Should a New Technology Change the Patent System?

linuxizer writes "Congress seems poised to turn an effort to create a pathway for generic biotech drugs, such as Remicade, into the exact opposite. Instead of the 5-year protection that traditional pharmaceuticals get, or the 0-year protection that the FTC recommends, the bill offers 12-year exclusivity with renewability for minor changes. The issue is highly charged, with activists waging a campaign to change the bill. Yet it also raises interesting questions for other technologies. To what extent do the traditional contours of patent law need to change in response to new technologies with a different set of market realities (biotech drugs are 22 times more expensive on average, and development costs for generics will be substantially higher) and in what direction? Need every new technological category get its own patent rules, and how do those rules get decided?"

Comments

People with the Money Call the Shots

[eldavojohn]

Apparently the author of the summary is unfamiliar with lobbying so here goes the simplest explanation I can think of for it.

Need every new technological category get its own patent rules, and how do those rules get decided?

Depends on the leaders of that category. The people with the most money will give tiny amounts of that money to the lawmakers. Then a bill is introduced and these weird rules probably get tagged onto some bill that has a much more important focus (like health care or one of the various wars we are engaged in). Since all the lawmakers received money from the the people with money, nobody objects.

Here's one of many examples in which a bill titled "Affordable Health Choices Act" gets tiny peppering of patent law attached to it like this (which is in regards to the category 'interchangeable biological products'):

... (i) a final court decision on all patents in suit in an action instituted under subsection (l)(6) against the applicant that submitted the application for the first approved interchangeable biosimilar biological product; or

(ii) the dismissal with or without prejudice of an action instituted under subsection (l)(6) against the applicant that submitted the application for the first approved interchangeable biosimilar biological product; ...

What's worse is that no voter immediately cares. Everyone cares more about things that directly affect them--like their health or their kin dying on some god forsaken soil. The immediate threat of these lobbyists is not only unseen but no one is held accountable down the line. You have to get someone not too politically savvy to be the poster child/target for this stuff if it's a whole bill you're introducing -- like Sonny Bono on copyright extension. Oh and there's another neat little thing in American politics where if you vote for that bill and then something like this gets added and you vote against the bill, your opponents label you as a "flip flopper", "waffler" or "indecisive."

Now, I paint a picture where opposition to lobbyists never arises because no one makes it a serious issue. But there are a few examples of this working positively. Example is the generic drug manufacturers do actually have some money and realize they are getting the short end of the stick so you have these lobbying wars occasionally. The really ironic thing is that name brand drugs are more expensive for the consumer. But often the consumer is on a health plan where they pay a small percentage or a copay on their drugs. If it is a copay and the consumer buys the $100/dose Calvin Klein drugs instead of the $1/dose Walmart drugs, someone (like your health care provider) is paying a lot more. Now, imagine what kind of state our health care would be in when there can't be any generic drugs for 12 years? Won't matter if you're a copay or a percentage, you'll be taking that $100/dose because it's your health and you can't exactly put a price on your health.

Re:People with the Money Call the Shots

[dkleinsc]

Reminds me of a great moment by Dr House: When he explains to his audience that Vogler's new drug will work really well, because the old drug worked really well, and nothing significant has changed, just minor changes in order to keep the patent protection.

Re:People with the Money Call the Shots

[Thykka]

This is exactly the reason democracy fails. People need to realize, that governments aren't in no way necessary or even beneficial for healthy societies. In a world without such authorities, the success of companies would be measured solely by their ability to provide the best service to their customers. Without artificial restrictions, such as patents or copyrights, there'd never be an opportunity for a company not to try to improve their services. A popular argument against removing patent and copyright laws is that a company has to invest significant amounts of time and money in inventing new products (such as medicine in this article's context) and that the patent would allow them to make profit out of their investment. I believe, that if a certain product really requires years of exclusive research it also isn't possible for competing companies to copy in a timeframe that wouldn't allow for the original inventor to gain reasonable profit. Nevertheless, if another company is able to provide better selling service regarding another company's invention, why not allow it? After all, we should be concerned about mankind's collective well-being and not the profit of select companies.

Re:People with the Money Call the Shots

[Anonymous Coward]

Without governments and their power the world would be run by gangs and mobs. End of story.

Now, on this specific issue: I don't know the best answer, and I don't know that there is a "best" answer for everybody. Basically drugs take a huge amount of money to develop and test to get approval. Remove the incentive of exclusivity in the market - so that anyone can copy it (yes, trade secret protection may still be there but reverse engineering will occur) and you will start to see very few new drugs created. If you posit that we already have enough drugs and don't need any new ones then it is probably OK to end protection / exclusivity. On the other hand, if you are hoping for something to combat certain cancers, etc. you aren't going to achieve that goal by ending the protections.You'd end up having to spend even more money having those 'unnecessary' governments inefficiently use money from the public coffers to do drug development and testing and then selling the formulas to generics makers.

Re:People with the Money Call the Shots

[Cassius Corodes]

Sorry but that is just retarded. Drugs require years of basic research then years of testing to get approval, and are easy to copy. See http://en.wikipedia.org/wiki/Drug_development#Cost http://en.wikipedia.org/wiki/Generic_drugs#Economics. You have to strike a balance between ensuring that drug development is profitable, but not excessively so - not an easy thing to do.

Also "governments aren't in no way necessary or even beneficial for healthy societies." - are you on drugs? Where are these fabulous government-less utopias? "In a world without such authorities" you would be still be bartering.

Re:People with the Money Call the Shots

[Anonymous Coward]

I was under the impression that drugs were quite easy to "copy" once discovered, and that the expense was in discovering and vetting them through trials. This also seems to hold true for many other industries.

Re:People with the Money Call the Shots

[Anonymous Coward]

And this is where I start listing situations where the market fails or is sufficiently vulnerable to be exploited:

- Natural monopoly.

- Imperfect information.

- Positive and negative externalities.

- Non-rivalrous goods, non-exclusive goods, public goods.

I could go on. What would happen in a market anarchist system, even assuming the security agencies wouldn't degrade into gangs who would turn the country into Somalia, is that the corporations (in themselves collective constructs) merge or buy each other up until there's only a few corporations left. These become, in effect, non-democratic states, and there you are - now you have a state, but you have no say in it (before the inevitable revolution, at least).

The free market has exploits - while there are less than with certain other systems, once a body of sufficient power can make use of the exploit, such a body rewrites the rules to favor itself and then, game over.

Re:People with the Money Call the Shots

[corbettw]

Without the FDA, the research time on these drugs would be cut from 22 years to less than one. Of course, then you'd have every charlatan out there peddling his snake oil as the latest and greatest cancer cure. And without any research to back up their claims, no one would be able to judge whether or not those claims were true until after trying the drug. And if you're going to insist that companies spend billions of dollars proving their products work, then you have to also protect them and their ability to turn a profit on those products or else no one else will ever develop any.

There's a reason why the majority of drug research is done in the US: we don't force drug companies to give away their products for free. Oh, and incidentally, one of the reasons drugs cost so much here is because other countries do put price controls in place, so we end up carrying the burden for those slackers. Too bad Congress doesn't enact an export tariff on prescription drugs, we'd make enough off that to pay for healthcare.

Re:People with the Money Call the Shots

[Wowsers]

The old drug worked, the new drug works, except the new drug can now cost more because it's "new", so more revenue comes in. The same as planned obsolescence in gadgets.

Re:People with the Money Call the Shots

[Marcika]

There's a reason why the majority of drug research is done in the US: we don't force drug companies to give away their products for free. Oh, and incidentally, one of the reasons drugs cost so much here is because other countries do put price controls in place, so we end up carrying the burden for those slackers.

Oh really? Please provide citations for this Fox News talking point. I'm quite sure that 6 of the 10 largest global pharma companies are European.

The reason why you pay thrice as much as "those slackers" is you screwed up health-insurance supervision: Big Pharma bribes doctors to prescribe brand-name medication at hugely inflated prices, and neither the patient cares (since he's not paying for it) nor the insurance industry (since they can just jack up their rates).

Re:People with the Money Call the Shots

[russotto]

Without governments and their power the world would be run by gangs and mobs. End of story.

With governments and their power the world is run by gangs and mobs.

We just call them "governments".

Granted, the current set of Western governments is largely better than your average run-of-the-mill gangs and mobs. The same, however, cannot be said about many other current governments, nor many past Western governments.

Re:People with the Money Call the Shots

[pjt33]

Too bad Congress doesn't enact an export tariff on prescription drugs, we'd make enough off that to pay for healthcare.

Or the countries which currently import drugs from the US would remove their patent protection for pharmaceuticals and US pharmaceutical companies would lose their current export market.

Re:People with the Money Call the Shots

[jedidiah]

Drugs cost so much here because people have developed an
entitlement mentality imported from Canada and Europe. People
think that products that require research, development and
manufacturing should be "free". The government and insurance
companies happily oblige and insulate everyone from the real
costs.

Americans already don't pay real money for their drugs.

If they did, they might get sticker shock.

Re:People with the Money Call the Shots

[Marcika]

Drugs cost so much here because people have developed an entitlement mentality imported from Canada and Europe.

So if the "entitlement mentality" is the same as in Canada and Europe, why aren't the drug prices cheap as well?

I.e.: Your argument contradicts itself: it tries to explain a difference by trying to point to a similarity.

Re:People with the Money Call the Shots

[Anonymous Coward]

I hope you realize that a world without patent restrictions did used to exist. Once mass manufacturing and advertising developed businesses and governments realized there needed to be a system to protect inventors from being driven out of business. Do a little research and you'll find examples of inventors having their products stolen by an established manufacture right from under them.

Re:People with the Money Call the Shots

[corbettw]

My wife works in pharmaceutical research. She's my source of information on how many drug trials are performed in the US versus other countries.

It doesn't matter where the companies are headquartered, it matters where they do their research and manufacturing. And the lion's share of that is done in the US.

Re:People with the Money Call the Shots

[Asic Eng]

What's worse is that no voter immediately cares.

Not about the issue itself - that may in many cases too difficult to access, the implications too hard to understand. However voters do care about corruption - they realize that a corrupt government is always a bad government. So this may be the way to discuss these issues publically: a few companies benefit from this amendment to the detriment of many other people - this is indicative of corruption.

Re:People with the Money Call the Shots

[Marcika]

My wife works in pharmaceutical research. She's my source of information on how many drug trials are performed in the US versus other countries.

It doesn't matter where the companies are headquartered, it matters where they do their research and manufacturing. And the lion's share of that is done in the US.

Can't argue against anecdote :-)

Still, I'd be interested in whether the number of US trials is disproportionately higher when adjusted by GDP and population (should be around 5-6x higher than UK or Germany due to that alone), and whether those trials are actually phase 0-2 or just phase 3-4 (jumping through hoops to get FDA US approval rather than research).

Re:People with the Money Call the Shots

[corbettw]

I'll ask my wife next time we talk. I'm sure she has industry stats, and links to them, regarding those numbers.

Re:People with the Money Call the Shots

[Ephemeriis]

This is exactly the reason democracy fails.

Democracy fails because everyone gets to vote - including the lazy idiots who have absolutely no idea who or what they're voting for. Democracy requires an informed populace in order to work. Our populace doesn't care enough to be informed.

In a world without such authorities, the success of companies would be measured solely by their ability to provide the best service to their customers.

Wrong.

Governments are 100% necessary for the functioning of a healthy society. You ever read The Jungle? Ever hear the term snake oil? There's a reason the FDA exists.

Companies are not concerned about the well-being of society, they're concerned with making money. A business will do whatever it can to make money. Without restraints or regulations, a business can be downright harmful to a society.

