He's a bit mixed up. Government enforcement of your temporary monopoly is a privilege. Failing to give you the privilege you think you deserve is not the same thing as stealing from you.
Without this "privilege" a company has no incentive to develop anything new, leave alone anything that requires massive R&D investments. What India did is it effectively said that they don't want to participate in the development of new drugs, so their stance on this matter is frankly quite ludicrous.
Try this for a comparison - Germany declares that all software sold in their country should be priced at $1 or less. Would you still be talking about software companies being crybabies for objecting this? Doubt it.
There are other incentives in life other than money.
No university or nonprofit has that kind of budget, and even if they did, they are unlikely to take on the risk of a failed drug.
Marketing spend is based on the idea you spend $X and get $X + Y back. This doesn't always work, but it's the general premise.
This means without marketing dollars they'd be making less money.
Drugs are things that people "need". If no drug companies advertised, people would still go to their doctors with problems, and doctors would still prescribe medication when necessary (you have some degree of advertising prompting doctor visits, but for the important stuff, and in a system where people are not afraid of the monetary cost of going to a doctor, they'll be going anyway).
However currently all drug manufacturers must advertise their products because their competitors advertise their competing products. Anyone who doesn't advertise will be left behind as patients request the drug that they saw on TV. No company wants to be the company that doesn't advertise.
Advertising makes advertising necessary. It's a sort of "Advertising Prisoners Dilemma": http://en.wikipedia.org/wiki/Prisoner's_dilemma#In_economics
One way to break this is to create laws that forbid advertising. Another is to allow the formation of cartels.
However, the cost of human trials are still a problem. Because of the costs, drug research to treat rare diseases aren't going to get funded by anyone.
So you're saying that drug advertising is pulling the wool over the eyes of the entire industry so that they give patients nothing more than placebos?
Most drugs, even those that offer a benefit over current therapies, don't sell themselves. Physicians need to learn about new drugs, have an opportunity to try them before you ever see widespread use.
For instance, with patents there is an incentive to find a solution first. This probably raises the cost of research because (a) pharmas spend more time researching alternative medicines with different compounds with the same effect as existing drugs simply to get around pre-existing patents and (b) pharmas spend more money to rush research to patent it first.
Also, if clinical trials are the problem, India appears to be willing to help.
For me the notion that someone can claim a right to a chemical compound that has positive effect on our bodies is absurd. It's like Einstein patenting e=mc^2 and asking nuclear power plants to pay him.
But there aren't other ways to fund drug research.
Yes there are; public money and normal sized salaries for scientists doing the public research for the public good. Granting monopolies to private corporations is hardly the only way to achieve things. Scientist's aren't in science for the money, science generally pays shit anyway; they're in it for other reasons.
Edit: the parent was originally a snarky one-liner "Yes there are"
There are legitimate problems with the current system, such as Pharma typically doesn't produce drugs for rare diseases - there just isn't enough money in the market to justify the lost opportunity costs. Publicly funded research is supposed to help those instances where the economic incentives aren't there.
This can lead to a perverse switch in motive. Instead of trying to help patients who legitimately need help to trying to get as many people to buy a drug as possible, regardless of need. But in case you haven't been paying attention - public funding for science isn't exactly growing. So if we want to see some of these next generation cancer drugs with small markets, you need to have the ability to charge large amounts.
But the public institutes just aren't equipped or financed well enough to handle it on their own.
I didn't say they did; I'm saying they should. Medicine as a business is immoral IMHO, and a good half of this county agrees with me. We want public healthcare, not private healthcare because money is a perverse incentive when it comes to health.
> But the public institutes just aren't equipped or financed well enough to handle it on their own.
Agreed, but they should be, and if we want to see a better healthcare system that does more for the general public rather than just the rich, they'll need to be. The free market is not the correct solution for healthcare/medicine. Medicine is a communal good and should be funded by and available to the whole community.
