Surprise, Surprise: Pharma Abusing IP Laws To Prevent Competition
from the live-by-ip... dept
The deeper and deeper you look into the pharmaceutical market and the way those firms use patents, the worse and worse it looks. There’s little evidence that pharmaceutical companies really need the kind of exclusivity that patents provide, but it’s become so established an idea, that some actually believe that pharma would disappear without patents. However, the truth is quite different. The chemistry industry — the precursor to the pharma industry — actually fought against patents in the early days, knowing that robust competition was what drove innovation and profits. Patents only allowed the leaders to stomp out competition and limit the overall market, increasing their own profits, but slowing innovation and product development.
Thus it should come as no surprise at all that a new report has found that pharmaceutical companies are regularly abusing patents for anti-competitive purposes (thanks Rob Hyndman for the link):
Pharmaceutical companies are manipulating the intellectual property rights system and are “actively trying to delay the entry of generic medicines onto their markets,” a top EU official said of an EU inquiry into the pharmaceutical sector released Wednesday. As a result, there has been a decline in the number of innovative medicines getting to the market, it says.
In other words, contrary to the popular myth, patents are actually being used to hold back innovation in the healthcare market.
Filed Under: abuse, europe, monopolies, patents, pharma
Comments on “Surprise, Surprise: Pharma Abusing IP Laws To Prevent Competition”
“Surprise, Surprise: Pharma Abusing IP Laws To Prevent Competition”
You need to make a VERY strong point when it comes to these Rockefeller and German Socialist led companies: they aren’t just using IP laws to prevent competition, they’re using it to prevent quality, affordable healthcare for a massive number of people throughout the world.
Let me be clear, because I’ve studied the history of most of these groups, their involvement with the WHO, NHB, the Rockefeller Organization, Nazi Germany, Nazis hiding in Argentina, etc., I’m am biased. But that doesn’t change the truth that most pharma firms are pure evil.
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Don’t hate the player, hate the game. Significantly eroding their IP rights, for one, would eliminate a significant amount of their power to warp the market. I imagine FDA regulations probably don’t help, since Pharma funds are without doubt deep in its pockets.
No doubt I have less knowledge in this area than you, but quality and affordability are for the most part inversely related. The only way we are going to achieve both in most markets is to increase competition and innovation. If we relax IP laws and FDA regulatory power, as well as emphasize incentives for curing over treating(such as pay-for-performance over pay-for-service), we stack the deck in favor of consumers. Then it doesn’t matter how evil these companies may be.
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“Don’t hate the player, hate the game”
Sorry, but no. I very specifically hate the players because they CREATED the game.
this is a load of crap. the whole point of a patent is to have a legal right to exploit the R&D put into the invention. in following, the patent exclusion right should sway with the cost of the R&D required. if it requires tons of R&D, the exclusion right should be stronger, and if there’s little or no R&D, there should be no exclusion right.
and since the patent should go to the first guy to get the paperwork together, inventors would balance the time and monetary costs against the possibility that someone else will beat them to the patent.
regardless, biotech R&D is ridiculously expensive. it’s not like writing code or recording music where anyone with a few extra hours and a computer can do it. you need hundreds of millions or even billions of dollars to do it.
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AC says costs money money, blah blah blah, poor us, we need protection
Creating a car costs lots of money too yet companies still take the risk of making new cars every year despite the fact that they are not guaranteed any protection whatsoever. Aspirin has not had any patent protection in years, yet which company sells the most of it in the world? Yeah, aspirin’s creator. Cry us a river.
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R&D on a new car design does not cost even a fraction of the R&D on a drug. Both cars and drugs must deal with marketing, but cars don’t have clinical trials, whereas the vast majority of drugs fail their clinical trials. The successes subsidize the research for the failed attempts.
Also, aspirin does still have patent protection in a number of forms. Every few years, someone comes out with a new method of manufacturing aspirin that reduces the cost per pill by a few shavings of a penny. When you multiply that by the trillions of pills sold every year, that new method of manufacture is worth a lot of money. Someone had to spend the time and development efforts in doing it.