Without artificial restrictions, such as patents or copyrights, there'd never be an opportunity for a company not to try to improve their services. A popular argument against removing patent and copyright laws is that a company has to invest significant amounts of time and money in inventing new products (such as medicine in this article's context) and that the patent would allow them to make profit out of their investment. I believe, that if a certain product really requires years of exclusive research it also isn't possible for competing companies to copy in a timeframe that wouldn't allow for the original inventor to gain reasonable profit. Nevertheless, if another company is able to provide better selling service regarding another company's invention, why not allow it? After all, we should be concerned about mankind's collective well-being and not the profit of select companies.

Patents and copyrights are a sticky subject, especially here on Slashdot. In some cases, they seem kind of silly - like patenting a new gene sequence you discovered in a critter, or patenting a software algorithm. In other cases, like drugs, they make more sense.

Developing a drug requires literally years research and costs literally millions of dollars. Then you've got a few more years and millions of dollars to get through FDA testing.

Once you've developed a drug, however, it's a very simple process to manufacture it. You're just combining chemicals and compounds in vats and then shaping it into pills or packaging it in bottles. Once someone's done all the work to develop a drug, anyone (with the right factory) can take that formula and easily mass-produce it.

If there was absolutely no patent protection for drug companies, there'd be absolutely no reason for them to do any R&D. Why would they spend multiple millions of dollars to develop a drug; only to have the competition take their formula and start manufacturing the same thing without all those dollars spent in R&D?

Re:People with the Money Call the Shots

[TubeSteak]

Oh, and incidentally, one of the reasons drugs cost so much here is because other countries do put price controls in place, so we end up carrying the burden for those slackers.

The main reason drugs cost so much is because the USA is one of the few countries that allows direct-to-consumer advertising of prescription drugs.
Last I checked, pharma spending on advertising was 2 or 3 times its spending on basic R&D.

In case you don't understand: 2/3rds to 3/4ths the price of a prescription drug is advertising.

Re:People with the Money Call the Shots

[Anonymous Coward]

I don't know why this practice draws as much attention as it does.

The key pharse here is the old drug works really well. You wrote that as "worked"; this is incorrect. It still works really well. Also, it no longer has patent protection. Making a new version doesn't magically extend the patent protection; it merely gives you something new that has patent protection.

So now there are two drugs on the market - an old drug that works really well and has cheap generics; and a new drug that's not significantly different and for which you must pay brand prices. Is the new drug so much better that you must use it instead? Well, that's not the situation you described...

Oh, and no matter how minor the changes to the new drug were, it's still new. There's less clinical data about it. Sure, it's gone through the whole FDA process... so did Vioxx. It's rare to have that kind of problem newly discovered in a drug that's old enough to have generics.

Unless I'm missing something big, there seems to be an easy solution here...

Re:People with the Money Call the Shots

[Impy the Impiuos Imp]

So isn't it the doctors' fault for prescribing the expensive, new drug instead of the perfectly fine, old, generic drug?

There may be a flaw in this situation, but it sure isn't the drug companies trying to earn money.

Re:People with the Money Call the Shots

[Znork]

You have to strike a balance between ensuring that drug development is profitable, but not excessively so - not an easy thing to do.

It's actually not hard at all to do. When you hand out monopoly rights expenses tend to rise until they take any available revenue, which means that you can basically hand them any amount of money and their expenses will rise until you obtain that balance.

Drug research doesn't need protection because it's expensive, it is expensive because it has protection. Only free market competition holds down prices in any sector, which is fairly obvious when you compare various protected to unprotected sectors.

Re:People with the Money Call the Shots

[TheCarp]

I actually recently applied the idea to one of my own purchases.

I have GERD, which mostly just means I keep tums around for when I don't or can't eat properly, and/or forget to take something better. Zantac works great, as does prilosec.

So I am down at the local pharmacy. I notice that I can get "zantac/ranitidine" for a whole range of prices, for the same doses. Then I look over and notice, that for HALF the price of the cheapest ranitidine, I can get.... cimetidine! I remembered the good Dr House's speech (I knew it already, but seeing it in fiction helps the info sink in and be remembered), and bought it. Wouldn't you know... just as good.

Frankly, I like the FTC 0 year patent idea. This whole race towards the next patentable drug is a HUGE distraction from looking to acutually improve care. Don't get me wrong, I am sure that some people respond batter to ranitidine than cimetidine... but how many choices for the same thing do we need?

It seems to me that research is best left to universities that can initiate research without the need for direct sales profits to come in later. So, lets remove patents and let the research dollars flow to the places that can do the research better.

-Steve

Re:People with the Money Call the Shots

[eric-x]

well... with old drugs you have to check expiration dates.

Re:People with the Money Call the Shots

[Anonymous Coward]

Doctors do not know each and every drug on the market. That's why drugs reps have "seminars" to enlighten the doctors on the drugs on the market to prescribe to their patients.

In addition to the free lunches, some companies offer kickbacks to the doctor for every prescription filled.

Next time you're at the doctor's, count the number of drug-branded, non-medical items you see, bonus points if you can make a game out of it.

Re:People with the Money Call the Shots

[corbettw]

Frankly, I find that impossible to believe. Do you have any evidence to back up your claim?

Re:People with the Money Call the Shots

[Libertarian001]

"Won't matter if you're a copay or a percentage, you'll be taking that $100/dose because it's your health and you can't exactly put a price on your health."

One wouldn't have thought so, but here we are.

Re:People with the Money Call the Shots

[Anonymous Coward]

This whole race towards the next patentable drug is a HUGE distraction from looking to acutually improve care

So is academic publishing and grantseeking.

It seems to me that research is best left to universities that can initiate research without the need for direct sales profits to come in later

It sometimes takes years to get a single journal article in print. Not only do companies tend to achieve results faster, being removed from the cycle of publish or perish (because they make their own money and don't have to answer to funding agencies), but they also know how to get something to market after they've invented it - something that many academics can care less about once they've published their results. And because we're operating on the premise that making a profit selling the drug is unethical, they have no reason to start caring. In fact, the situation at the current time is this: the ones who do care about marketing their discoveries start companies to sell the drugs - at a profit. As a medical researcher myself, I'd argue that they have a moral right to be compensated for the years of hard work they invest into their research, but we can also take it on a more practical basis: if they do not have a profit model, they will not be able to continue selling the drugs at all - no matter how altruistic, they would not have the resources to do it.

Re:People with the Money Call the Shots

[Anonymous Coward]

Oh, oh, I know! Burning Man, and Somalia!

Re:People with the Money Call the Shots

[Anonymous Coward]

the one thing everyone seems to miss, several of the manufacturers of the name brand, also make their own generics. its not really other companies making a generic its the same companies that made the original. its just how much more than can make on the same drug.
companies cant just wish into existence the equipment to make drugs, the only places that really have the equipment are already making the original name brand. ..
posting anon because i work for the pharmaceutical industry.

Re:People with the Money Call the Shots

[Mr. Slippery]

You have to strike a balance between ensuring that drug development is profitable, but not excessively so - not an easy thing to do.

Why does it have to be profitable? Why not publicly fund such vital research?

If you objection is that you're opposed to a government role in development of goods, then you can't favor patents and remain logically consistent. We are subsidizing research by private companies by creating artificial monopolies, letting big phrama rake in wads of cash from us by pointing guns at anyone who copies drugs they've patented; why not just subsidize researchers directly by handing out wads of cash? Pay the money in direct taxes to the government rather than by indirect taxes to patent holders.

If you think that only the profit motive can lead to scientific discovery, please explain how we've come to know about quarks and exoplanets. Or to take a more relevant example, Salk never patented his polio vaccine; as he said, "Could you patent the sun?"

Re:People with the Money Call the Shots

[damasterwc]

fund all drug development with government credit and make the results free to anyone to manufacture... problem solved.

Re:People with the Money Call the Shots

[Anonymous Coward]

Sorry but that is just retarded. Drugs require years of basic research then years of testing to get approval, and are easy to copy. See http://en.wikipedia.org/wiki/Drug_development#Cost http://en.wikipedia.org/wiki/Generic_drugs#Economics. You have to strike a balance between ensuring that drug development is profitable, but not excessively so - not an easy thing to do.

Also "governments aren't in no way necessary or even beneficial for healthy societies." - are you on drugs? Where are these fabulous government-less utopias? "In a world without such authorities" you would be still be bartering.

are u on drugs, cassius??? i'm sure your profiting doctors and pharmacists have u on some meds.

why must we ensure "drug development is profitable?" we don't ensure the education, fire, and police systems in this country are profitable. back in the day, people did their job because they had a passion for doing it. children wanted to be doctors because the wanted to HELP people. now, doctors are in it for the wealth and social status. fuck the profit motive. when u make profit the motive, greed takes over and puts us in the exact mess we are in needing health care reform.

as far as i'm concerned, we need PASSIONATE people making our laws and healing our sick, not self-absorbed, greedy fucks like the current situation. how do u get rid of greedy fucks in the system? TAKE OUT THE PROFIT MOTIVE!

teachers, firemen, and police, generally speaking, perform their jobs at such low pay because they passionately want to help society. these are the type of people we need running our county and healing the sick.

Re:People with the Money Call the Shots

[Anonymous Coward]

Oh, and incidentally, one of the reasons drugs cost so much here is because other countries do put price controls in place, so we end up carrying the burden for those slackers.

That is so stupid it makes my head hurt. If you think that is true then riddle me this, why do the drug companies even bother exporting if it so unprofitable?

Personally, I don't think drug companies are stupid, they're just run by people who only care about their bonuses. By extension, they aren't going to do anything that won't increase profit (or pass up the opportunity for new "we're the only ones who get to make this" laws).

And if you're going to insist that companies spend billions of dollars proving their products work, then you have to also protect them and their ability to turn a profit on those products or else no one else will ever develop any.

You have a rather bleak outlook apparently, since you seem believe that no-one cares about other people's suffering which is why things like charity or non-commercial projects/research don't exist... Oh, wait...

Re:People with the Money Call the Shots

[Anonymous Coward]

http://www.google.com/search?q=pharmaceutical+spending+on+advertising

Re:People with the Money Call the Shots

[Cassius Corodes]

Let me know when your socialist paradise is complete :D

My comment needs to be read in the context to the one I was responding to - I don't necessarily think that drug research needs to be private, but for it to be so you need to keep it profitable (see the GP).
I'm not sure that you are fair when you say that doctors are only in it for the money - some of them work very long hours in highly stressful situations. Researchers do what they do because they are hoping to solve diseases that harm people.

I don't think taking out the profit motive will solve greed as it is something inherent in human nature. Some people are idealistic and will do the right thing, most wont.

Re:People with the Money Call the Shots

[Kharny]

In finland, the doctor might or might not prescribe the brand, but pharmacies where you buy the drug are by law forced to offer generic alternatives if available. The customer chooses whether he wants the generic or branded( co-pay might be bit lower on generics)

Re:People with the Money Call the Shots

[Anonymous Coward]

[citation needed]

Re:People with the Money Call the Shots

[TheCarp]

> And because we're operating on the premise that making a profit selling the drug is unethical, they have no reason to start caring.

I am not sure that anyone is actually starting from that premise. Simply that the HUGE markup above marginal cost that can ONLY be supported and pay for new research though a patent regieme is perhaps not the best way of doing things. Perhaps leaving the search for new drugs to the people who look to profit from their sale leads to narrow interest in drug research since the cost of choosing to research the next new ED pill thats slightly better than the last to keep a patent regieme healthy vs researching drugs to fight AIDS or cancer are an externality to the firms doing the research.

This isn't to say we should prevent such research, or its somehow immoral. This is about patents. Its about how much should we give these companies a leg up for doing what they do. If their "leg up" costs too much for everyone else, even indirectly, then I think we have every right to stop handing it out.

-Steve

This is Slashdot

[FlyingBishop]

Of course not, unless by 'change' you mean 'abolish.'

But for these sorts of pharmaceuticals, I have to question the wisdom of allowing patents at all. Nobody really properly understands how most of this works, it's almost entirely statistics. That's not to trivialize the importance of new drugs, but patent exclusivity will discourage widespread use, reducing the statistical information we can glean from the new drugs, and making combining treatments much less safe.