The current system has become a few spots, take a look at the debate about cherry-picking clinical trials to get new drugs approved, requirements for pre-registration and the non-functional oversight of the same ...
Perhaps trying new ways to fund drug research can be a part of revitalizing the system?
Seriously though I want to stab that guy. Maybe we should ask the scientists who put in the real work who they think should have access to the drugs.
And no, you can't pay for the costs with "satisfying intellectual curiosity"
When R&D budgets are no longer superseded by advertising budgets at pharmaceutical firms[1], I will start to find this line of argument compelling.
[1] http://www.sciencedaily.com/releases/2008/01/080105140107.ht...
The number there is from the figure here:
http://www.plosmedicine.org/article/info:doi/10.1371/journal...
How do you suggest intellectual curiosity be fulfilled with no money?
Drug development is fundamentally different from software. There is just no way to do it (either by public or private institutions) without a lot of money.
C'mon, mice can't cost that much.
And that doesn't even cover their plans for world domination.
Here's a link to Ohio State's per diem fee for mice: http://ular.osu.edu/rates-and-fees/ (It's around $1/day per cage there)
I think you can house up to 5 mice in a cage, and it wouldn't be uncommon for a reasonably sized lab to have a colony of around 200-300 mice. So you'd have maybe 75-100 cages (males you house at a lower rate). So your daily rate at OSU is on the order of $75-100. At other institutions, it can cost as much as $1 per mouse. And this is just for housing them. You start getting to real money, real fast.
A strongly decreased financial incentive is disincentive in a system where
1) Equipment and the necessities of life cost money, to say nothing of opportunity cost. Even the most ascetic lab rat can't eat good feelings and intellectual curiosity.
2) If you're looking to raise capital, E(ROI)>0 makes it 100x easier to raise 100x as much capital (perhaps this is exaggerating, but capital markets are MUCH larger than charity markets).
How much are they developing vs how much are they marketing? A lot of pharmacological studies are preformed by public universities and an insignificant amount of money that many think goes to "research" instead goes to "do you have <made_up_disease>? talk to your doctor about <our_new_drug?>" type commercials and other marketing.
> Try this for a comparison - Germany declares that all software sold in their country should be priced at $1 or less.
If that software will end up saving lives, then it should be sold for $1 or less and the government should develop/buy it/fund it.
Or how about another comparison. Open source software is priced at $0. Are people writing it? Why? They shouldn't according to your logic. So maybe someone will bother developing and researching life saving drugs without being granted monopoly on its distribution.
Let me know how much all those things cost.
Drug discovery (i.e. actual drugs; NOT just hits or lead molecules) is not as simple as pounding code on the couch in your jammies.
By the logic above, that should never happen.
The patent laws of the US are responsible for Bayer's business model, and in a lot of ways it's a good tradeoff. But it's not the only possible way to figure this stuff out, nor is the money the only possible incentive.
Anyway, it's not like Bayer wasn't aware of India's patent laws. They are still going to make billions on this drug, regardless of what India does, and they can spend that money bribing its government officials to change their patent laws. Don't worry, it'll all work out in the end.
While that is true about companies it is not true about people. There are numerous people who do research into specific medical conditions for reasons other than money. While I'm not saying Crowley didn't make a fair shake of money with his companies
http://en.wikipedia.org/wiki/John_Crowley_(biotech_executive...
There was a clear motivation to save his own, and other children's lives.
Would companies stop entirely or would not for profits arise in their place?
I think it's disingenuous to imply that there is no other way that medical research could ever happen.
One also has to examine the moral dilemma faced in this situation. Respect international intellectual property laws and quite literally allow millions to die OR "steal" the drug?
Now run the dilemma again but it's your own child.
Is it right? Would you do it?
Free software movements point to the probability that software would likely still exist in a world where it was declared that all software should be priced at ${arbitrary}.
I feel like the truth is far more nuanced than you're allowing for here. There's far more than money on the line and if I were the one dying of a $65,000/year cancer I'd also struggle to respect the international laws that were willing to consign me to death if the profit on the materials was in the 99% range.
