Want Healthcare Reform That Works? Get Rid Of Patents
from the and-watch-innovation-flow dept
Economist David Levine (author of the book Against Intellectual Monopoly) has a column up at the Huffington Post, where he explains why abolishing pharma patents would be a great way to reform healthcare. He runs through many of the arguments against such a move, and explains why they don't make much sense:
But, perhaps, without all those extra monopoly profits we wouldn't have such great new products? The fact is there aren't so many great new products - a well known fact among health economists is that while big pharma's spending has soared the last decade, as patent control has tightened, drug discovery has plummeted. Pharmaceutical innovation is not lower in Europe, despite of big pharma's lower monopoly profits. While the market for pharmaceuticals is now largely a global one, so local rules may not be so important, this was less true in the past. Historically, before pharmaceutical patents were introduced in Italy in 1978, that country accounted for about 8% of new pharmaceutical discoveries worldwide. After the industry was strangled by patents, that percentage dropped to practically zero. Switzerland, a powerhouse in the world drug industry, introduced pharmaceutical patents at about the same time. While Switzerland's fall has not been as dramatic as Italy's, it too is much less of a powerhouse today than it was before 1977.He also goes on to suggest some other ways to lower the costs of "drug development," as well. There's probably not much new in there if you've read his book, but it's a good, straightforward description of the problem with pharma patents. While the writing is a bit flippant, if you go through the related chapter in Levine's book, and then start reading some of the other source material and studies, it's all backed up quite strongly. There's almost no evidence that patents do anything to promote more drug discovery -- and plenty to suggest it makes medicines significantly more expensive. Ditching pharma patents would make a much more efficient market in drugs that would end up saving a lot of lives.
Patents do not seem to lead to the innovation their proponents claim. The list of examples goes on and on: the discovery of the one-dose HIV cocktail that replaced the complicated multi-pill regime? That took place in India a country that at that time did not allow pharmaceutical patents. Of the fifteen great medical milestones recently identified by the British Medical Journal - only two were patented or could be attributed to the "incentive" that patents supposedly provide. Numerous technical studies by economists of the effect of stronger patents on innovation have failed to find any consistent increase. Put it plainly: while the social gains from abolishing patents on drugs are obvious and computable, the losses are dubious and, on the basis of empirical evidence, probably nil.
Pharmaceutical patents and the resulting monopolies have many other corrosive effects, over and above raising the prices of prescription drugs. Pharmaceutical companies spend far more money promoting their products than on R&D. Some of the giants spend as much as four times on marketing as they do on research and development. How do these companies market their products? Most of the money goes to "scientifically convincing" the medical profession to prescribe patented products. How? Well, for example, by inviting doctors and their families to week-long conferences in exclusive resorts, where two hours are for a marketing presentation (the "medical symposium") and the rest for (all-included) leisure. A spectacular - but hardly unique - example of the level of corruption is the conviction of Pfizer for encouraging doctors to bill the government for drugs they were provided for free. These practices not only raise the cost of drugs, but corrode trust in the medical profession.