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>Often, the same researcher then spins out the company that tries to commercialize the research.

It seems to me that you imply that there is some added value from the commercialization. But commercialization does not cause added value in itself. Sometimes, commercialization just mean marketing and profit center.

However the real question is, what does commercialization of an already founded and paid invention has to do with patents. Why should research which is paid with tax money (through NIH) be patentable, and how does that benefit society?

There is often substantial risk turning a research result (molecule X inhibits virus Y) into a safe medicine. You have to do significant, expensive testing. That is where the money is spent because that is where commercialization fails.

Also, pharmaceutical drugs don't just pop out of Wonka-like machines in a manner similar to the Everlasting Gobstopper. The production process has to be efficient. Efficiency is a function of the cost to research, design, construct and operate the production facilities and QA, and the expected returns.

Well, if you want efficiency, thats were all the factories with generics lives. They use capitalism, that is competition to produce the best product for the lowest price.

As for testing (the above comment), thats where FDA approved monopolies comes in. FDA want to incentivize testing and producing of products, even once they fall out of patent protection, so FDA themselves gives out limited timed monopolies after a drug gone through all the testing. Thats a monopoly on top of regular patents for most drugs. FDA don't assume patents to cover the cost beyond the initial research. They consider that more incentives are needed, targeted for testing and producing of products.

I wasn't disagreeing with the poster above, I was adding additional insight into what it takes to initially commercialize a product (assuming the initial research was publicly funded).

Before a decision to produce can begin, there is additional R&D into: - scale production design and cost analysis - analysis of potential market size - risks and boundaries of treatment identified via clinical trials

If the potential market size and production costs work out to be marginally profitable (to be an attractive investment): - initial outlay of prototype production facilities - scale production and distribution processes (some drugs have limited shelf life or require special handling) - market building (disseminating information about the treatment to health providers, and tracking market penetration) to make sure the market potential is fully used

Production of generics is "efficient" because by the time generic production gets underway (at patent expiration), they can sell as an alternative to a pre-built market with processes already proven by years of practice.

What prevents generics to do cost analysis, market research, prototype production facilities, scale production and distribution processes, and market building? Isn't those step normal procedures for any commercial venture. To make the car an analogy, when producing a new car, a company need to do cost analysis to weighing materials, product facilities, prototype building. They also need to do market building to push their product in a market already buzzing with competition. They need to care about the distribution processes. They can't patent this, and even if they could, I doubt the car industry would be helped by it.

Generics, like any other form of commercial entities do prefer a pre-built market. This is same for everyone else too, as everyone is currently making the same pads, laptops, phones and mp3 players as last "hit product". This however doesn't mean that there aren't any new companies trying new things. Same goes for generics. The "putting a product into the market" is't someting patents are needed or even suggested to cover. Its the cost of the invention that is covered by the patents.

Patents cover the cost of inventing. The FDA granted monopoly covers the testing. Everything else rest onto the commercial entity to resolve. This is the order of things, through patents are so far not covering the cost of the invention, as that is taken care by tax dollars distributed to research by NIH.

Thus the logical thing to do is to either cut the budget of NIH and let "patents" take care of the inventing (as intended), or reconsider patents as funding for inventions.

Yes, in any normal commercial venture, those are the normal procedures for commercializing something, which are the investment. Re-reading back to the top of this thread, I see this spun out specifically from a one-liner about research by professors at public universities. The funding sources for professors at public universities is varied (depends on what funding they have managed to gather and what strings were attached, and what they were intended for), and the degree that the results of their research is clinically applicable also varies. A researcher may discover that a certain receptor on a cell's surface responds to a specific molecular structure, but this is far from being a treatment. Depending on who funded a particular research study, the results may be pre-assigned to a private entity, or may become public information. It all depends on how the research was commissioned. In any case, university researchers don't usually create new drugs, they discover relationships; they just don't typically have that mandate (as far as I am aware, which admittedly isn't that much).

Incidentally, patents are not to cover "invention" costs, they are so that inventors can get the rewards of invention while at the same time exposing their invention, rewards and costs are not the same thing. For drugs, public exposure is a necessity of the way we require FDA approval; since without such regulation, drug related litigation would ultimately end up in open court anyway to prove liability or negligence, it has been deemed a public good to do this public exposure prior to market introduction, and require a degree of pre-approval (that we assign directly to a government agency).

In the US of A, the FDA grants neither a monopoly, nor a patent. The FDA's purpose in new drug development is the declaratory judgment regarding the safety or applicability of a drug. It is perfectly possible to get a patent, but fail FDA approval. It is also possible that the process to produce a drug at scale is itself a novel application or invention and itself patentable (though that may also need FDA approval separately from the drug treatment).

It is perfectly possible to get a patent, but fail FDA approval.

I believe this happened to Eli Lilly yesterday. EDIT: Not sure it was Lilly- I heard the news on the radio this morning and I can't find the source on the news sites. Annoying.

Without them you wouldn't have the medicine.

How do you prove that? I disagree. Here my statement: Without patents you would have cheaper medicine (but I cannot prove that either)

Not only would you not have the medicine, but you wouldn't have delivery vehicles (devices, forms) either. It's because USA and Europe require such substantial testing, at various stages, to prove (1) efficacy, and (2) safety. These are not binary-outcome experiments. They are expensive (gotta pay people to take your dope and you gotta pay - and train - docs to keep an eye on them. Remember- the outcomes are not binary).

Some percentage of your population aren't going to feel well while in the trial. Is is the fault of your medicine? You better be absolutely sure. Oh wait, you can't. Can you find anybody who might be able to help you decide?

So before VCs will give you $5M, they are going to be sure that Walmart can't knock off a copy once you have the proof. That's where the money goes, and why you won't get any unless you can arrange some exclusive sales.

And, like everything else, you have to make sure that there is a paying market (meaning docs will use it and insurers will pay for it).

and eventually it gets cheaper on average for everybody.

Sometimes cheap drugs get more expensive, so that's at least not a universal truth.

http://www.nytimes.com/2012/12/30/business/questcor-finds-pr...