No doubt that there are more incentives than just money, but you do realize that John Crowley is filthy stinking rich from the sales of his company to Genzyme, right?
Ha ha I appreciate your comment (and if it's sarcastic/funny it's actually hilarious)
But otherwise it's Ad hominem. I'm presenting him as a more nuanced human than just than just a guy who sold a company for $200M (http://newsok.com/novazyme-example-of-promise/article/275860...) and who's name gets floated as a possible (R) candidate (but who doesn't take on the role).
Perhaps he's one of the numerous Republicans who are dissatisfied with the entire radical wing. I don't know anything about that. Maybe the reason he repeatedly chose not to run or accept an appointment is he wasn't radical enough. After all, many do say that even Reagan wouldn't make it in today's Republican party.
Making a founder's share of $200M is probably fair payoff for saving all those children's lives (potentially ~10,000 cases in the USA)... especially when compared to a share of $1B for enabling the absoloute clusterfuck of idiocy that is TUMBLR.
Do Zuckerburg, Brin and Graham deserve the same derision for also being filthy stinking rich? Do all other motives get thrown out the window when they get a life changing payday?
Anyways, the sum of a person is more than their net worth and their political affiliations. I'm sure there are a handful of good people who are also Republicans.
I get where you're coming from, but I think what my point is is that you can have altruistic intentions and get filthy stinking rich in the process. In fact, you can be nothing but a greedy pig and still do good in the world.
The same applies for medicine. If you are with-holding drugs that can literally cure cancer but require you to cough up, say, $50,000, then I sincerely hope a hell exists for you because that is straight-up unapologetic evil.
If R&D is that expensive and you need to recoup costs, then the government should fund the research of such drugs.
No matter what the circumstances however, you don't get to restrict access to a drug that cures cancer based on financial capability and somehow take the moral high ground.
If someone has to take a drug for 3 years and pays 195,000 dollars, and there are tens of thousands of patients, they can certainly price it lower than that.
If the price per year is 1950 (3%) and a million people are using the drug, that that 1.95 billion dollars. Per Year.
If we were making the comparison to the software industry again we wouldn't make that same comparison, we would just have the people close up shop and start another startup when their product fails and they fail to pivot.
I guess the analogy just starts falling apart there.
After all, profits attract competition.
Obviously that isn't what you mean though, your talking about the competing from start to finish of a drug, well lets say a company invests in producing an equivalent cancer drug that doesn't infringe on the original patent. Now we have these two drugs that are effectively the same and they both compete and the price lowers down to the point were they are both making enough profit to support their business without over the top profits on that drug. Congratulations you've got to the point that the Indian government wants and all it took was a huge investment in an otherwise redundant drug.
Since the Indian government can't force the company to sell the drugs at the appropriate price they have to rely on the threat of letting other companies sell the drug at an even lower price and hope the company plays ball. The whole point behind intellectual property is that both the creator and the public benefit, if the public isn't benefiting then they will not respect intellectual property.
I think we have a lot of support for that here. :)
I'm all for any solution that doesn't require giving a cop access to my computer to enforce it.
It would be OK if this were known in advance; software developers could decide whether the absence of future German revenue meant they should (i) not develop a German version and/or (ii) not develop a product at all (as the non-German revenue would not be sufficient).
Changing the goalposts after development decisions are made is different.
lol - recursion.
It does make me wonder why, in an attempt to capture more revenue, it isn't being released and priced locally in the Indian market? I'm guessing fears of re-export degrading sales in the western world?
In practice it doesn't work that great. Stronger countries with richer customers tend to use their leverage and have more rules. It definitely works for illegal products but I doubt it would work for goods that are legal but coming from manufacturer who's illegal. Goods would got cloned by legal manufacturers pretty quick if they were so good they'd be worth traveling for.