Besides, patents are filed well before FDA trials even start. On average, if the drug does get FDA approval, the trials will have eaten 5-8 years off the life of the patent depending on the class the drug is in. Between the FDA, paperwork, and marketing, you’re looking at useful patent terms of roughly 10-12 years for most drugs.
And in the US, we have Hatch Waxman rights, which gives generics massive incentives to challenge bad drug patents.
Bottom line: you guys have no idea what you’re talking about.
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Mod parent up. AC is right. R & D costs for developing pharmaceuticals are astronomical. Think about what you’re asking for next time you expect a drug to be 100% effective with 0% side effects. A lot of great drugs fall by the wayside because they adversely affect a tiny fraction of the population and so get trashed. Your medicines would likely cost a lot less if they weren’t required to be perfect. If the effort went into matching people with compatible medicines rather than making medicines perfect for everyone, drugs would be a lot cheaper.
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R & D costs for developing pharmaceuticals are astronomical.
Not as astronomical as you might think. A recent study showed that most major pharmaceuticals were mostly funded by public dollars. Private pharma only takes it over late in the process. The study I saw pointed out it really costs about $30 to $40 mil for a pharma R&D…
The real issue is often the cost of clinical trials, which isn’t R&D, but is a gov’t mandate. There are better ways to deal with gov’t mandates for safety than giving pharma co’s a huge monopoly for them to abuse.
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The “study” you saw is a joke. Even the anti-patent crowd admits that it’s $500m to get a drug to market. To put this into perspective, the pro-pat crowd says it’s $1.5b.
There’s 3 phases of trials that a drug has to get through before the FDA approves the drug. Because failure rates are so high, the expected value of cost after lab testing and clinicals alone easily pops the R&D to between $500m and $1.5b. Then you have marketing/promotion on top of that. It’s not like the recording industry, where the failure to protect the establishment will simply lead to newer lower cost systems. Anyone can write a song, and the sole barrier to success is marketing/promotion. But drug development takes a ton of expensive education to step in the lab door and exponentially more money for research. In the end, merely certifying your results in phase 3 runs $300k.
I do admit that there have been problems in pharma patents (the product-by-process doctrine was abysmally stupid up until just 2 months ago). Regardless, pharma is exactly the type of research industry that patents were intended to protect.
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What he said.
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Until those “better ways” are in place, pharma companies still have to foot the bill. Perhaps once the return on the “stimulus money” investment is realized, the tax payers can foot the bill for the “better ways” rather than just the customers of the pharma companies.
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Could you provide a link to that study, please?
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Clinical trails are a part of R&D. They are a test of weather or not the drug works as intended. And those trials often lead to additional modifications of the drug chemistry itself or of delivery methods.
There is no reason that all drugs could not be created with tax dollars and that any intellectual property produced could be owned by all of us. The problem is that there is little willingness on the public’s part to pay for this.
Contrary to all the free crap sentiment on TechDIRT there really are no free lunches.
Ronald J. Riley,
Speaking only on my own behalf.
President – http://www.PIAUSA.org – RJR at PIAUSA.org
Executive Director – http://www.InventorEd.org – RJR at InvEd.org
Senior Fellow – http://www.PatentPolicy.org
President – Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (810) 597-0194 – (202) 318-1595 – 9 am to 8 pm EST.
Re: Re: Re:4 Re:
“There is no reason that all drugs could not be created with tax dollars and that any intellectual property produced could be owned by all of us. The problem is that there is little willingness on the public’s part to pay for this.”
That’s not true because the public already pays for much of the R&D and pharmaceutical corporations get the patents as if they paid for it. The problem is that there is little willingness on the public to STAND UP for what’s right and to DEMAND that this intellectual property be removed. Pharmaceutical corporations spend more on marketing and advertising than they do on R&D.
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“Bottom line: you guys have no idea what you’re talking about.”