Of course, the same argument works fairly well against the current pharmaceutical patent system, but again, this is Slashdot.

Re:This is Slashdot

[lapsed]

The purpose of patent protection is to allow the patent holder to appropriate the investment the underlying innovation requires. Without patents, the incentive to invest in R&D is diminished. The US is good at biotechnology innovation, and part of the reason for this is because biotech firms know that if their research is successful, they'll be given a chance to recuperate their investment. Any solution to this problem has to continue to encourage research.

Re:This is Slashdot

[Anonymous Coward]

You should not confuse you not understanding how antibodies and protein receptors with everyone not understanding them. Some people are educated differently than you in these fields. They don't come up with chimeric monoclonal antibodies on accident, without knowing what they're doing. Come on, now.

Re:This is Slashdot

[stephanruby]

The purpose of patent protection is to allow the patent holder to appropriate the investment the underlying innovation requires. Without patents, the incentive to invest in R&D is diminished. The US is good at biotechnology innovation, and part of the reason for this is because biotech firms know that if their research is successful, they'll be given a chance to recuperate their investment.

Please take note of the circular nature of your argument.

Making money leads to => good biotech. Our biotech is so good because => it makes lots of $$$.

Is that the best argument you/we can come up with? -- because it makes lots of money? Shouldn't biotech be measured instead by the number of diseases it cures? or by the number of years it can push back death? and/or by the number of years it can increase our quality of life? It sounds to me like our incentives are ass-backwards. The longer we extend pharmacological patents, the longer those pharmacological companies will want us to stay sick and/or unhealthy.

And no, I'm not suggesting that people are thinking that way, or that there is even such a conspiracy. The sad truth is that there doesn't need to be one (a conspiracy). Decisions like these are very formulaic, and made often within spreadsheets. Our in-house experts are so over-specialized, they're not going to make mistakes. And shareholders are so insulated from the decisions of the companies they own, they're certainly not going to care either.

Re:This is Slashdot

[lapsed]

To be clear, I don't think that profit is a complete measure of the performance of the US biotechnology industry. I claim that 'the US is good at biotechnology innovation' but I don't back up that claim with any evidence. By 'reason' I mean 'cause'. Stated another way, 'a cause of the high output of innovative activity in biotechnology is the relative certainty of appropriability provided by patents'. The reason is antecedent to the outcome. My argument is incomplete but not circular.
As to how to measure innovation in biotechnology, most research relies on patents, investments or profitability. If a private firm can't contribute to good health outcomes while making money, backing up my claim with that research would be circular. Health outcomes -- lifespan, infant mortality, etc -- have tons of confounds.
Having said that, the point I'm trying to make stands. Private participation in innovative activity requires an appropriability regime. Reducing patent protection will decrease investments in innovation by decreasing the return on those investments. Whether private participation in health research generally is moral or desirable or effective is another issue, but as long as private firms are able to participate in the provision of health-related products and services, the rate and direction of that participation will be determined by profitability. The institutions that align public and private benefit may be flawed, but any argument against them has to acknowledge their underlying purpose.

All the same

[Anonymous Coward]

If something is complicated enough to deserve patent protection, then it's complicated enough that others won't be able to easily copy the idea and compete. If an idea is trivially copied, then it's not deserving of patent protection in the first place. So all patents should be accorded the same protection: none.

Re:All the same

[Geoffrey.landis]

Huh? That makes no sense,

If "it's complicated enough that others won't be able to easily copy the idea and compete," then you don't need a patent-- you can use a trade secret.

The original idea of patents was that the inventor gets a period of exclusivity in exchange for writing out a complete description that allows anybody skilled in the relevant art to replicate the invention. Patents and trade secrets are, in a sense, opposites.

(However, there's very little that can't be reverse engineered these days. I'm not sure that there's anything that can't be copied for a few million dollars worth of analytical work.)

Re:All the same

[Anonymous Coward]

If something is complicated enough to deserve patent protection, then it's complicated enough that others won't be able to easily copy the idea and compete. If an idea is trivially copied, then it's not deserving of patent protection in the first place. So all patents should be accorded the same protection: none.

The complicated part about pharmaceutical drugs is finding which compound works in the first place and modifying it so it is safe and effective.

The easier part is making it.

Your argument is ridiculous in this context.

Re:All the same

[mea37]

Patents don't reward "complexity". They reward innovation.

An invention can be extremely innovative, and yet easy to copy once you have one.

There are plenty of good arguments both for and against patents. Pretending the underlying issue patents address doesn't exist is not one of them.

Re:All the same

[Anonymous Coward]

Why would you want a patent if you can have a trade secret instead? Why do we need patents if we can have trade secrets instead?

Recoup period

[BadAnalogyGuy]

Without a recoup period, there is no incentive to develop new treatments. 5 years is probably a good balance. 12 is probably too long. And 0 is the type of braindead proposal you'd get at a discussion site like Digg or Fark.

When you buy your house, a lot of your money is ostensibly tossed down the drain to pay for the interest on your loan. However, this interest is actually the cost to you to borrow that money. So the lower the interest, the lower your cost to borrow money. If you had no interest to pay and had no incentive to pay back a loan on time, there simply wouldn't be a loan market. No one would lend to you because there would be no hope of getting any return on their investment. Just as you expect use of money as the benefit of borrowing, they expect a small rate of interest to recompense them for their loss of the use of the money.

In many ways, the financial and pharmalogical industries are very similar in this regard.

Re:Recoup period

[_LORAX_]

So make companies "buy in" to patent protection. Default is 2 years and for 5 million/year they can buy up to another 8 years of protection.

Re:Recoup period

[RiotingPacifist]

yeah its not like FTC know anything about trade! (did you even read their argument.)

Do you have any idea how long it takes to get drugs approved for use by the public? drugs (like software) can't simply be copied and resold, if you develop a new drug you have a good 3/4 years of no competition while a competitor gets reverse engineers it and gets approval for his version, after that you have the fact that your drugs are tried and tested and you've been producing it for 3/4 years. Patents are useful in many sectors, but medicine is even less one of them than software (especially when you consider the human cost).

IF the drug approval process was faster AND it was easy to reverse engineer drugs THEN patents are needed in medicine (probably 5 years), but until then the drug company's can shove the any proposal up their respective asses!

Re:Recoup period

[JasterBobaMereel]

No ... the interest on the loan is 1) to cover the depreciation of the original sum, due to inflation 2) make a profit from the loan company

If there was no interest then the loan company could not make money on it, and in fact would effectively lose money .... so they would not bother, what the borrower does does not matter (they have an agreement with you, so can take you to court to make you pay)

The patent period new drugs get is there like all patents so the company can recoup the development costs, so they can 1) invest in developing new drugs, 2) make a profit and stay in business

The patent period on drugs could be modified to zero if it also guaranteed a profit to the inventing company, i.e. all drugs could be generic from day 1 but would be more expensive, at a level defined by government... the current system allows the inventing company to charge whatever they think the market will allow for 5 years, then they effectively get nothing ...

 

Re:Recoup period

[salesgeek]

But I have the patent on that. Oh wait, it expired the day I got it.

Re:Recoup period

[BadAnalogyGuy]

IF the drug approval process was faster AND it was easy to reverse engineer drugs THEN patents are needed in medicine

So the net effect of patents is effectively zero in this case.

But you want to get rid of them because of present day technical difficulties that may one day be overcome? That's some good planning there, Lou.

Re:Recoup period

[corbettw]

They already do that. The patent fees on new drugs are pretty high, especially if you count the years of research the FDA requires before allowing a new drug to be sold. It goes into the billions even for the simplest drug.

Re:Recoup period

[crmarvin42]

They already are "Buying in" to patent protection.

The billions of dollars required to identify potential bioactive compounds, evaluate their potential plusses and minuses, then prove to the USDA/FDA/etc. that the drug is both beneficial and safe enough for approval don't come from nowhere. The company foots the bill up front, and most of the compounds they investigate either don't work, don't work reliably, or are not safe enough for approval. The company needs to make enough profit to cover the development of the 1 drug that did pass muster, as well as the 100's to 1,000's of chemicals that did not. The high prices on patented drugs pay for the R&D necessary to identify the next drug. If the patent protection is too short, the they run out of money and R&D stops.

I'm not saying I know what the sweet spot is as far as the amount of time a drug patent should be valid for. I don't believe that there is ONE number that will fit in all situations. However, charging companies for patent protection after already requiring them to spend billions on getting FDA approval in the first place is going to just muddy the waters and possibly inhibit R&D spending.

Re:Recoup period

[GigaHurtsMyRobot]

With all the money we donate to charities 'for the cure' or for research, I'd think the incentive would be to help people and the funding would come from numerous sources, least of which needs to be the sick person or their insurance company. Kind of like the open source movement where most people aren't doing it for the money, they're doing it for the greater good and maybe a bit of recognition.

Re:Recoup period

[Halo1]

But you want to get rid of them because of present day technical difficulties that may one day be overcome? That's some good planning there, Lou.

Of course it is. You can always reintroduce them at that mythical day of the second coming when the unicorns finally descend to Earth and solve all problems with the patent system. Patent proponents have been saying for decades that problem X with the patent system would be solved within Y years once the system has adapted to whatever the new development challenging the patent system is (chemical processes, medicine, software, biotech, trolls, court/forum shopping, patent thickets, alternative innovation/dissemination models, ...), while in practice the problems only get worse and worse (increasing examination backlogs, increasing amounts of trivial patents that get granted, increasing court case costs and associated innovation overhead/drain, legal uncertainty, various uses of patents in ways that have nothing to do with increasing innovation such as Monsanto's suing of farmers that are victims of cross-pollination and continuation patents in pharma, ...)

The standard answer to remarks like this is always "don't throw away the baby with the bathwater". Reality check: the baby is long dead, now stop beating it as if it were a horse (hey, I am replying to BadAnalogyGuy).

Re:Recoup period

[Anonymous Coward]

This doesn't make sense - the point of the patent is to allow the company to recoup the cost of R&D on the drug and the other drugs that didn't work out or to fund the R&D for the next drug. Buying extensions turns the research into even more of a gambling proposition - you have to have a mega drug to actually make enough to pay off your failures and even a successful drug might not break even. This would also have the effect of shrinking the number of diseases that can be profitably researched - those affecting only a small number couldn't be profitable even if they succeed, even if there is reason to think that a drug might work for that.

Re:Recoup period

[nine-times]

Without a recoup period, there is no incentive to develop new treatments.

That's not entirely true. There are incentives to develop new treatments... like, you know, curing people. There might even be business models which fund developments of new treatments. It's just that there might not be business models which provide enough funding to find these treatments quickly, and what business models there are might include trying to keep trade secrets, which means that the treatments might not be widely available, and people wouldn't be able to do significant research based on those discoveries.

It's worth keeping in mind that the purpose of patents wasn't originally to guarantee inventors a return on their investment in research. The idea was that it was an exchange: the government guarantees you a limited period of exclusive rights to the invention, and in return you publicly disclose how your invention works, and the public gets to use it once your exclusivity ends.

Personally, I don't really have a problem with copyrights or patents, just so long as we keep in mind that the purpose is to enrich the public's store of IP rather than to enrich the originators of the IP. We just give the originators something in trade for their contributions: limited control over their ideas for a limited time.

Re:Recoup period

[TubeSteak]

drugs (like software) can't simply be copied and resold, if you develop a new drug you have a good 3/4 years of no competition while a competitor gets reverse engineers it and gets approval for his version, after that you have the fact that your drugs are tried and tested and you've been producing it for 3/4 years.

I don't think you know what you're talking about and neither do the mods.

In the USA, if a generic pill is shown to be identical in function to the original,
the generic pill can use the original's drug trials as proof of efficacy.

Not to mention that reverse engineering most drugs is a trivial act.