And is this privilege particularly artificial relative to others we accept readily? Most people believe that people should have the privilege to own land. Yet if you think about it, land possession is far less deserving of the government's protection than a drug formula. This drug is something Bayer created, that didn't exist before. Land is something that nobody created, that people simply claimed (in the U.S., those who "own it" derive their ownership from dispossessing Indians), that will continue to exist long after everyone who claims to "own it" is long dead. Why is land more deserving of an artificial government monopoly than a drug formula?
Lawless animals have concepts of possession, even the concept of possession of land. The difference between humans and animals is that we have codified our social standards and generally do not have to resort to violence or direct threats of violence to resolve disputes over possession or territory.
A powerful wolf "owns" the best parts of a kill (whether or not they possess it) because their social system values the traits that makes a wolf powerful. Their system for determining the legitimacy of a claim involves violence, or more typically the threat of violence. Modern humans have different social values than wolves and would not consider "I am bigger than you, and male, therefore it is mine" to be a legitimate argument.
Regardless, ownership, narrowly defined as a legal (and therefore necessarily human) concept, is a red herring. Theft, the concept being discussed, exists in systems that have concepts of possession even if we dismiss the possibility that they have a concept of ownership. A beta can certainly steal from an alpha male.
If you define theft as something that can only exist in the presence of a value system that modern humans respect, and then claim that therefore only modern humans can have a concept of theft, then you are doing nothing but making an uninteresting tautological argument. I am asking you to consider the possibility of theft in systems with value systems dissimilar from your own. This includes the concept of theft in human value systems that are dissimilar to those currently codified in our laws.
Also is the government "taking" the drug, or just not extending monopoly patent rights for it? Also even patents (in the US) have a provision that they be reasonable licensed in exchange for gaining the temporary monopoly.
By the United States Constitution, in the United States such a taking must be with compensation (reasonable, market-based compensation). And the same is true in most democratic countries with an independent judiciary. (This is notably not true in China, which is why seizing land from peasants is a favorite way for corrupt local officials to enrich themselves.)
Look, I don't think Bayer will complain at all if India (the country) pays for the drug used by patients in India, like the health systems in UK and Canada. Bayer's complaint is that India doesn't compensate the company.
This basically says that if you aren't in the Indian market or aren't offering your product for a price that India agrees with, your IP protection is meaningless.
This starts to get murky from an ethical point of view because we are talking about a cancer medication, and I doubt that software IP would fall under the compulsory licensing. But, cancer drugs are expensive to develop. Bayer should absolutely be afforded some IP protection to recoup the costs of developing the drug. Otherwise, they'll just stop; or more likely, just increase the prices elsewhere around the world.
I'm sure that Bayer isn't as concerned with losing the Indian market for the drug. But rather, they should be more worried about the Indian generic version of the drug hitting the international market.
That seems reasonable. Why should we expect India to grant privileges to a company that wants nothing to do with India? They are giving India no reason to give a shit.
If Bayer has an issue with Indian generics getting into countries that it does have an interest in doing business in, then Bayer can appeal to those countries to block the import of those generics.
Are you saying they will make more money by increasing prices around the world? If so, why wouldn't they do that regardless of India's decision? They basically ignore supply/demand curves until India makes them angry? Or are you making some weird argument where they have to raise their prices in the face of medical tourism as opposed to the lowering everyone usually assumes?
Now, since India is no longer a market for the drug, the amount of money that Bayer needed to make from India needs to be made from the rest of the world. That's $50 million more that the rest of the world will need to spend to subsidize India.
Even worse - what happens if the Indian generic form of the drug hits the international market? Now Bayer needs to recoup even more from the remaining international patients/insurance.
Or, what happens if patients from wealthier countries start going to India for treatment instead of staying home? Even more that Bayer needs to charge the rest of the world.
They need to make a profit to finance their next drugs in their pipeline.
The cost savings in medical tourism are usually attributed to lower labor and facility costs, not necessarily cheaper drugs.