Perhaps, but I’m guessing Canada and the EU do, so let’s allow free importing of drugs from there. They seem to be able to recoup these tremendous costs at a far lesser cost to the consumer.
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“Perhaps, but I’m guessing Canada and the EU do, so let’s allow free importing of drugs from there. They seem to be able to recoup these tremendous costs at a far lesser cost to the consumer.”
Canada, the EU and others ride the coattails of America’s R&D. It is not so much that they recoup the costs as they completely sidestep them by taking the benefits of others investments.
Ronald J. Riley,
Speaking only on my own behalf.
President – http://www.PIAUSA.org – RJR at PIAUSA.org
Executive Director – http://www.InventorEd.org – RJR at InvEd.org
Senior Fellow – http://www.PatentPolicy.org
President – Alliance for American Innovation
Caretaker of Intellectual Property Creators on behalf of deceased founder Paul Heckel
Washington, DC
Direct (810) 597-0194 – (202) 318-1595 – 9 am to 8 pm EST.
Re: Re: Re:3 Re:
“Canada, the EU and others ride the coattails of America’s R&D. It is not so much that they recoup the costs as they completely sidestep them by taking the benefits of others investments.”
Prove this to me.
Canada and EU do their own R&D and often times countries ignore R&D done in other countries and doctors just read medical journals based on R&D done in their own countries.
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“Canada and EU do their own R&D and often times countries ignore R&D done in other countries and doctors just read medical journals based on R&D done in their own countries.”
and since Ronald J Riley seems to be completely oblivious of the rest of the world, since he must think that the world revolves around him (and, since he’s in America, therefor it must revolve around America) just look at doctors in America. They read journals that publish American based studies (ie: done by Americans). You go to Canada and guess what? You find the same thing, the journals they read are based on studies done in Canada. Scientists and doctors in one country are often oblivious of studies done in other countries (in fact, this is a criticism of our system I learned in a class I took). Stop trying to support your beliefs based on nonsense that you make up. The world doesn’t revolve around the U.S just because that’s where you are.
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“Canada, the EU and others ride the coattails of America’s R&D. It is not so much that they recoup the costs as they completely sidestep them by taking the benefits of others investments.”
And, yes, Canada and the EU do put money in their own R&D. Just because another country progresses doesn’t mean that the U.S. is somehow responsible and therefore the world must owe us something.
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“Canada, the EU and others ride the coattails of America’s R&D. It is not so much that they recoup the costs as they completely sidestep them by taking the benefits of others investments.”
If anything it’s the other way around.
http://www.techdirt.com/articles/20090708/0055045483.shtml
Toyota, for instance, started advancing its hybrid vehicles (ie: Japan) and now the U.S. that doesn’t want to enforce the IP laws of other nations only when it benefits the U.S. But then the U.S. expects to enforce its IP on other nations. The double standards here show that the U.S. is only self interested. Toyota spent research dollars to advance their vehicles while U.S. companies like Ford refused. Yet since the U.S. doesn’t want to enforce Toyota IP laws on hybrids Toyota hasn’t benefited from IP from the U.S. (see the post by Anonymous Coward – Jul 8th, 2009 @ 12:55pm). “the court ruled in Ford’s favor saying that Ford developed it independently, off of the concepts developed and patented by TRW in the 60’s.” I don’t buy this for a second (or else it would have been developed a long time ago) and it sounds to me like the U.S. is only being self interested. They develop hybrids only after Toyota does so? Yeah right. Yet the U.S. wants to enforce ridiculous IP laws on other nations. Had it been the other way around, had the U.S. been the one with the patent, they would have tried everything they can to enforce it on the other nation and such an excuse of prior art would never have convinced them.
Yet, despite the fact that Toyota has not benefited from IP (from the U.S.) they still put the research dollars to advance their hybrid (only to have it stolen by Ford). So, if anything, it is the U.S. that is taking advantage of the investments of other nations.
