice little monopoly for a short while before the competition come crashing in.

    I don't know what kind of advantage the first to innovate have in the pharmaceutical industry but I imagine setting up productions and contact suppliers would be time consuming.

    The Italian industry for example, before patent applied to them, still invested in R&D.

     

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    Max Powers at http://ConsumerFight.com, Oct 27th, 2007 @ 10:01am

    Every Business Allowed to Make Money

    I had never managed to get over 2 hours of straight sleep in the last 26 years until I broke down and had my Doc prescribe me Ambien. Recently Ambien now comes in a generic form. I now get 6-7 straight hours of sleep and the generic works exactly the same.

    Why do people hate the pharmaceutical companies so much? Has anybody done any research to see how long and how much money it takes to develop a pill? Do want to regulate every company that produces something required for us humans to live?

     

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    Jim, Oct 27th, 2007 @ 10:18am

    Re: Italian Drug Industry

    I am not aware of any new major drug discoveries in Italy or India in the past 10 years. Can anyone name any? Without the US patent system, you wouldn't have any significant drug discoveries. How many countries get the benefits our of the US patent system without the costs?

    How much would the US economy save without law suits against drug manufacturers? There is a reason why it costs $800 million to bring a drug to market here in the USA and this cost is only rising. These drugs have to be perfect or else your company will be in court forever.

    Where will Senator Sanders get the $80 billion to fund this program? The US patent system doesn't charge this amount in fee's, so I'm guessing from the drug companies.

     

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    ipanema, Oct 27th, 2007 @ 10:24am

    Re:

    If I understand you right you are in favor of a drug company spending millions in research and development(the greatest cost) to develop a drug then when it markets it give the formula to anyone else who only has to endure the cost of processing it?

    It's reality that millions, if not billions are spent on R&D. There is a need to develop, to find cure, ultimately the right medicine. Perhaps the above quote is the same reason why drug companies are into a race. It's big money.

     

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    ipanema, Oct 27th, 2007 @ 10:31am

    Re: Re:

    lol @ myself...corrections: P3Line8 - RUPtured


    sorry. :)

     

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    ipanema, Oct 27th, 2007 @ 10:31am

    Re: Re:

    lol @ myself...corrections: P3Line8 - RUPtured


    sorry. :)

     

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  16.  
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    Anonymous Coward, Oct 27th, 2007 @ 10:52am

    Re:

    most of these generic companies have the network already in place...all they need is the formula. People are really overlooking 2 important points.

    1) most drugs go through extensive R&D and fail during the FDA phases...then the parent company has to eat that cost of development. If you are a generic company then you dont have to eat that cost. Why innovate and spend all that money when all you have to do is wait for someone else to spend all that money.

    2) recovering the money that goes into developing a new drug that makes it to market is also subsidizing not only all the drugs that failed but is also subsidizing the development of the next round of drugs.

    Remove that profit and you remove all incentive to continue to develop the next cure for diseases. Just like if you want oil companies to only charge for their cost then you remove their profits and reason to discover other energy sources.

     

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    Mike (profile), Oct 27th, 2007 @ 10:56am

    Re: Re: Italian Drug Industry

    I am not aware of any new major drug discoveries in Italy or India in the past 10 years. Can anyone name any? Without the US patent system, you wouldn't have any significant drug discoveries. How many countries get the benefits our of the US patent system without the costs?

    Actually, the real question should be whether or not you've seen any new major drug discoveries in Italy or India SINCE both were force to implement a US style patent system. Those who say that patents are necessary for innovation have a hard time proving it when you realize that since putting patent protection on pharma in these two countries, the pharma industry has decreased... In other words, it's not about creating incentives, it's protecting *foreign* pharma companies from competition.

    There is a reason why it costs $800 million to bring a drug to market here in the USA and this cost is only rising. These drugs have to be perfect or else your company will be in court forever.

    Yes, there is a reason it costs $800 million. That reason is that it actually doesn't cost $800 million. Unless you believe the pharma companies who don't want more competition and want more gov't protectionism...

    http://tinyurl.com/3xzwqq

    The biggest cost, of course, is in clinical trials, which is a red herring. Because those trials aren't necessarily designed to prove that the drug is *safe*, but to get FDA approval. Note that those are two separate things... Also, many drug companies really use "clinical trials" as underground marketing campaigns -- meaning that much of that "cost" is really marketing, hidden as R&D so that they can complain about how much R&D really costs...