Over the short term, the costs of developing a drug are a sunk cost that has already been financed using the profits from the previous round of drugs. They try to get as much out of the market as they can with their current lineup of drugs so that they can pay for the pipeline that is developing the next round. Over the long term over many drugs on the market, they are hoping that they are able to make a reasonable profit. They have to recoup the costs of developing each drug (including the ones that failed before getting to market). And to satisfy shareholders, they try to make as much profit as they can.
The amount that Pharma charges is based on a variety of factors, but you're right that it is largely what the market will bear in the presence competing drugs. For a cancer drug, the amount is whatever the insurance companies will pay. And that amount is always negotiated. The market will determine what is reasonable.
However, they still have a giant research and development machine that must be financed. If they aren't making enough on their current drug lineup, a company either needs to charge higher prices or slim down their drug development pipeline.
There might even be further decreases to productivity of the research pipeline due to economies of scale (investigating one drug may make you stumble on a cure for something you weren't even looking for). Or there might be significant diminishing returns to more pharm industry research, because of the dependence on advances that only come through basic biology research. So it is hard to say which outcome is optimal.
Nothing in economics says that the money generated through monopoly prices due to patents is an optimal amount for drug research and development. And why chose 20-year patent terms rather than 30? Or 10? It's just kind of a system we've thrown together haphazardly.
Through NIH we fund more than half of drug research and basic biology research largely outside of the patent system. India funds research as well that we take advantage of, and India provides the early education for a very significant proportion of our graduate-student/pharm-industry-researcher population.
In practice, any monopoly (which is what patents provide, though in reality upwards of 20% of pharm research is just wasted on researching patent workaround processes and drugs to break the monopolies of competitors, adding no new functionality) will try and price discriminate. E.g. low-income people can get coupons for prescription drugs in the US and pay way less than high-income people, though it will be less relevant once we have near universal insurance coverage.
So, in the presence of patents and import/export restrictions/tariffs, the companies would end up charging much less on average per-pill in India and other low-wage countries than in the US in order to maximize profit. This means that though we give India a subsidy, it doesn't cost us much in lost revenue relative to the number of people in India who get a benefit.
If they wanted to make money in the Indian market and be afforded IP protection, they could've priced the drug reasonably. Surely a smaller profit is better than no profit?
Still, perhaps he has some sort of point. The way he government selectively disables this provision has a tinge of dishonesty about it. Perhaps it could be argued he has the right to an equal monopoly protection relative to others.
Ideas should not be own-able. Your software is not an idea, it's an implementation of an idea, you should get some protection of your implementation, nothing more. If someone else can do it better, or at all, they should be able to.
Ideas are not property, copying an idea is not theft.
If IP were actually enforced, much of the Internet wouldn't exist. Innovation comes from the free flow of ideas, science has proven this time and again. IP disincentivises real innovation because it prevents people from building upon and improving other people's works. All this innovation you think IP is giving us pales in comparison to what we'd likely have without it.
What you aren't acknowledging is that business doesn't need artificial monopolies to take big risks and make big profits off big ideas because those things aren't necessarily easily copyable anyway. The money necessary to manufacture things is generally more than enough to put up a massive barrier to entry to allow them to profit off their ideas. Job Schmoe isn't going to suddenly take down Intel because Intel wasn't allowed to patent a CPU design because their advantage isn't the design, it's the fab process and how expensive it is. The same applies to drugs or practically anything else.
If your big innovation is so easy to copy that you require an artificial monopoly to make it profitable, then it doesn't deserve to exist. If your business relies on forbidding other people from doing something, your business doesn't deserve to exist.
The solution is broadly to introduce an element of idea exclusivity. Patents is one way to do this. Without patents, in my hypothetical world, we'd see some combination of other measures (eg. more trade secrets, private exclusivity deals, aggressive branding---note I don't hate trademarks) and we'd also see less ideas being produced.
This economy would then have to go on with less idea generation and more friction in protecting innovations. This is based on my best understanding of the issues.