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The fact that Ford didn’t bother to develop it until Toyota started having commercial development in no way requires Ford to have used any part of Toyota’s research and/or discoveries (ie patents).
You could build a web site that has a different functionality than existing web sites (the first social site, for example), and begin to have commercial success (or sell your company for a decent amount of money), and I can then see that as incentive to build something that has a similar function without ever even looking at your site, especially if there’s some sort of past example of something similar to look at (say… shared address books from email clients).
The fact that someone develops a TYPE of technology first does NOT mean that anyone else who delivers a similar type of technology, one meant to fulfill the same function, based it in any way on the first.
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More made up crap from AC.
So what are the latest patents that Bayer filed for production of aspirin and how is it functionally different from any other knock off on the market? There are numerous companies making aspirin and all of it does the same thing.
R&D on a new car design does not cost even a fraction of the R&D on a drug.
And manufacturing facilities just pop-up on their own? Any new car requires major retooling of the production line and costs from tens of millions of dollars to multiple hundreds of millions.
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R&D on a new car design does not cost even a fraction of the R&D on a drug.
The latest Holden Commodore platform cost $AUS 1 billion to develop, and was a global undertaking. In my mind, thats a lot of money. Based against Mike’s above post that Pharma R&D is about 30-40 Million, its a veritable shitload.
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Um.. billions and billions are spent in R&D on cars every year. Its an expensive business. You aren’t looking at the entire pipeline. The car manufacturers design consumer cars and sell them to the public. Thats their distribution channel for the R&D pipeline. They take the things that work inside R&D, make them more consumer friendly, easier to use, and significantly toned down in abilities; then sell it to consumers. But actual R&D, is done in auto racing. Sure, you’re Toyota Camry may not look a lot like a race car, or perform a lot like a race car. But a lot of what makes it economical to drive and safe when you crash it… came out of arguably the most cost intensive and unforgiving R&D pipeline conceived by man. The pursuit of making cars go really fast.
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Cars have thousands of patents associated with them…
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Who says one entity has to invest all the money into researching a new drug? Why not spread the cost and effort amongst the competitors as they fight to one-up each other with many small advances in progress? Sort of like open-source vs commercial software.
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Nobody says. That’s the way things work.
In a way I can understand the behavior since it takes nearly a billion dollars to launch a major new drug type. Of the potential profits make it worthwhile.
Its a double edged sword because those potential profits are why we have the best drug research and resulting products in the world.
Crap??
This crap is a load of crap. There is a lot of R&D done at universities and funded by tax dollars, and guess who gets the rights. Then there is the the converse side of the issue that companies like IBM spend a larger percentage of revenue on R&D and file more patents than most. Not so they can manufacture products or prevent others from manufacturing and selling, or to even license these patents to others. But for “just in case” insurance so when they run afoul of a patent it is very likely to be their own. Now isn’t a system like that a load of crap.
Re: Crap??
You are at least partially wrong. IBM files a lot of patent applications (and gets a lot of patents) because they like being in the patent leadership position. They use those patents as an indication of the amount of innovation they do. Hmmm…Big Blue, equating patents and innovation. Imagine that.
While I agree that what they are doing (preventing generics from entering the market) sucks for individuals (and the bottom line) – It DOESN’T stifle innovation.
While patents have (got a bit better) been ridiculous with gene patenting (without even knowing what the gene does), what you (Mike) cited concerned preventing generics, not stepping on small start ups.
In fact, there is a HUGE industry for small startups in the pharm industry. Discover some thing new and innovative, patent it, sell to a ‘big guy’ for development and release, then start over.
I’m I missing something?
Pharma Abusing IP Laws
I agree just look at the insulin market, it has been around for decades. but there is still no generic for it. so in turn if you don’t have insurance like myself, The insulin for my wife now costs us $80.00 and even with insurance it was $50.00
now if there was a generic it would only cost $4.00.
the drug company’s fight tooth and nail to keep generics out of the insulin side.
How about?