    At the same time, thanks to these artificial monopolies, more R&D money *does* go towards pills, rather than recognizing that pills are increasingly not the best way to treat many medicines, when modern technology can often do a better job. However, it's much tougher to get non-pharma technology funded, because those pharma monopolies act as a magnet to take all that money. Pills are inherently risky. They're throwing some chemical compound into your body, which is different than anyone else's body and can react in different ways and have serious side effects.

    I AM NOT saying that pills are bad. They're wonderful, and they've saved, extended, improved many lives (including my own). What I am saying is that there are increasingly better ways to do all of this stuff that might not involve pills. But, we can't get off of our pill habit because artificial monopolies have made it so lucrative that it's tough to get anything done in other areas of more targeted technologies that will be better, safer and cheaper.

    http://tinyurl.com/2odk77

     

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  18.  
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    Anonymous Coward, Oct 27th, 2007 @ 3:03pm

    What about the cost of developing the next drugs and the cost of the drugs that do not make it to market? People seem to only focus on the cost of the drug that makes it to the market. Most drugs dont make it.

    It totally reflects the way the US works where the top 1% earners pay 40% of the nation's taxes and the top 5% of wage earners pay 60% where 50% of wage earners pay less than 3% of the taxes. That allows these big companies to make more good drugs. What I see proposed here is going to harm our leadership in the pharmaceutical industry where we as a nation are actually subsidizing the entire world's drug needs.

    The point is that the most successful drugs marketed pay for the cost of all the drugs that either dont make it or aren't successful when they do hit the market. Plenty of companies go out of business because the one big drug they invested in failed to make it out of trials and take their investors with them. It is a risky business.

     

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  19.  
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    Lucretious, Oct 27th, 2007 @ 7:27pm

    I agree with the fact that patent law is a mess but there are a couple of things I disagree on. 1.) is that other countries have "thriving" pharma industries that may well be in certain circumstances, but, the OVERWHELMING majority of new, cutting edge medicine is done by the US Pharma industry. 2.) It also bears pointing out that the amount of money that it costs to bring a new drug to the public is astronomical (between 1-2 Billion). This for R&D and the cost of getting through the rigorous standards that the food & drug administration insists on.

    Could the pharma industry do things in a way that is more ethical? Certainly (I've a got a few horror stories of my own), but also keep in mind the reason that we have the quality of pharmaceuticals here that we do is because of the potential profits involved. Its a double edged sword with no easy black or white answer.

     

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    Lucretious, Oct 27th, 2007 @ 7:31pm

    Mike, give a few examples of "Technology" doing something better than a pill wouldn't.

     

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  21.  

    Drug Guinea Pig

    Just a note. Back in 1985 I was a "guinea pig" for a Pharmaceutical company that was in the latest stages of development for a pill that would prevent further enlargement of the heart (which I suffer from).

    The trial lasted 12 weeks and the last week they came to pick me up on a Saturday to bring me in. This was not normal so of course I thought something was wrong.

    When I got to the clinic, there was a bunch of executive types and several doctors were present, along with some of the other study patients. As it turned out, our liver enzymes had increased during the last week of study. Automatic failure.

    I found out later (through an employee at the clinical trial business) that the company lost millions and had to start all over.

    I decided never to be a "guinea pig" again.

     

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  22.  
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    Lots of Fantasies, Oct 28th, 2007 @ 2:39am

    Unless each disease gets a Bill Gates to fund it development with out the WEAK patent protection now offered many things that now save lives would never had been created.

    As it is now a patent is good for 20 years. Not from the day the drug is approved but from the day the initial dug design patent is filed that is early on in the research process. So before the first dose is sold 25%-50% of a drugs protected life is gone.

    So that means the time to recover the cost has to be compressed. What would help actually, not to make the heads of techdirt mavens explode, would be to start the drug patent clock off on release, not invention.

