Slashdot Mirror
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?"
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.
My work here is dung.
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.
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.
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.
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 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)?
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.
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?
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.
This is my sig.
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.
It's NOT me! It's the meds! I'm on 1000mg of Fukitol.
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.
When all is said and done, nothing changes...
Yes, I'm sure the revolution will start any second now. Tweet when it kicks off, will you?
If you were blocking sigs, you wouldn't have to read this.
I wouldn't worry if I was them. Sick people can't move very fast and get tired easily.
It is by the juice of the coffee bean that thoughts acquire speed, the teeth acquire stains. The stains become a warning
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.
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).