How about we keep patents, but, those medications that are needed for the life of a patient, such as Insulin, Heart Meds, Pain Meds, etc., are given a flat cost of $4 per prescription fill and the other meds used for quality of life such a Nicotine Patches, Erectile Dysfunction, etc., those are priced to cover their true R&D costs and a little extra for the R&D costs of the other meds?
Re: How about?
Then what would be the insentive for pharma to make new life saving meds when it can just make next generation viagra
that's just good advice
Ask your doctor about whether you need our new fangled drug.
Side effectes include vomiting, diarrhea, headache, oily discharge, hives, shortness of breath, and death.
“The chemistry industry — the precursor to the pharma industry — actually fought against patents in the early days”
I’d like to learn more about that piece of history. Can you point me to where I can learn more about that?
I am reading the comments with interest esp. as I am actually working in R&D of a major pharma company.
And yes R&D costs a lot. The biggest part of it is not the drug discovery as some commenters seem to assume but the clinical trials. And those are forced on the industry by goverments.(don’t get me wrong, I am not against trials). Only successful clinical trials get a drug approved. And you cannot just do it say in the US and get the drug approved worldwide. No, you have do do it over in Europe for approval there, in China for approval there and so on. A drug that fails in the Phase 3 trials may have already eaten up 100 Mio $ or more.
I am angry with Pharma as the next guy that they hinder generics once the patent protection is over.
The emphasis is clearly on protecting their patents and hindering competition which is bad.
But somehow it is understandable that they fear generic producers.These producers have hardly any R&D costs, they just need to refer to the clinical studies of the inventing company to get their generic version of a drug approved.
So what would be the solution to this dilemma? On the one hand huge developing costs due to goverment imposed requirements(clinical trials) plus high risk of failure and on the other side usually low production costs for the drugs itself which makes it so lucrative for generic producers to step in to benefit without much risk.
After all with all the goverment intervention in development there is no real market to begin with.
@Mike,
I recall that you wanted to write about patents in Pharma for a while now. I would really like to see some anlysis here. I certainly cannot think up a good solution that works for Pharma as well as for customers.
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“So what would be the solution to this dilemma? On the one hand huge developing costs due to goverment imposed requirements(clinical trials) plus high risk of failure and on the other side usually low production costs for the drugs itself which makes it so lucrative for generic producers to step in to benefit without much risk.
After all with all the goverment intervention in development there is no real market to begin with.”
Ok, what about a solution like this. Remove the imposed government requirements and do this.
If someone takes a mislabeled drug or an underlabled drug and it harms them, they can sue for LOTS AND LOTS of money. The company will PAY that money. This will give the company incentive to provide a safe drug but they also have incentive to do so efficiently, at a cheap price. The drug will have to genuinely be safe (none of this Vioxx nonsense where they fake the trials) because if it’s not, the law will allow for SUBSTANTIAL rewards if it harms someone.
Now if someone misuses a drug, against the label, and it harms that person then of course the company is not liable.
Of course this can have shortcomings (the shortcomings that often occur with court cases) like how does one prove that they used the drug as labeled. How does one prove the drug caused the problems. However, if a drug is generally harmful when used as labeled then I think after the fact society will generally find out the symptoms/problems it can cause and how to diagnose them. Then people taking a drug can use that as evidence in cases, along with written notes from doctors. Is it foolproof, no, but I think it’s something to consider.
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Basically, allow corporations to release drugs without many government imposed requirements but make them PAY severely if those drugs harm anyone when used as labeled.
I understand this solution GREATLY oversimplifies the issue and has many loopholes. But I’m just throwing it in there as something to entertain.
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First it’s “analysis” (sorry, but when searching for words so I can respond to the paragraph is helps if things are spelled correctly).