Re:Recoup period

[RiotingPacifist]

I don't think you know what you're talking about and neither do the mods.

True, but short of somebody in the pharmaceutical industry correcting me, I think I can make some fairly informed guesses based of my knowledge of organic chemistry.

Not to mention that reverse engineering most drugs is a trivial act.

Of the drug yes, of the production process NO.

In the USA, if a generic pill is shown to be identical in function to the original,
the generic pill can use the original's drug trials as proof of efficacy.

Drugs are rarely 100% pure, so it is unlikely that the generic pill will be identical to the original. I figured that the this would mean the new drug will need new testing & approval, to show that it's impurities are not harmful.

Re:Recoup period

[TakeyMcTaker]

The general "reimbursement for R&D" claim about the need for patents is completely bogus. I have not seen one proof that such costs can't be made up via early-mover and brand establishment advantage, through a mix of first-to-market and Trade Secret status. Trade Secret status alone requires costly reverse-engineering for others to enter the market without independent invention, and if the reverse-engineering is cheap why is the patent worthwhile exactly? When I say "worthwhile" I don't mean to the monopoly rent seeker but to the public, which is the entity (via government) that is granting this "temporary" monopoly via patents. What other incentive does the public have to grant these temporary monopolies?

I personally think the long history of the USPTO has shown the entire current patent system to be counter-productive, and in no way keeping the original Constitutional intent of "progress" in the "useful arts and sciences." Instead what we have is an endless parade of trolls seeking monopoly rents on minor increments or remixes of past inventions instead of real novel, non-obvious, and truly *new* discoveries.

I think it should be replaced with a Registered Trademark System, which doesn't contain unenforceable "obviousness" tests, and doesn't punish independent invention where referencing the other work wasn't needed -- in most cases they were just "beat to the punch" in getting the patent first, if they bothered to apply at all. The only punishable offenses should be direct industrial espionage, or licensing Registered Trade Secrets only to use the RTS materials without following through on the licensing contract agreement. Otherwise real inventors shouldn't be forced to read through the USPTO's long history of non-inventive patents, just to avoid overlap that might lead to litigation, whether the overlapping patents are truly valid or not.

To match the patent system, once the Registered Trade Secrets expire, they should go to the public domain. The same net benefit of "progress" in the public domain data is gained, without all these hurtful unenforceable "obviousness" tests ruining everything. The RTS obviousness test becomes: if anyone can recreate or reverse-engineer the product with nothing more than the summary abstract and/or the available market product, the invention is obvious.

The USPTO has proven nothing except its own corruption and incompetence, and violated Constitutional intent via rampant market counter-progress, and thus should be dissolved.

Re:Recoup period

[Labcoat Samurai]

Hmmm.... I thought he meant technical difficulties with reverse engineering and getting the products approved by the FDA. In other words, that technical difficulties make the patents irrelevant, but if we got rid of them and then got over those technical difficulties, we'd need the patents again.

Sounds like you're talking more about there being technical difficulties with the patent system itself and you think he was proposing we continue using it anyway because they might get fixed.

Re:Recoup period

[TubeSteak]

Wikipedia happened to be the first site that popped up
Heck, I just learned that generics don't even have to be 100% identical in makeup or function!

Still, I applaud your persistence in the face of ignorance.
Most people would have done basic research in order to sustain their argument,
but you bravely^W blindly charged full speed ahead with your "informed" guess.

For future reference: your informed guess wasn't worth the electricity I used to write this post.

What needs to change

[Targon]

To encourage invention or innovation, the system MUST go back to the original reason for patent protection in the first place. The idea is that new ideas should be protected so the patent "owner" can develop said idea and turn it into a product. If there is no ability or intention to DIRECTLY make a product to take advantage of the protection, then the protection should be removed.

This means that patent trolls would all go away, since none of them have any intention to make a product based on the patents they own. It is one thing for a company like AMD or Intel to file a patent and make use of their inventions, and another for someone sitting in an office to buy a patent just so they can file lawsuits against anyone who makes a product that might infringe on the patent in question.

So, for all of these companies that file patent related lawsuits, they SHOULD be looked at to see if they have taken even a few steps towards making a product. If there has been no effort made to create a working product based on the technology, they should be fined for filing a lawsuit in the first place.

Re:What needs to change

[Attila Dimedici]

I would agree with this in part, as long as the attempt to sell the idea to a company counts. A classic example of where the patent system works as intended is the intermittent windshield wiper. The car companies worked to develop an intermittent wiper and were unable to do so. An independent inventor developed the idea and tried to sell it to them. They asked him to demo the idea before they would pay for it. Once they saw how it worked, they developed their own and tried to claim "obviousness". He sued them and collected significant damages.

Re:What needs to change

[Anonymous Coward]

To encourage invention or innovation, the system MUST go back to the original reason for patent protection in the first place. The idea is that new ideas should be protected so the patent "owner" can develop said idea and turn it into a product. If there is no ability or intention to DIRECTLY make a product to take advantage of the protection, then the protection should be removed.

This means that patent trolls would all go away, since none of them have any intention to make a product based on the patents they own. It is one thing for a company like AMD or Intel to file a patent and make use of their inventions, and another for someone sitting in an office to buy a patent just so they can file lawsuits against anyone who makes a product that might infringe on the patent in question.

So, for all of these companies that file patent related lawsuits, they SHOULD be looked at to see if they have taken even a few steps towards making a product. If there has been no effort made to create a working product based on the technology, they should be fined for filing a lawsuit in the first place.

I've also thought along similar lines to the OP, however, it overlooks one basic issue.

If patent rights are truly 'use it or lose it', then there will be ZERO incentive for potential licensing partners to come on board.

For example, why would I pay for an expensive license when I can simply be obstructive and recalcitrant, in the hopes that I can later use your inability to successfully negotiate with me as grounds to oppose your patent in the future, for failing to "work" the patent.

So any such proposal is going to have to take this into account, which will be very difficult to do. How does one distinguish the situation above from a negotiation where the patent holder is simply asking for too much?

- Anonymous Coward -

Re:What needs to change

[alexo]

To encourage invention or innovation, the system MUST go back to the original reason for patent protection in the first place.

To protect revenue streams, prop up failing business models and raise barriers to entry (all under the guise of "encourag[ing] invention or innovation"), the system works just fine as it is, thank you.

Re:What needs to change

[Maximum Prophet]

He sued them and collected significant damages.

No, he sued them and was awarded significant damages. Then he had to sue them again to collect those damages. He eventually won $10 million from Ford and $30 million from Chrysler, but spent much of it on legal bills. He was divorced. He died of brain cancer in 2005. This is not a win for the patent system.

Re:What needs to change

[khallow]

I don't see why not. We have these new windshield wipers plus the inventor got $40 million dollars minus legal fees. The divorce and brain cancer are irrelevant.

Re:What needs to change

[Maximum Prophet]

It's not a win, because he filed his first patent in 1964, but wasn't paid for it until after 1990. Most people can't live on nothing for 26 years waiting for a payoff.

The divorce and cancer are relevant because both are related to stress.

I can't find a source, because it's probably secret, but most sources say he spent most of the $40 million in legal fees, even though he represented himself a lot.

Re:What needs to change

[Anonymous Coward]

How about combining the suggestions above? Granting the first inventor a SHORT protection, say 3-5 years, initially. Then if the inventor or his/her licencees can implement the invention, a LONGER, 12-15 years protection is to be granted?

Re:What needs to change

[khallow]

even though he represented himself a lot.

So it's even less of a typical example than before.

how do those rules get decided?

[Fizzol]

They get decided whichever way is more profitable for the corporation and more expensive for the consumer, such is always the way with US health care.

People without the Money Burn a Witch

[Yvanhoe]

Seriously, we are not talking about geeks not having their OSS fix here, it is about sick people not getting their drugs. People without money are never heard of unless they retort to violence. This can be very dangerous.

Re:People without the Money Burn a Witch

[Rogerborg]

Yes, I'm sure the revolution will start any second now. Tweet when it kicks off, will you?

Re:People without the Money Burn a Witch

[Hoi Polloi]

I wouldn't worry if I was them. Sick people can't move very fast and get tired easily.

Re:People without the Money Burn a Witch

[Boomerang Fish]

This is a troll?

I think the entire digression is offtopic, but not a troll...

And the tweet comment was stupid, not funny.

The fact is, we without are becoming more and more disenfranchised... either it's because we don't care (likely, as Survivor is about to start...) or because we're losing our voice in politics to large money (which can come from large action groups or corporations, so don't get all "you hate corporations" on me here... it's the fact that money talks loudly that I'm noting here)

I don't know how the "revolution" will occur... I hope it's through votes to politicians that change policies and practices, but violence isn't out of the question... look at history. Disenfranchisement of a large portion of your population has never "gone away"... it always has a revolt, though not always violent, and not always successful.

--
I drank what?

Re:People without the Money Burn a Witch

[Anonymous Coward]

It is also about ensuring the proper incentives remain in place to allow the creation of new drugs.

Re:People without the Money Burn a Witch

[Anonymous Coward]

Yes, and they're totally incapable of pulling triggers or lighting shit on fire...

O WAIT U R NOT IN ZOMBIE MOVIE THIS IS RL

Longer patents = cheaper branded drugs?

[JSBiff]

I know, I'm probably being far too charitable here, but it occurs to me that at least the *possibility* exists that granting longer than 5 years on drug patents *might* lead to cheaper branded drugs? 12 years might still be a bit too long, but here's my reasoning. . .

1) New drugs cost a lot of money to do R&D, and then to get through all the clinical studies and FDA approval.

2) New drugs require the drug companies to market to both doctors and patients (although, it could be argued they should be doing less marketing to patients, and more to doctors, but that's a bit off-topic for this thread). My point is, there is a 'ramp up' period to get drugs up to their 'natural' demand level (by which I mean that enough doctors and patients know about the drug that it is probably being properly prescribed to most of the patient population that needs it). This probably takes 2-5 years, I imagine.

3) The costs of R&D, trials, approval, marketing, *and* reasonable return-on-investement currently have to mostly be done within that 5 year window, which means that the cost, per patient, for the drugs, it would seem to me, must *necessarily* be quite high.

Now, if you allow the drug companies to amortize all of those 'startup' costs for the new drug over a period of say, 8-10 years, shouldn't they be able to reduce the cost-per-patient pretty substantially (assuming that the unit manufacturing costs aren't a substantial fraction [i.e. greater than 75%] of the 'retail' price the patients end up paying, which I kind of think is probably true for most drugs)?

Re:Longer patents = cheaper branded drugs?

[salesgeek]

A patent does nothing to amortize anything. It grants a monopoly on the invention. The patent holder may do whatever they want with it after that, so price gouging is the natural thing to do.

Re:Longer patents = cheaper branded drugs?

[rotide]

You're assuming that someone with what amounts to a monopoly on a drug will somehow eventually want less profit and voluntarily drop their prices? Speaking of drugs, can I have some of what you're having?

Re:Longer patents = cheaper branded drugs?

[JSBiff]

I'm not really assuming any such thing. Actually, I'm assuming that the *potential* market demand (that is, the number of patients that might benefit from the drug) for most drugs is greater than the actual demand in terms of prescriptions sold to patients. (Almost) Any company will reduce its unit price *if* it has reason to believe that by lowering the unit price, it will increase sales enough to both offset the lost revenue and increase revenue overall. Put another way - there are some people who need the drugs, but who do not buy them because they can't afford them, and don't have insurance (or maybe their insurance company won't cover the drug, although I do think there might be laws [at least in the U.S.] requiring insurance to cover necessary drugs; not quite sure about how that works).

I'm willing to bet that if the drug companies had a longer period of exclusivity, they would somewhat reduce prices (perhaps not in the first year or two, though), in order to stimulate market demand during the period of exclusivity. I may be wrong though.

Re:Longer patents = cheaper branded drugs?

