Report Says Patents Prevent New Drugs

An anonymous reader writes "Current orthodoxy claims patents encourage innovation, by allowing developers to enjoy profitable monopolies on their inventions which in turn inspire them to create new inventions. A new report by the non-partisan General Accounting Office suggests that this orthodoxy is wrong — at least when drug companies are involved. According to the report, existing patent law allows drug companies to patent, and make substantial profits off of, "new" drugs which differ little from existing medicines. Given high profit margins on very minor innovations, the report argues that drug companies have little incentive to produce innovative new drugs. In other words, current patent law actually discourages drug companies from producing new medicines. Responding to the report, Senator Dick Durbin (D-IL) released a strongly worded statement suggesting that a legislative response will be forthcoming. "The findings in this new GAO report," said Senator Durbin, "raise serious questions about the pharmaceutical industry claims that there is a connection between new drug development and the soaring price of drugs already on the market. Most troubling is the notion that pharmaceutical industry profits are coming at the expense of consumers in the form of higher prices and fewer new drugs.""

Comments

Exaggeration

[Petronius.Scribe]

The headline draws rather a long bow. I think that what's clear from this report is that the current patent system is broken and stifling innovation. However, this does not invalidate the very concept of a patent, which the article summary suggests is the case. "Current orthodoxy claims patents encourage innovation, by allowing developers to enjoy profitable monopolies on their inventions which in turn inspire them to create new inventions" - this is still true. It's the current implementation of the "profitable monopoly" that is causing issues.

Re:Exaggeration

[Anonymous Coward]

MMM symantics,

Thats not the point at all,
the deepepast implication is that drug companies are incentivised to treat and not cure ...
the patent structure does not create market conditions that would prompt real inovations for instance cures.

*Cure's* are not good for busness.

And this i find truly disturbing.

Re:Exaggeration

[UbuntuDupe]

Without patents, patent-heavy fields like pharmaceutical research fall into cutthroat, razor-thin-margin price wars - but that is not a bad thing.

Well, cutthroat razor-thin margins generally aren't bad, but it's hard to imagine how it would be profitable to sink billions of dollars and 20 years into developing a drug, when someone can compete with you when they're already billions of dollars and 20 years ahead, merely by using your published formula.

The article's point was not that "patents" are bad, but that allowing an additional patent for an incremental upgrade is bad.

In fact, it's not too different than desktop computers, where we've seen manufacturers keep up with Moore's law for a remarkable amount of time, even while having to struggle to break even on almost every product.

Well, yes and no. It's the same in that the driving force behind Moore's law, the processors, are patented (rendering your example moot). It's different in that, even if you could legally copy the processor design, you'd have to put up a huge amount of capital (though you wouldn't need to do the research, that's a much smaller fraction of costs of bringing to market).

Again, patents do not exist to provide peace of mind to investors; they exist only to promote progress. If ending them, and forcing pharmaceuticals to (*gasp*) innovate to stay in business (and even having a few go out of business when they fail to!) is the best way to promote progress, than that is exactly what we should do.

Pharmas do innovate! And they do fail sometimes, even with patents. You seem to think that just because they don't have to struggle as much once they have a patent, they're not competing. That ignores the research competition they have to go through to find patentable medicines. Whenever someone tells me that a pharma is earning monopoly profits for doing nothing because they have a patent, I almost have to ask what they think of veterans drawing a pension. "Oh, okay, great, big deal, you fought some war a while back. What are you doing for us *now*? Why should we pay you this pension *now*?"

Just to be clear, I don't want to come across as a pro-patent extremist. My point is that the issue is a lot more complicated than people on either side give it credit for.

Re:Exaggeration

[blakestah]

That's just not true. Polio, smallpox, almost wiped off the earth. HIV infection has been made manageable, and people are working very hard on vaccines.

The medical system is HUGELY biased to work on treatments for things not working properly, rather than work on prophylaxis. This will never change unless we go to socialized medicine, because people fundamentally go to see a doctor when they are sick, and not to manage their future potential illness burdens.

I also take issue with Durbin saying this indicates a problem with the patent system. If a new drug comes out that offers no additional benefit, but has patent protection, WHY DOESN'T THE CONSUMER BUY THE GENERIC? That is the real problem. Capitalism fundamentally depends on informed consumers. If anything, I would urge Durbin to consider legislation to inform the consumer about non-patent-protected drugs in a reasonable way so they would not waste their money on a slickly marketed new drug that is only just as good as a generic.

A FAR more serious problem...

[dpbsmith]

...is that profits are much lower for drug products, such as vaccines and antibiotics that are extremely effective and "cure" in a small number of doses, than for drugs products that merely help, or palliate.

The invisible hand of the marketplace skews development toward drugs that must be taken forever, such as blood pressure medication, or cholesterol lowering medication, or anti-depressives and so forth. These drugs are godsends if you need them, but the fact remains that drugs that actually save lives, with a small number of doses, are less profitable than drugs that merely improve or prolong them, and need to be taken continuously and repeatedly forever.

It is this warped incentive that needs to be fixed.

The antibiotics we have are losing effectiveness. Hospital infections are becoming more and more dangerous. My generation is probably going to be the only generation in human history to live its life mostly free of the mortal fear of dying from bacterial infection. There are virtually no new antibiotics in development.

analogous to Open Source ..

[rs232]

The pharmaceutical industry is where the software industry would be if it wasn't for the existence of Open Source. That the closed source companies are pushing for a US style patent regime in Europe and elsewhere is a given. What with patented GM crops we see farmers being sued in the US for reusing GM seeds grown from their own crops. Something practiced for centuries.

It's also difficult to avoid infringing some patent as the GM crops cross-fertilise with plants in the next field. The resultant seed being also covered by the same patent. The GM companies would of course have the farmers buying their seed annually from the companies. What next, produce sterile crops and totally outlaw unlicensed seeds.

As the report says in relation to pharmaceuticals, you can see the same thing in the closed Windows monopoly, little real innovation, "new" software that is differs little from the old and a small number of companies making vast fortunes and lastly it's the consumer that suffers from no real choice.

Gaaah!. Tired of hearing this!

[rhombic]

I am so ridiculously tired of hearing this absolute BULLSHIT. I'm a researcher at a pharmaceutical company. Most of the conditions we're trying to make drugs to already have a cure: Put down the cheeseburger, put down the mountain dew, get your fat lazy ass off of the couch and get the fuck outside and walk around a little. There is no cure for a retard eating 4000 calories per day with 15g of saturated fat-- you are going to get type II diabetes and atherosclerosis. That's how your body works. And the way the biochemistry works, THERE IS NO CURE. The systems are working exactly the way they're supposed to. Problem is, they've evolved to store fat during the rare times of plenty, and then dole that out during lean times.

If I could come up w/ a cure, you can bet we would make it. See, we have competitors. Who make a lot of money. If we could make a quick & easy cure, we'd make it, make a ton of cash, and move on. As an example in the last couple of years, Merck made their HPV vaccine to PREVENT cervical cancer. One time, cheap shot, and they've lost a potential cancer patient. Of course, it took forever to get to market because the Republicans think that preventing HPV infection will cause teenage girls to become whores. If you want to look for the reasons our health care system is so fucked up, I suggest that you follow not only the money, but the ideaology.