I suggest you read this
http://forums.christianity.com/Red_Yeast_Rice_and_the_FDA/m_3777330/mpage_2/tm.htm#4432585
and this
http://forums.christianity.com/m_3795161/mpage_1/key_/tm.htm#3795161
The posts don’t necessarily pertain to patents specifically but I do mention them. Another good source is
http://www.naturalnews.com/
Again, this blog doesn’t necessarily talk about patents (though they are mentioned from time to time) but it’s good for getting different perspectives, other than just the corrupt mainstream media perspective (which likes to unethically censor opposing sides that are no less reasonable than the position the corrupt mainstream media presents).
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Oh, and another good blog is this one
http://scienceblogs.com/effectmeasure/2006/07/h5n1_sequence_release_patent_a.php
This blog is kinda like the techdirt that specializes in science and especially in the Biosciences and medicine. They tend to be somewhat anti IP as well.
copy
“There’s little evidence that pharmaceutical companies really need the kind of exclusivity that patents provide”
So you expect them to bet the farm on new discoveries without protecting them enabling competitors to simply copy all their hard work without the same risks? Get real.
Re: copy
As was mentioned before, most of the cost is the result of FDA regulations, not R&D. You assume that if we relaxed IP laws, that everything else would remain exactly the same; it wouldn’t.
Whether privatizing medical approval or cost sharing or some totally different system, there’s no reason we need to retain our current one-company-pays-everything-spends-100-million-on-clinical-trials-gets-FDA-approval-and-20-year-patent workflow. And even if we didn’t, is there some evidence to think that if we just shortened that period to two or three or four years that it wouldn’t still serve as incentive to create?
The fact is that new medication came out before the existence of patents suggesting that patents aren’t necessary for medical advancement. I also see little to no evidence to suggest that our current system has done much to accelerate medical advancement. I think patents shouldn’t last so long. Why should an entity innovate if it already has a government sanctioned monopoly over the market? What it has is incentive to prevent others from innovating.
You know what other countries should do (countries that aren’t so big on IP). They should get intellectual property on every bit of R&D that they perform and allow any of their citizens to freely exploit patents and IP without paying anything. Then they should cross license all of their patents to each other as much as they can (ie: EU cross licenses patents with Canada). If the U.S. won’t cross license all U.S. patents and IP to the rest of the world then the rest of the world should CHARGE the U.S. for any IP they infringe upon. If the U.S. doesn’t pay for the IP they infringe on then the rest of the world doesn’t have to pay for U.S. infringement. The rest of the world should only enforce their IP on the U.S. and other countries that want to exploit the IP system and they should freely cross license their IP to anyone who would freely cross license IP to them.
So take the pirate party. The pirate party is not so big on IP. Fine. Let them try to get the EU as a whole to get as much IP as it can from anything produced within their borders. They allow anyone within their borders to exploit that IP and then they ask other countries to cross license all IP with their IP. If some other country (ie: the U.S.) doesn’t want to cross license ALL of their IP with the E.U. then the E.U. will enforce their IP on that other country. To the extent that the U.S. enforces its IP on the E.U. the E.U. will do the same. If the U.S. does not enforce its IP on the E.U. then the E.U. will not enforce U.S. IP in their borders whether the U.S. likes it or not.
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“If the U.S. does not enforce its IP on the E.U. then the E.U. will not enforce U.S. IP in their borders whether the U.S. likes it or not.”
Or, rather, if the U.S. does not enforce E.U. IP on U.S. citizens then the E.U. will not enforce U.S. IP on E.U. citizens whether the U.S. likes it or not.
Naturally the E.U. , being not restrained by stupid IP laws, will advance faster than the U.S. As a result they will have more IP to enforce on the rest of the world and more power, as a nation, the compel the U.S. to cross license patents with it.
But, what about small, poor nations that have no such bargaining power. The E.U. and other entities that don’t like IP but have tons and tons of IP to enforce on evil nations like the U.S. should not only MAKE the U.S. cross license their IP with them. They should make the U.S. cross license their IP with those poor nations as well. Unfortunately nations tend to be self interested and while IP tends to only benefit rich and powerful entities at the expense of everyone else it is hard to say if the E.U. and other nations would be willing to protect poor and powerless nations from unethically being exploited by the U.S.