[Anonymous Coward]

No. (MBA in training, here.) The Monopoly quantity for any good is always less than the amount produced with competition. The Monopoly price for any good is always higher than the price with any competition. (Note that competition is not always a guarantee of significantly better value for consumers; oligopolies can and do extract nearly as high a price when they arise.)

This is a basic fact of economics. Competition is the only effective way to lower prices.

Re:Longer patents = cheaper branded drugs?

[Anonymous Coward]

Yep, you're wrong.

Here's the problem: most biologics are targeted at a small market niche. Even the most common diseases treated by biologics - rheumatoid arthritis (RA), Crohn's disease, etc. - only affect a small segment of the population, and among them, the only people using biologics tend to be those for whom traditional treatments fail.

So, these small markets tend to saturate quickly. From there, it's just a matter of rent extraction by the drug companies. The only way that prices will come down is for competitors to come into the market, but (with the exception of RA, which is the most common autoimmune disorder treated by biologics) this tends not to happen because of the high cost to entry and the small customer pool.

Generics provide another means to enter a market, with a much lower barrier. You just have to reverse-engineer what the other company did, or read the research if it's published. This means guaranteed competition in all but the smallest markets - and in those markets, there are already government subsidies for "orphan drugs" which treat disorders with few victims.

So the question is this: is it better for one company to be able to extract maximum rent from a group of individuals already suffering from a debilitating and possibly fatal disease, driving up the cost of health care for everyone (assuming some risk pooling, which is the case even in the U.S.), or do we want to let the companies make back their buck and then open things up so that drugs are affordable? Without

Re:Longer patents = cheaper branded drugs?

[JSBiff]

"The Monopoly quantity for any good is always less than the amount produced with competition. The Monopoly price for any good is always higher than the price with any competition."

I agree with that statement, but you are comparing oranges and bananas. I never said the price, by increasing the period of patent protection, would be lower than the price with competition. What I *said* was that I think it is at least possible that the monopoly price with a *longer period* of patent protection would be lower than the monopoly price with a *shorter period*.

I still might concede the point, though. I've thought about it for a bit longer, and while I think I still have a valid point about the potential to increase overall profits by reducing price, I suppose that in the situation of drugs, it might not matter as much - that's because in order for price reductions to increase profits, they have to have a very large impact on demand; so, for example, if you reduce the marginal profit [which, of course, is not the same thing as price] by 50%, you'd need that to produce greater than 100% increase in demand in order for that to translate into greater profits. That might not be true in the case of pharmaceuticals.

I suppose with something like drugs, it may be the case (particularly since health insurance does generally cover most of the cost of even expensive drugs, and I think the figures I've heard tossed out lately are that about 80 percent of U.S. citizens have health insurance) that price doesn't have much impact on demand. If that is the case, then lowering the price wouldn't probably increase demand much, and conversely, high prices might not be having much effect of reducing the demand, so high marginal profit just means higher profits total.

Re:Longer patents = cheaper branded drugs?

[Anonymous Coward]

I could charge less for 12 years to recoup the same cash I could get in 5 with higher prices.

Or, because I am an Evil Corporation (tm), I can charge the same, since that is what the market is accustomed to bearing, and make 7 more years of profit.

Where is the incentive to lower prices? It doesnt exist. For this same reason, prices raise quickly under market pressure (see fuel prices during holidays), but come down slower, since the only push to go down is competition. A government granted monopoly would have 0 incentive to bring the price down, until there are generics available.

Re:Longer patents = cheaper branded drugs?

[toppavak]

This is not a longer patent period. What this is an extension of the period that a pharma company can retain exclusive access to its clinical trial data. Without this data, a generics manufacturer couldn't get a drug to market because they would have to repeat all of the original clinical trials- something which would be extremely cost prohibitive. This bill would extend the time during which the FDA would not release the raw data from the trials to the public so that even though the patent on a drug may have expired, no generics could enter the market. This is in essence granting a 12 year extended monopoly to biologics manufacturers because they whined (and spent) enough despite that their principal justification for the extension (generics are more expensive to develop than small molecules and thus warrant a longer monopoly) has been shown to be false.

Re:Longer patents = cheaper branded drugs?

[Anonymous Coward]

And increases in price should cause a decrease in demand too (not universally true). Certain fundamental assumptions in economics overgeneralize and can produce errors in the real world - an 10% increase in rice in a poor area would actually cause an increase in demand for rice as (all else staying fixed) the consumer would need to replace meat/fish/etc with more rice to have close to the same caloric intake while remaining within their means. Another example would be if the cost of groceries went up a small amount, some would actually eat at home more provided it remained substantially cheaper than eating out since the impact to the food budget would be even more exacerbated by reducing demand. Some monopolies actually reduced price from what it was under competition as their costs declined (reduced advertising, better negotiating postion with suppliers, etc) and the lower price serves as a barrier to entry. While utilities are not the best example due to their regulated prices, competition there would cause prices to rise as the main cost is the infrastructure and a new competitor could not compete while servicing the debt to build such. At least in the short term, drug companies would be likely to lower prices as a means of encouraging the government to keep the new policy in place. It could also stimulate more research which would encourage true competition between different drugs that treat the same disease.

Re:Longer patents = cheaper branded drugs?

[vorpal22]

I sincerely doubt that this is the case with Remicade on any level. Perhaps it cost a lot in R&D (I don't know), but given that it filled several niches very quickly that were desperate to be filled due to a lack of suitable medications or medications without tremendously terrible side effects (autoimmune disorders like Crohn's Disease, ulcerative colitis, rheumatoid arthritis, and ankylosing spondylitis, all of which are terrible nightmares of diseases), there was near instantaneous demand for Remicade once it passed clinical trials and was established as a suitable treatment for these conditions.

Given that my Remicade treatments cost in the ballpark of $80,000 / year (and that's in Canada), and Remicade is one of the highest grossing drugs of all time, I'd say they're making fistfuls of cash. I can't wait until Remicade goes generic to see how this will influence price.

Re:Longer patents = cheaper branded drugs?

[IICV]

No.

If I have deadly disease A and it can be treated with drug B, I will pay $X for B, with $X being in the range of [0, all my goddamn money].

Now: Drug company E has a patent on drug B. What is a rational price for them to charge me for B? There is no lower limit, because there's no competition. The upper limit is all my goddamn money. Which will they charge?

Re:Longer patents = cheaper branded drugs?

[TakeyMcTaker]

1) New drugs cost a lot of money to do R&D, and then to get through all the clinical studies and FDA approval.

This argument completely ignores how far these clinical trials are already subsidized by a mix of government, private, and non-profit grants.

2) New drugs require the drug companies to market to both doctors and patients

This argument is completely false in the cases most worthy of any government protections: if the drug is really that new and effective, it will market itself via the clinical trial results alone.

3) The costs of R&D, trials, approval, marketing, *and* reasonable return-on-investement currently have to mostly be done within that 5 year window

This is assuming that the drug isn't held as a Trade Secret until just before commercial release, making the patent period equal to the market period. This also assumes the drug is really all that new, and not just a remix or increment on older well-known drugs or coctails. Drugs are rarely all that "novel", because the mechanisms of truly new drugs can't be trusted not to create bad reactions. Most drugs are also derived from natural or organic materials and processes, which also brings their novelty and non-obviousness into question.

I'd personally much rather pay for the R&D and clinical trials of life-saving devices, procedures, and pharmaceuticals via taxes, as we are already doing anyway. That sounds better right now than continuing to be taxed by monopoly rents, via health insurance Trust markets, as we are now.

Copyright laws need a look too

[jonesxxx]

We should also ask are the copyright laws legitimate? The original copyright laws originated in Britain in 1710 as an act “for the encouragement of learning” and “for the encouragement of learned men to compose and write useful books”. It's right that they protect musicians too but when a music company can contrive for some teenage nit wit to be hyped in all the music media and then sell millions of copies of some ditty at a replication cost so close to nothing that it may as well be free can this be fair? Hasn't the music industry neglected it's initial reason for being and now become interested only in supporting itself and neglecting the msuci? Isn't it ripping everyone off? Let the audience decide http://tinyurl.com/yj7zbok

Re:Copyright laws need a look too

[jonesxxx]

Who flagged me as off topic - This is not off topic.

The topic was patents. The broader topic was intellectual property. Copyright is the other type of intellectual property and if you start modifying patents you should also consider copyright.

Can anyone explain the US system?

[Anonymous Coward]

Anyone know how the US drug patent system works? It seems very different from my foggy memory of the system in the UK which I think is 20-25 years for drugs.

Anyway patent extension through minor changes is nothing new the drug companies have been at that one for years. Its why you get MR (modified release) slapped on the end of your medicines even though the benefit of many MR preparations isn't that great except for patient compliance issues.

I always thought medicines got a raw deal with patent law compared to say copyright law.
Something so important, difficult to develop, costly (billions of dollars in development) and strictly regulated gets less protection than Mickey Mouse.

Now im not saying I'd like longer medicine patents, generics do a great job of driving prices down on something that is more necessity than luxury, but I find it strange that art which can take one uneducated dude all of 5 seconds to come up with is given more protection than discoveries that take 100's of highly educated people years.

What about ARM?

[JSBiff]

The problem with your reasoning is that it leaves no possibility for a Research and Development for-profit business. Take ARM CPUs for example. Their business model is that they develop designs for real CPU cores (which is, in a sense, a real product, but in another sense, is not). But, they are a 'fabless' semiconductor company - they don't *build* or directly sell any actual products (except for, probably, some demo/marketing units which they ship to manufacturing partners).

They license their CPU designs out to manufacturing partners, who integrate them into all sorts of devices - cell phones, game consoles, netbooks, DVRs, DVD/Blu-Ray players, automated manufacturing devices, medical devices, etc. Anything which needs a CPU could potentially use an ARM CPU design.

So, what is so *wrong* about the ARM business model? I don't think most people would call them a patent troll, and yet without patents, they would collapse overnight. But, by your (rather vague) definition, they wouldn't likely get patent protection?

Re:What about ARM?

[Aceticon]

ARM are actively trying to sell their designs - that's very much an indication of "intent to implement the idea".

Contrast this with Patent Trolls who get an idea and patent it (or just buy a patent) to then just sit on it until somebody else independently comes up with the same idea and DOES implement it, at which point they pounce.

Now imagine a patent system where ideas have to be implemented in a set time from filling the patent:

• Playing for time by stalling (filling multiple versions) is a negative, since the clock is counting
• The initial patent fillings will be much better simply because the clock starts ticking as of first filling: sloppy work means risking to loose the patent
• Ideas will be much more developed and fleshed-out before being patented and more specific: the time limit between first filling and implementation means that you can't just patent generic wild ideas and hope for the best - ideas patented which are far from implementation are likely to quickly loose patent protection once the time-to-implementation has expired with no implementation being done.
• A serious company that has an idea but cannot (say, for monetary reasons) immediately go for an implementation will either keep it a trade secret until they can implement it or patent it and sell it to somebody willing to implement it. If they do keep the idea as a trade secret they will either later patent and implement it (in effect getting more time to develop the idea than that which would be available purely from the patent) or loose it if in the meanwhile somebody else independently comes up with the same idea (meaning that the idea wasn't really that original, and thus undeserving of patent protection)
• Patenting something and sitting on it will not work: you either implement it yourself, sell/license it to somebody who will or loose it.
• Implementing a patent is usually the most costly bit: if you've gone to the trouble of implementing it it's much more profitable to go ahead and commercialize it than it is to sit on the patent

I can see problems with the idea and ways around it. Certainly this doesn't solve the issues with Business Methods patents (something which should never have gotten patent protection to begin with).

That said, a use it or loose it patent system would steer us away from the "race to stake claims of ownership on all ideas" which is the current way patents are used and which has resulted on a large wasteland of undeveloped potential where "nobody can go" into a system where people only stake claims ownership to those ideas they mean to develop, which would result in small active areas (of patents being explored) and plenty of free space for anybody that wants to develop an idea.