    And realize that many drugs have dual uses. I know of one drug that was originally for a terminal diseases.. that had amazing potential found for treating a non-terminal but debilitating disease. After the company that made the drug was acquired, the new owner killed the research because there was no way they could recover the cost of the new approval process before the drugs patent ran out.

    We pay more for drugs because we can afford to.. most people have coverage. the remaining 15% that do not that are part of the often quoted statistic are not covered because they are illegal workers or have chosen not to be covered. Even the health coverage for kids being politicized in DC could cover many more people, if they just applied for it.

    While there is much that can be done to fix some of our health care funding problems. Our insurance systems allows for lots of drugs to be made that if the prices were artificially limited would never make it to market. The US free enterprise insurance system is subsidizing lower cost drugs to countries that make price controls to keep their socialized medicine system from collapsing.

    Two things we pay for in our health care are other governments laws on price and legal abuses where lawsuits are filed, won, and awarded not based on fault but sympathy and that often attorneys who suffered nothing, get 40% of the judgement instead of billable hours.

    Limit legal fees for lawsuits to billable hours and health care would get cheaper..

    People die from "free" health care in other countries we lost a friend in the UK because his wait for a test that can be done on US hospitals immediately was too long.. he died because the queues for resources kept him from being diagnosed in time.

    Those that want health care for free would doom all of us to getting what we paid for.. and in the end.

    This idea of taking away patent protection is just another way to make sure that orphan disease never get cures.

    And patients need to know trials are not a great way to get free drugs, they are a way you put something on the line for the good of thousands or millions of other people.. and if you are lucky you also get a cure. If no one did trials.. millions more would suffer.. because you can not test this stuff on animals or computers... we are too complex for that as of yet.

     

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  23.  
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    Shaun, Oct 28th, 2007 @ 3:12am

    Re:

    Mike, give a few examples of "Technology" doing something better than a pill wouldn't.

    Umm actually he's allready done this on a previous occasion.... See Another Example Of How Patents Skew Medical Research - though technically I believe this would create a pill just not a patentable one. People are always complaining about Mike not providing evidence when it is usually the case that the last half-dozen posts that he made on the subject provided exactly that evidence - and they sometimes even do so in reply to the posts that provide the evidence....

    Also there is the case of phages which being bacteria that already exist rather than a chemical formula are also kinda hard to patent. Say where exactly can you get one of these to treat your multi-drug-resistant infection? Certainly not in the great US of A, who we all know is at the pinnacle of all medical research due to their wonderful patent system.

     

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  24.  
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    Yet Another Anonymous Coward, Oct 28th, 2007 @ 5:58am

    I Advise...

    Before anybody continue the discussion please read this chapter as part of "Against Intellectual Monopoly" book.

    http://www.dklevine.com/papers/anew09.pdf

    It is all about the pharmaceutical industry and why patent are bad.

    This is to improve the quality of discussion.

    As for me, I am on "patent have to go" camp.

     

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  25.  
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    Anonymous Coward, Oct 29th, 2007 @ 6:20am

    Uninformed Blog

    What Mike did not research what something before he posted his blog? That has never happened before. Mike your background is not in "pharma" or in music, so write what you know about instead of what you think you know about. Your opinions on those subjects are ill-informed.

     

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  26.  
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    angry dude, Oct 29th, 2007 @ 10:17am

    Re: Uninformed Blog

    Mike's a PR hack, just look at his resume

     

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  27.  
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    Mike (profile), Oct 29th, 2007 @ 11:43am

    Re: Uninformed Blog

    What Mike did not research what something before he posted his blog? That has never happened before. Mike your background is not in "pharma" or in music, so write what you know about instead of what you think you know about. Your opinions on those subjects are ill-informed.

    It's great when people just attack me randomly, rather than pointing to anything specifically that I got wrong. If you feel that I got something wrong, please point it out so we can discuss it. That is the point of the blog after all...

    Besides, I find it amusing that people suggest I can't talk about pharma or music if I don't have a background in those fields (and you're wrong by the way on one of those two counts, but alas...). However, my background is in economics, and I'm approaching these from the economics standpoint of things.

    Hell, I could just as easily say that no musician should be able to talk about the economics of music, since they don't have training as an economist. But that would be dumb, right? So why is it that you would say I can't talk about economics of industries?

