Drug Firms Freaking Out Over Expiring Patents

from the live-by-the-patent... dept

Glyn Moody points us to a discussion about how the big pharma firms are freaking out because their key patents are expiring, and they've failed to develop any new patentable drugs in a while. This is leading the usual patent supporters to worry and fret. Of course, the whole thing is backwards. As Moody points out, expiring patents should be a cause for celebration, not dismay. It means the public is getting access to all sorts of important medicines at much more reasonable prices. That's good news.

The real issue here is that for years patents massively distorted the healthcare market. It hasn't been about keeping people healthy at all. It's been about finding patentable drugs to extract monopoly rents (often at the expense of actually keeping people healthy). Perhaps, if we can get past this silly and short-sighted focus on patentable medicine as being the key component of healthcare, we can start seeing smarter companies develop smarter business models that actually align interests: firms that recognize there's tremendous value in actually keeping people healthy, rather than trying to sell them a tiny pill.

If you start looking at the economic research behind healthcare, you begin to realize that the economic incentives around healthcare are totally screwed up. The reports have shown that keeping people healthy for longer contributes billions, if not trillions to the economy. If firms can't figure out how to profit from keeping people healthy, they're not paying attention. But that's never been the focus of our healthcare policy, and it's a shame. If today's drug companies are felled by their overreliance on patents, perhaps we can finally move on to rethinking healthcare towards making people healthy and improving the economy at the same time... rather than the current structure that appears to do neither of those things all too often.

Filed Under: business models, drugs, health care, healthcare, patents, pharma

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  1. icon
    jilocasin (profile), 10 Mar 2011 @ 7:09am

    Pharma incentives are completely backwards.

    The way things are, the incentives for Pharma are completely backwards to what 'sane' people would think.

    From least to most important to a healthcare company

    Vaccine: lowest payback
    Pro: everyone gets a shot
    Con: That's all they need

    Cure: second lowest
    Pro: when they were sick they needed medicine.
    Con: only people sick with this illness need the cure
    once they get the cure they aren't customers anymore

    Treatment: best
    Pro: people who need it will need it forever (lifetime customer), if it's life threatening then we can charge outrageous prices (it's their money or their life)
    Con: not everyone might have this illness. So if it's not life threatening, it should be vague so that we can say it works for the largest number of people.

    Why should they work to find a cure, or heaven forbid a vaccine, for cancer or diabetes, or any of the other ills of modern society. A treatment is so much more profitable.

    Even then, there are only so many people with cancer, etc. Now a 'lifestyle drug', there's something we can get everyone interested in.... just think of the money.

    Of course failing that, we can just make up treatable illnesses like 'creepy ants crawling leg syndrome' or a nebulous mental illness that a majority of the population suffers from (and didn't even know about before we told them of our drug to treat it).

    If you think I'm making this up then you haven't been paying attention. They've gotten otherwise normal rambunctious children 'diagnosed' as ADD just so they they could push their 'treatment' (a.k.a. drugs) to a whole new class of customer.

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