Freeing up all that unused "idea space" could actually result in a new Renaissance.

Re:What about ARM?

[Herkum01]

Reading your post, I think you are making a logical error. Your ARM business model is producing something, a sale. They are licensing the technology they developed to other businesses and that is the way it should work.

A patent troll inherently produces nothing, they sit on knowledge waiting for someone else to (re)discover the idea and actually more forward with it. They remain uninvolved until someone else is actually producing something and then file a lawsuit.

Re:What about ARM?

[Anonymous Coward]

So, what is so *wrong* about the ARM business model?

Overseas outsourcing? Not that everyone doesn't do it anyway. But that patent protection is of limited use the more global the economy gets and half the world doesn't give a fuck about (our) patents.

Re:What about ARM?

[JSBiff]

"half the world doesn't give a fuck about (our) patents."

Ahh, but, if you want to import anything into the U.S. in any quantity (obviously, you could probably smuggle small quantities and get around Customs), you have to respect patents. The U.S. Customs Service *will* seize your unlicensed products which violate patents, at the port of entry, before you can sell the goods on the market, if the patent holder complains to Customs. So, you might try to rip off ARM's designs, but you won't have any luck selling products in the U.S. (or Canada and Europe). You might get away with selling the unlicensed goods in other countries, but then in the future if you wish to start doing business in the U.S., you will likely have to come to a settlement with the patent holder regarding past sales as well as future royalties, before you would be able to start.

Stop intervening in the market place

[tjstork]

Everyone has it in their heads that drug companies should get a special monopoly because drugs are so expensive. Maybe we need to knock off the special breaks and accept what our pricing signals are telling us. A lot of this stuff is simply too expensive and we need to figure out ways to make drug research less expensive.

Re:Stop intervening in the market place

[Anonymous Coward]

Want the answer of how to decrease bringing a drug from the bench to the bedside? Eliminate all FDA and government regulation and compliance issues of the safety and efficacy of drugs, and costs will drop tremendously for pharmaceutical development. Only about 1 in 100 drugs makes it through FDA phase III to become an actual prescription medication, taking between 8-10 years and $100 million to make it to marketplace. Costs are not only in R&D, but clinical trials consume tremendous amounts of money, and then there high fixed costs involved in setting up GMP plants to manufacture some of these drugs. Pharmaceutical companies have about 8 years to recapture their costs before drugs and turn a profit before going off patent protection; they need to charge a quite a bit of money to recoup costs and to turn a reasonable profit in order to pay for development and then to grow the company.

Of course, the elimination of FDA and government approved regulation is not appealing for most people; Americans have come to expect that approved prescription drugs will be safe and effective in the major of cases. The dilemma here is that most people want all of the innovation, development, and advances made by the pharmaceutical industry, coupled with the high bar of safety established by the FDA, without being willing to wanting to pay for it.

Eliminate the high safety and efficacy bars set by the government, and let the pharma companies police themselves.

Re:Stop intervening in the market place

[dissy]

Eliminate the high safety and efficacy bars set by the government, and let the pharma companies police themselves.

As long as it is clearly announced for a product if it has been through, and how much, FDA testing, then that is not a bad idea what so ever.

There are a lot of people happy to get generic prescriptions from overseas, knowing full well there can be quality risks. As long as it is a choice, so those who do not want to assume those risks have the higher priced and actually tested to FDA standards version available to them.

I think there are too many difficulties in how to go about doing that correctly, that it probably will never happen. But there is no real technical reason why it couldn't.

Re:Stop intervening in the market place

[mcgrew]

A lot of this stuff is simply too expensive and we need to figure out ways to make drug research less expensive.

Most of the cost of drugs isn't research, it's profits. But I'm ok with 20 year patents; I wish copyrights were as sane a length.

Doctors are part of the problem. Back when I was on Paxil, the patent ran out on it. I'd been paying a $20 co-pay on a bottle (no idea what retail price was, that's another reason drugs are so expensive), as soon as the patent ran out I got generics for $5.

Next time I saw the doctor she changed the prescription to PaxilCR, which was newly patented -- and didn't work for me at all, while the old generic paroxitine did.

Re:Stop intervening in the market place

[Maximum Prophet]

Americans have come to expect that approved prescription drugs will be safe and effective in the major of cases.

I'd settle for safe, let the market decide if a treatment is effective. The FDA should simply gather trusted, non-biased information, and let people compare treatments. There are conditions where the best treament is 40% effective at best. We'd be better served by having many more safe drugs available, and much more data.

Re:Stop intervening in the market place

[tjstork]

Next time I saw the doctor she changed the prescription to PaxilCR, which was newly patented -- and didn't work for me at all, while the old generic paroxitine did.

In fairness to your doctor, many people actually don't do well with generic substitutions, particularly for psych meds. He/She might have been trying to do you a favor and keep your medication consistent. Generics - are not the same -.

Re:Stop intervening in the market place

[mcgrew]

Except I'd had no trouble whatever with the generic, whereas the CR didn't work for me at all. If the generics work, why use a more expensive, untried option?

20 years not 5

[NoYob]

From the FDA:

Brand-name drugs are generally given patent protection for 20 years from the date of submission of the patent. This provides protection for the innovator who laid out the initial costs (including research, development, and marketing expenses) to develop the new drug. However, when the patent expires, other drug companies can introduce competitive generic versions, but only after they have been thoroughly tested by the manufacturer and approved by the FDA.

Traditional pharmaceutical patents last for 20 years.

Re:20 years not 5

[Anonymous Coward]

That's from date of patent submission, which is usually really early in the development of the drug. The 5 years they are talking about it is 5 years after marketing approval. You get the longer of the two. If you have 10 years left on the patent, you get 10 years. If you have 2 years left on the patent, you get 5 years.

Re:20 years not 5

[gabebear]

There seems to be a lot of confusion going on here. The summary is really bad.

Drugs have to be approved by the FDA before they can be sold, which is where this new law comes in. Follow-on/generic drugs don't have to go through the HUGE amount of work to be approved by the FDA if they can prove their drugs are "identical in dose, strength, route of administration, safety, efficacy, and intended use."

You get a patent for 20 years, but drug patents usually have a 5-10 year of useful life after developing them and getting approval to sell them. Usually the patent is on some formulation of known existing chemicals and not on the active ingredient. Because it's usually so much easier/cheaper to make the follow-on/generic drugs, the FDA grants a 5 year monopoly to the first company that gets a drug to market where generics don't just have to prove they are identical to a current drug.

http://en.wikipedia.org/wiki/Generic_drug
http://en.wikipedia.org/wiki/Drug_Price_Competition_and_Patent_Term_Restoration_Act

Re:20 years not 5

[Anonymous Coward]

Mod up the parent. The author of the article has completely misstated the debate by presuming that traditional patent protection lasts only 5 years. Congress is proposing less time for follow on biologics than would otherwise be available to innovators if the invention was purely pharmaceutical in nature, and so is apparently trying to strike a balance between no protection (currently the state of affairs), and full patent protection (20 years from the filing date).

Re:20 years not 5

[Anonymous Coward]

This is true. It should be noted that a patent is submitted when the drug company files an Investigational New Drug (IND) with the FDA (this is typically after animal testing, etc). They then have to go through Phase I (safety in healthy humans), Phase II (safety and efficacy in target populations), and Phase III (bigger and longer Phase II studies) clinical trials before they can file a New Drug Application (NDA). If they get approved, then they can market the drug. On average, I believe it takes a drug 12 years to get from IND to pharmacy shelves. So that leaves about 8 years of patent exclusivity. The summary is wrong and everyone quoting is, of course, wrong.

Your friendly neighborhood pharmacist

Keep it at five years.

[FrostDust]

The problem with exceptions is that when you start making them, suddenly everyone thinks they're special and starts demanding the rules be bent for them too. If this goes through, how soon until the flood of requests from every industry in the country that they be able to get extended patent-protection time?

If pharmaceuticals are so unique the patent system can't adequately protect them, make them unpatentable and put them under a different type of protection.

Re:Keep it at five years.

[Dragonslicer]

Pharmaceuticals are already an exception. If they weren't, the patents would last even longer.

Matter Printers

[MarkvW]

Neal Stephenson's book, "The Diamond Age," really got me thinking about matter printers. They're already here and they'll just keep getting better and better. In the near future, you'll be buying a bag of carbon pellets at the hardware store. Then, along with the design software, you'll be able to matter-print physical items. Recycling will probably get easier, also. As time progresses, the matter printers will get cheaper and more sophisticated. They will then become ubiquitous. Such devices could really change economies.

If music piracy was bad, matter piracy will be worse. It will be difficult for patent and copyright holders to police their work. Consumers who own matter printers may be able to pressure their governments to relieve them from existing restrictions. On the other hand, merchants will pressure for more invasive restrictions.

I don't know where the future will go with this, but it sure will be interesting.

Re:Matter Printers

[Anonymous Coward]

Consumers who own matter printers may be able to pressure their governments to relieve them from existing restrictions.

Yeah, right. Unless they can print themselves C-4, there is literally zero chance of consumers pressuring their governments to voluntarily relieve them from their wage slavery. It is far, far more likely that matter printers will be quietly and brutally repressed, and never see the light of day.

Re: Good Points

[relguj9]

Which is why I would think that Health Insurance companies would be lobbying AGAINST this as well, and they are literally rolling in money. Their margin benefits greatly from getting generic drugs on the market as fast as possible.

Oh, how I loathe ...

[jandersen]

Over the years my feelings at the sight of the manifestations of shameless, corporate greed have gone from outrage to anger, and has now reached the state of pure, unadulterated loathing. It really becomes harder and harder to see anything redeeming about it, whether it is the underhanded dealings from the entertainment industry and the RIAA, or the sick greed of the likes of the medicine and GMO industry. It doesn't to be that way, it really doesn't, and it will end, one way or another.

There is a growing tension between the magnitude of greed of the moneygrabbers and the very real needs of the rapidly growing class of the very poor in the world. Historically these tensions have always resulted in a breakdown of some sort; often a revolution, but one can still hope, I guess, that those in power will simply throw out the idea of patents altogether, or at least recreate the concept from scratch.

I am not against companies making a reasonable profit, but they already do that and more, so much more. I have long been convinced that private companies are not suited for handling important, public services - to which research and production of medicine belong, IMO. People's suffering should not be the object of profiteering.

The answer is so EASY...

[Karem Lore]

The solution to the never ending patent rubbish that is coming out is:

1) All R&D needs to be logged (in terms of cost).
2) All patents are protected and valid until the net profit of selling any item has reached the level of costs, or 1 year if no progress on the the patent has been made to monetize anything.
3) After R&D costs are covered, the patent becomes public knowledge and usable in any capacity by anyone.
4) Any litigation from a patent holder can only be back tracked 1 year prior to the declaration of accusation. No, oh you've been abusing my patent since 1985, cough up Billions please...

This will help innovation of new products based on older patents by opening them up as soon as they become viable.
This will stop people sitting on patents (trolls).

You may ask about well, if on the day the patent opens some foreign firm floods the market in cheap XYZ drug...Well, no...Because said company may not develop until the patent has been released...Thus, the lawyers will be happy because they can still litigate companies who abuse this rule, patent holders will have a lead time to get profits, future innovators can innovate still and the whole world will advance much much quicker...

And no, I have not thought through everything and I am sure there are some holes in this that a eagle-eyed slashdotter will notice...but it could be a good starting point.

Re:The answer is so EASY...

[Anonymous Coward]

And what if it takes twenty years to recoup R&D costs ?

Re:The answer is so EASY...

[sigmundur]

I guess that by reading the first comment about lobby system you understand why that will only happen after hell has frozen over and melted a couple of times...

Re:The answer is so EASY...

[Karem Lore]

Well, then the idea is not viable...

Re:The answer is so EASY...

[Karem Lore]

Sure, but when you wish upon a star...