    Again, feel free to point out where I'm wrong so I can discuss it. But to paint me as being wrong without giving a single example isn't exactly convincing.

     

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  28.  
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    Mike (profile), Oct 29th, 2007 @ 11:48am

    Re: Re: Uninformed Blog

    Mike's a PR hack, just look at his resume

    Angry dude, that's impressive. Just last week you apologized for saying I was a PR hack because it was pointed out to you that I'm not.

    So, yes, let's look at my resume, if you want to bring it up. I have never had anything to do with PR, ever. I have never studied PR. I have never worked in PR. I have never done any PR. So... uh... why would you say I'm a PR hack? My resume shows the exact opposite. It shows that I've built a business telling companies what they *need* to hear, not what they want to hear. Most of the posts here are about what companies are doing *wrong* rather than what they're doing right. If I were a PR hack, don't you think it would be the opposite?

    But, while we're talking about resumes, angry dude, it amuses me that you hold up mine, while you ignore repeated requests to know yours. You've been caught lying to us about patents you hold (originally saying you held several, and then years later admitting you just received your first). You refuse to point out what patent you actually hold. You don't say who you work for.

    Who's more credible here? I'm completely open about what I do -- and it's got nothing to do with PR. You, on the other hand, hide behind anonymity and insults, and rarely add anything of substance.

    So, again, I need to ask you to apologize for lying about me, and to refrain from posting lies in the future. If you had any integrity at all, you might also answer those other questions about who you are and your older lies.

     

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  29.  
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    Anonymous Coward, Oct 29th, 2007 @ 12:04pm

    Re: Re: Uninformed Blog

    I believe it is about experience and what you know about. Just because a musician is not trained as an economicist does not take away from the fact that he has experience working with music. Do you have eperience as a musician or in the music industry? But using your logic you could only focus on the economic field you studied. So what field was that? Tech? Or copyright law? Because sometimes I get confused.

     

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  30.  
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    Yet Anonymous Anonymous Coward, Oct 29th, 2007 @ 12:28pm

    Logical Fallacy

    I believe Angry Dude committed the logical fallacy called argumentum ad hominem.

     

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  31.  
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    chris (profile), Oct 29th, 2007 @ 1:28pm

    Re: Re: Re: Italian Drug Industry

    rather than recognizing that pills are increasingly not the best way to treat many medicines, when modern technology can often do a better job. However, it's much tougher to get non-pharma technology funded, because those pharma monopolies act as a magnet to take all that money.

    insurance companies love pills because they are cheap compared to surgery or therapy.

    also, if you have a bad reaction to a pill you can stop taking the pill. a surgical complication requires more surgery. in insurance terms, surgery bad pills good.

    yes surgery, other biotech, and therapy (physical or psychological) in particular, is probably better than pills, but health care is financed by insurance, and insurance loves pills and hates surgery and therapy.

    medicine is funded by insurance. insurance is driven by profit. pills are more profitable than surgery or therapy. ergo, medicine is pill$ and everything else is meaningless.

    so, if you did away with patent monopoly on pharmaceuticals, then pills would be even cheaper and further supplant surgical and therapeutic innovation.

     

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  32.  
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    James Love (profile), Oct 29th, 2007 @ 2:39pm

    The Sanders bill actually keeps patents, but elimi

    In S.2210, patents would exist, but would be used to establish claims on the prize fund, not to prevent generic competition for products. The prizes themselves would be divided among drug developers competitively, according to the relative impact of products on health care outcomes. This is the putative basis for third party reimbursements, but prizes are a much more elegant way to do it, solving a number of well known problems. Access to products would be much greater, and R&D incentives would be targeted more efficiently, to products that actually delivered increases in therapeutic outcomes.

     

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    Mike (profile), Oct 30th, 2007 @ 1:45am

    Re: Re: Re: Uninformed Blog

    But using your logic you could only focus on the economic field you studied.

    My logic? I said the exact opposite. I said that it's dumb to suggest that only people who have specific experience in a particular industry are qualified to speak on what's happening in that industry.

     

    reply to this | link to this | view in thread ]


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