Oh, and lobbying should be banned...The government is for the people, not the lobbying of interest groups and corporations...

Re:The answer is so EASY...

[Theaetetus]

The solution to the never ending patent rubbish that is coming out is:

1) All R&D needs to be logged (in terms of cost). 2) All patents are protected and valid until the net profit of selling any item has reached the level of costs, or 1 year if no progress on the the patent has been made to monetize anything. 3) After R&D costs are covered, the patent becomes public knowledge and usable in any capacity by anyone.

Let's see how this would work with a reasonable example:
1) Company starts working on developing new product on Jan. 1, 2000.
2) Company finishes development on Jan 1, 2002 (2 years R&D, and, say, $1 million in costs)
3) Company gets patent after reasonable time for examination/search/etc. on Jan 1, 2005.
4) Company markets product and makes $1 million in profits over 5 years, causing patent to expire on Jan 1, 2010.

The company has now broken even, for a 0% return on investment over 10 years.

I think you need to go back to the drawing board.

Re:The answer is so EASY...

[abarrieris5eV]

The primary issue I see with this is the huge record keeping and auditing overhead. The USPTO would end up making the IRS look efficient.

Re:The answer is so EASY...

[dkleinsc]

There's a massive loophole in your proposal:
1. If the pharma companies are responsible for tracking the R&D costs, then they will make darn sure that the R&D costs are as high as they can be without drawing suspicion from whatever agency is enforcing these rules.
2. Thanks to Hollywood accounting, the net profit of any good can be $0 (or $1 if you make a "no profit = no patent" rule) if the company producing the good wants it to be.
3. Ergo, the R&D costs can either never be covered, or won't be covered in anyone's natural lifetime.

Re:The answer is so EASY...

[that IT girl]

Lobbying should absolutely be banned, I can't believe people have stood for it this long.

Re:The answer is so EASY...

[Karem Lore]

Well, the assumption here is that the backlog of the patent system is not reduced due to the fact that patent trolls no longer have an interest. So I would say that step 3 would be reduced to 3-6 months.

So:

1) Company starts working on developing new product on Jan. 1, 2000.
2) Company finishes development on Jan 1, 2002 (2 years R&D, and, say, $1 million in costs)
3) Company gets patent after reasonable time for examination/search/etc. on June 1, 2002.
4) Company markets product and makes $1 million in profits over 5 years, causing patent to expire on June 1, 2007.

Company has broken even...It's now up to them to keep the momentum going to stay ahead of the game...keep them innovating or move out of the sector and let someone who can innovate in, not lock them out...

I am curious to know why you think that a company should be allowed to endlessly sit and block human innovation...I believe that the patent system has stiffled not only our innovation for fear of being sued, but also our evolution into new technologies. For example, if a company found a way of reducing to 0 the CO2 emissions from a car but sat there on a patent and charged $10,000 per car, no car would have it and the planet can go to hell...

Re:The answer is so EASY...

[Karem Lore]

It would be up to the company to keep the records of costs, not the USPTO...The USPTO could request those records and the company would need to supply them.

It's not like company don't record their R&D costs now anyway!

Re:The answer is so EASY...

[Karem Lore]

1. Why? R&D costs will hurt their shareholders...It is far better for them to keep them as low as possible...And they would need to be able to prove those costs. Secondly, if they did do this then the only thing they are evidently trying to do is prevent their medication from reaching those who really need it...this would be proof of that.

2. This is fine, you could add an "upper" time limit to the patent system. However, this has to come in the same vain as simpler and more transparent accounting practices, agreed.

3. Again, there needs to be changes in accounting and patent/R&D for my ideas to work, agreed.

Re:The answer is so EASY...

[Theaetetus]

Well, the assumption here is that the backlog of the patent system is not reduced due to the fact that patent trolls no longer have an interest. So I would say that step 3 would be reduced to 3-6 months.

Except that patent trolls don't do much with the USPTO. They've already got the patents - they're tying up the courts, not the Examiners.

So:

1) Company starts working on developing new product on Jan. 1, 2000. 2) Company finishes development on Jan 1, 2002 (2 years R&D, and, say, $1 million in costs) 3) Company gets patent after reasonable time for examination/search/etc. on June 1, 2002. 4) Company markets product and makes $1 million in profits over 5 years, causing patent to expire on June 1, 2007.

Company has broken even...It's now up to them to keep the momentum going to stay ahead of the game...keep them innovating or move out of the sector and let someone who can innovate in, not lock them out...

So instead of 10 years of 0% return on investment, you have 7 years of 0% return on investment, and then lose your patent. I don't see how that helps anything.

I am curious to know why you think that a company should be allowed to endlessly sit and block human innovation...

I'm curious to know why you think that I think that, since you sure didn't get it from my earlier post. All I said is that limiting the duration of the patent until the company breaks even means that you get 0% return on investment and either encourages "creative" bookkeeping such that the patent never expires, or discourages applying for patents at all.

I'm also curious as to know why you think that a company shouldn't be allowed to profit, for a limited time, from the fruits of their innovations?

I believe that the patent system has stiffled not only our innovation for fear of being sued, but also our evolution into new technologies. For example, if a company found a way of reducing to 0 the CO2 emissions from a car but sat there on a patent and charged $10,000 per car, no car would have it and the planet can go to hell...

Except that:
(a) the patent would expire in 20 years, and long before then, the patent application would be published, opening the field to further innovation, as the patent system was intended to do
and (b) no company would spend all of that money on R&D and then charge such a high fee for licensing that no one could buy their product. Consider - I patent a new type of engine for use in lawnmowers. I price it at $1 billion dollars. No one buys one. I go broke. Why would I spend all the money on research, and then the further money obtaining the patent, and then price the product at a point at which I wouldn't make a single sale? It'd be a complete loss of my investment.

Frankly, and no offense intended, your earlier proposal and the above statement seem to imply that you have no understanding of how businesses work. They're in it for the profit, not "to save the planet". If we don't provide them a way to profit, then they wouldn't do the research.

Re:The answer is so EASY...

[nine-times]

1) All R&D needs to be logged (in terms of cost).

... and they'll pad those costs more than lawyers pad their time. Or haven't you heard that the Star Wars movies still haven't made a profit?

(Even if the Star Wars story is fake or exaggerated, the movie and music business do these sorts of "creative accounting" all the time.)

Re:The answer is so EASY...

[Anonymous Coward]

Easily gamed by faking the numbers.

The staff alone are trivial to game. Sure they cost us $x per hour but if they weren't working on this project we could contract them out and they'd bring in $3x. That's our opportunity cost so we'll list that as our cost.

Re:The answer is so EASY...

[abarrieris5eV]

That is no different than the tax system now. The IRS doesn't do accounting for people, but in any system where fudging some numbers in a few books will result in longer patents making a lot more money you would need auditing and oversight, not to mention processing all of the filings about R&D costs, making sure they are somewhat reasonable, endless regulations as to what constitutes an R&D cost (travel? consultants? internet bandwidth that the company might have had anyway but was also being used for the project?). All of those regulations would need enforcing. It would just be a huge can of worms.

Re:The answer is so EASY...

[austin987]

Not all drugs are viable in the market. Under your proposal, those R&D costs are lost, and cannot be recovered by drugs that do well and are more profitable.

FDA

[omb]

Your comment, 22 years testing, sums it all up, That is TOO long; and the choice is not 22 years testing or no-testing it is a sensible balance, which indeed governments do seem very poor at providing.

In that context also, and the US health care debate, you should know about the UK history with NICE, which was supposed to foster evidence based medicin, and did for a few yeard before becoming a contentious roadblock to new treatments.

Regulation, of Finance or Medicine is hard, because it requires common-sense and balance not the application of laws and rigid beurocratic principles.

I'm going to get ran off for this

[gravis777]

I am all for the patent system. It CAN help drive innovation. I remember back in business ethincs class in college, I learned that the guy who invented the first photo copier said he never would have invested all the time and money into it if he did not know that he was going to have exclusive rights to make it for, what is it, 18 years?

That being said, there really needs to be better patent review. There is a difference between patenting something that you spent years of R&D on, versus being a patent troll. However, how it should be reformed, I am not the person to offer proper arguments either way.

Comment removed

[account_deleted]

Comment removed based on user account deletion

Did you even RTFA?

[Anonymous Coward]

"The Federal Trade Commission released a fact-finding report in June estimating that follow-on biologics [this means generics] would take eight to 10 years to develop and cost $100 million to $200 million. Due to high production costs and slow market acquisition, the FTC recommended zero years of market exclusivity for biologics, a far cry from the currently proposed 12 years."

So a legislative protection of "0" is equivalent to 8-10 years (plus $100-200 million) because of technological limitations. Furthermore (and this is REALLY IMPORTANT), setting the legislative protection period lower (rather than higher as proposed by Congress) than the technological protection period means that there is now a huge incentive for somebody to invest in inventing significant advances in the production/development of biologics which will, in turn, result in faster production of more medications.

Let me say that again in case you missed it -- legislating a 12 year (plus renew ad-infinitum) protection timeframe for the current biologics will delay the discovery of not-yet-invented drugs. It seems, to me, that that's clearly in diametric opposition to a goal of promoting advances in science.

Compulsory licensing

[foniksonik]

How about rather than giving 'inventors' of a drug an exclusivity period, the law gives them a compulsory license deal. Here's how it would play out:

A drug company discovers a compound or treatment process (or creates one - unlikely but not unheard of). They then register with some regulatory organization - possibly the USPTO, possibly some other more suitable entity.

At this point they receive a first rights license within that country and are guaranteed a significant percentage of any profit generated from that formula for a period of 10 years.

Any other company can produce and sell the formula but must go through the same trials as the original company but will have to pay the licensing fee to the registered company.

The benefits of this are manyfold.

Not all research groups are suited to carrying out drug trials and setting up manufacturing. These companies can register a discovery and simply allow other companies to take them to market which equals a fair competition for those companies who are suited and means that the research group has an incentive and cashflow to continue doing research. Additionally this means they can continue to focus on research and not be forced to a) sell their research at an undervalued rate to big pharma or b) not have to waste energy on duplicating the infrastructure of big pharma just to bring a drug to market.

Companies that both do research and marketing (this includes the trials and manufacturing) will receive compensation for their discovery but will have to compete on the marketing. They will have an initial advantage as they are initially more prepared for all aspects, but if the drug is highly useful then other companies will have incentive to license and bring the drug to market as well.

Companies that did not do the research can assess the drug's viability and profitability and decide whether it is something they can bring to market independently and still make a profit while paying the licensing fee to the registered company.

Consumers benefit the most because this provides competition in the market, allows more research groups to be profitable and opens the door to all kinds of discoveries that currently are passed over by large organizations which must decide which drugs to put their resources behind... it is likely that some drugs currently do not make it to market because they are in budget conflict with other more highly profitable drugs... with a system as outlined above these 2nd tier drugs could find a home with a smaller pharma marketing company and yet the registered company would still profit from the licensing revenue.

Should a New Technology Change the Patent System?

[John Hasler]

Of course not. However, this has nothing to do with new technology. It's quid pro quo for supporting healthcare "reform".

Emergence of "Kitchen Table Genetic Therapies"?

[LifesABeach]

With Genetic Therapies at our door step, does America really need to artificially maintain a Pharmaceutical Industry? Wouldn't our time be better spent having University Researchers take publicly known data and start applying it to a Genetic Therapy Solutions? Rather that having Federal Funds channeled to be used as a crutch for the mercantile facade of pharmaceutical distribution, why not channel that money to University Researchers for Genetic Therapies? The FDA is more than capable of administering Logistics of these types of solutions. Personally, I think the Pharmaceutical Industries finest minds should maybe find more fulfillment elsewhere in life than advertising to minors, Vaginal Pleasure Cremes on TV.

-1, Just Plain Dumb

[sean.peters]

One of the sillier posts I've seen on Slashdot in a while. Developing a new drug requires doing many, many trials to see which compounds might work, then doing many, many more trials to make sure they don't actually kill the patient or induce intolerable side effects. The end result is a proven process to create a drug that you can be reasonably sure is safe and effective. Copying this drug just means implementing the already proven process. How could this not be cheaper? If it wasn't, there'd be no generic drug industry.

Look, I'm no big fan of the patent system in the US, but making uninformed statements like this are doing nothing to help the situation.

New tech? No. More intelligent people.

[Tolkien]

Without having even glanced at the summary, I have your new technology right here:

if (patent.isBraindeadObvious()) {
  patentOffice.deny(patent);
}

This Is About Regulatory Exclusivity, Not Patents

[Grond]

Even a cursory reading of the linked articles would show that this has almost nothing to do with patent protection, which lasts for 20 years from the date of filing regardless of the subject matter. This is all about regulatory exclusivity from the FDA. An example of regulatory exclusivity is new drug product exclusivity, which generally lasts for 5 years for completely new drugs and 3 years for new formulations of existing drugs. Another kind is the 180 day generic exclusivity for the first generic to market, which encourages generics to be made by giving them a small window of high profitability.

The issue here is whether biologic drugs should be given a longer than usual regulatory exclusivity period given that (so the argument goes) they are a new, experimental technology that is harder to develop than traditional small molecule drugs.

You might ask "if a drug is patented, then why is a (shorter) period of exclusivity even necessary?" Here's an example: inventor discovers a new compound that might be a useful drug. A patent is filed in 2000. Then 10 years go by while the inventor struggles to find the optimal dose and delivery mechanism. Now in 2010 the inventor's startup starts looking for a partner to bring it through trials and into production. 5 years later, human trials start. 3 years later the drug is approved by the FDA for sale. Now it's 2018 and the patent only has two years left. If the manufacturer has to recoup all of its costs in just 2 years, the price will have to be extremely high, which will limit the drug's availability. So the regulatory exclusivity period gives drug makers a guaranteed 5 years in which to recoup their costs.

So that's the argument for having an exclusivity period. There are also arguments against it, of course, but the main point is that all of this is only tangentially related to patent protection and has nothing whatever to do with a special patent rule for biologics.

Fundamentally ignorant of the business

[FallLine]

There are several MAJOR flaws in your argument that, essentially, companies should only be able to retain exclusivity until they recoup the strict costs of their R&D on their successful projects.

First, the real costs of R&D extend will beyond just the one successful project, but generally also several failed ones. In order to break even on R&D in general, they need to recoup it on just a few of their successes. In the pharmaceutical industry, this ratio tends to be less than 1 success for every 10 drugs (and this is really only accounting for drugs that gain approval... not market success).

Second, the R&D costs of a product are generally just a small fraction of the costs to actually create a successful product. Companies need to spend considerable sums promoting a product before they can break even, not to mention legal, manufacturing capacity, various other overhead, etc. All of these monies are put at risk for an uncertain outcome and generally take several years to pay off after market entry.

Third, you absolutely MUST provide strong incentives to take risk. The higher the risk, the higher the reward needs to be. This is well established by many years of economic and financial research. Who would invest in a drug company that produces novel drugs when you can essentially make the same profit by investing in a generic manufacturer with far less risk and with a far shorter timeline? Why invest in drugs at all when there are safer businesses still?

Fourth, you need to account for the time-value of money. Even if your investment was essentially risk free, you would demand an appropriate rate of return because you could invest that money in other places. A savings account would be far more liquid and likely have less risk in practical terms (not to mention other preferable investments).

Fifth, accounting for costs is not this simple. What is the cost for me, an entrepreneur, to drop out of the job market for several years when I can earn 100K+/yr salary in a risk-free job? Founders would simply never take that risk if we could only MAYBE break even if everything pans out. What about the engineers and developers I hire that accept less salary in return from an equity interest in the business (i.e., potentially large rewards in exchange for a riskier job and less salary today)? You would essentially need to dramatically increase the compensation of all such employees in excess of what it is today.

Sixth, this would give a huge edge to larger and better funded companies that could swoop into a business with an expired patent and reduce the profit potential to near zero under your regime (presuming you accounted for a bunch of the above problems).

I could name several other critical issues, but suffice it to say that your idea is a total non-starter and demonstrates an ignorance for why the current system generally works far better than you imagine (like most people on slashdot).

Re:Fundamentally ignorant of the business

[TakeyMcTaker]

I thank you for enumerating all the ways that big pharma would fail without government protection. Any business that depends on so much government protection should simply be made part of the government, and thus subject to Democratic decision making instead of private profiteering. Short of that, they should be allowed to fail just like any similarly poor business model would on the free market.

None of the problems with the big pharma business model you enumerated show them to be anything worth saving or protecting. Quite the opposite, they should be allowed to fail as quickly as possible, so something better can take their place.

Re:Fundamentally ignorant of the business

[mbone]

You forgot the creative accounting that this would inspire. I have worked with Hollywood companies; I can guarantee you that this scheme would lead to perpetual patents, as somehow the R&D costs would never be paid off. Maybe not for every invention, but for a lot of them.

Re:Fundamentally ignorant of the business

[FallLine]

I thank you for enumerating all the ways that big pharma would fail without government protection. Any business that depends on so much government protection should simply be made part of the government, and thus subject to Democratic decision making instead of private profiteering. Short of that, they should be allowed to fail just like any similarly poor business model would on the free market.

Funny you should say that. The overwhelming majority of the R&D costs are imposed by government demanding very expensive and lengthy randomly controlled trials (RCTs) combined with the FDA's excessive conservatism to an extent that is generally not socially optimal. These increased costs and delay affect not just the cost of the approved drugs, but the labeling of them, i.e., the manner in which companies can market them, and the ability to sell some good medications at all (some good drugs are bared from the market due to the limitations of RCTs).

In other words, if you are arguing this from a libertarian perspective you should at least recognize the governments role on the other side of the equation. You should also extend this same argument to software and most other technology oriented business since they too depend on government granted monoplies.

If you are not arguing that government action is inherently bad, then you should at least present a coherent argument for why I am wrong.

If you accept my arguments, then you really need to explain why strong patent protection is problematic since those drugs would not be developed without it and the "problem" would be entirely academic.

Re:Fundamentally ignorant of the business

[TakeyMcTaker]

The overwhelming majority of the R&D costs are imposed by government demanding very expensive and lengthy randomly controlled trials (RCTs) combined with the FDA's excessive conservatism to an extent that is generally not socially optimal.

Assuming this is true, which has to be assumed to give any credence because you give no backing material or references here whatsoever, then I think such government regulation should be funded. In example I think "No Child Left Behind" was a dismal failure because it tested for poor school environments but did nothing to fund those requirements, or to catch schools up to standards. In the same way these RCTs you claim to be a problem (what's the alternative -- beta testing?) should be funded by government.

(some good drugs are bared from the market due to the limitations of RCTs).

[citation needed]

You should also extend this same argument to software and most other technology oriented business since they too depend on government granted monoplies.

Nobody should do any such thing. I actually don't think software is dependent at all on such monopoly grants. Software patents, which are essentially patents on Boolean Math, are inherently counter-productive, and arguably a limitation on free speech rights. I think currently proprietary software isn't even all that dependent on copyright. Proprietary software is dependent on Trade Secret, since they only release binaries and hide the source. Even when they release the source it tends to be under NDA style contract provisions. Open Source also has better business models than Copyright entails.

If you are not arguing that government action is inherently bad, then you should at least present a coherent argument for why I am wrong.

Why would I pose the idea of Democratic government taking over an industry if I thought it was inherently bad? You're making that claim, not me. And you have the burden of proof here -- the need for big pharma has never been proven, in that it has never been proven that similar or better treatments wouldn't arise without giant drug companies and monopolistic patents.

If you accept my arguments, then you really need to explain why strong patent protection is problematic since those drugs would not be developed without it and the "problem" would be entirely academic.

I do not accept your arguments, and the burden of proof is with those that say patents are needed, or that the same or better results cannot be achieved through less exclusionary means. That is what has not been proven.

Re:Fundamentally ignorant of the business

[FallLine]

Assuming this is true, which has to be assumed to give any credence because you give no backing material or references here whatsoever.

I have multiple and varied connections to the pharmaceutical, biotech, and medical devices industries (inside & outside, academic, research, financial, executive, etc), so I have a feel for the numbers. However, you can find confirmation of this in academic literature if you look. DiMasi asserts in a 2003 paper that the fully capitalized cost of clinical trials is 70% of R&D (and this number has certainly grown according to all trends), see: "The price of innovation: new estimates of drug development costs".

then I think such government regulation should be funded.

You are not presenting any concrete proposal nor any support for your vague notions, but it's a bad one in general. Government generally does a poor job at allocating capital (see: central planning) and has a serious problem with efficiency (see: motivating its employees, agency costs, interest group politics, etc). Furthermore, if you mean that industry would still retain a role, such an arrangement could create a massive agency situation whereby industry could submit multiple compounds for clinical studies and not have to pay the costs thereby making the system far more expensive for a society as a whole. There is also real expertise needed to design the trials and manage them which, again, government tends not to do well with pursuits like this.

In example I think "No Child Left Behind" was a dismal failure because it tested for poor school environments but did nothing to fund those requirements, or to catch schools up to standards.

I know it is deeply unpopular with the teachers unions, but this does not prove anything. Virtually every test score has risen or stayed the same. Do you have any objective facts to prove that on whole it was a net loss? Furthermore, with respect to the unfunded mandate stuff, that is a weak argument. It is not mandating an act--it's demanding baseline performance (and generally weakly at that). Given the dismal performance of US public school education vs most of the developed world and it's comparatively high cost, it's difficult to argue persuasively that waste could not be removed from the system by refocusing it on a more effective curriculum and reducing the vast amounts of administrative overhead. If anything it has failed to the extent that it allowed the states to control the tests and generally weaken the standards.

what's the alternative -- beta testing?

Fewer, smaller, and shorter clinical trials (that recognize that RCTs have huge limitations) combined with increased post-marketing (approval) surveillance. Namely, the cost per patient is so high and the availability of volunteers is so limited (this is a HUGE problem now) that it is impossible to conduct these trials with sufficiently large numbers of patients (sample size) to detect relatively rare and/or delayed on-set problems. With current phase III trials (average 3-4K patients) adverse drug reactions (ADRs) can only be detected that occur more frequently than 1:1,000. To have a 95% chance of detecting ADRs that occur in 1 or 2 in 10,000, you would need to enroll 600,000 patients. This is a number that is completely impractical yet would still expose half those patients to risk and the other half would just be getting placebos (a problem in and itself). Furthermore (besides raw statistics), these patients do not tend to be represent real world conditions very well (far higher compliance, generally healthier, fewer co-morbidities, increased observation, etc).

In other words, there is no substitute for actual real world use. In the meantime the FDA, which has some understanding of this problem, has every incentive to delay and restrict products from market and almost none to allow

3 years. Use it, or LOSE it.

[unity100]

thats as good as it goes. if something is so fucking valuable that it 'justifies' 13 years of 'patent duration', that means it can make heaps of money. that means, if you want to make money, you should USE it and make that money.

noone should be allowed to patent stuff, hoard them and just wait, working on other things or waiting for someone to use a similar thing and troll on them. this is knowledge. if you invented something, and are not using it, you shouldnt be able to bar mankind's progress when someone else invents it through their own means.

1 thing that is important with this?

[Anonymous Coward]

Is this research government funded or not?

Cause I personally get tired of watching us sink millions upon millions of taxpayer money into the R&D for a drug only to give a 3rd party exclusive rights to that drug and even giving them the patents.

I say that any drug or research generated via government funding is owned by the people and no company can leverage a patent on it. It is paid for by the taxpayer so it is owned by them and basically open for anyone drug manufacturer to use. It would really put a control on some things.