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Drug patents - Omnia mutantur, nihil interit.
February 21st, 2005
12:24 am
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Drug patents

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From:papertygre
Date:February 21st, 2005 07:09 am (UTC)
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Charging a less-developed country less money for the same product seems like a valid instance of price discrimination, one that I think doesn't necessarily undermine the integrity of the patents on the drugs. If the drug company sells N units of drugs (each costing X dollars to make) at price Y > X in first-world countries, and 0 units of drugs in third world countries because the third-world countries can't pay price Y, then drug company could still make more money and also win accolades for its humanitarian efforts by selling M additional units of drugs at price Z (Y > Z > X) to the third-world countries. The main practical problem would be, as you point out, reimportation.

However, I'm not convinced that drug research is special when it comes to patents, or that drug research wouldn't get done if there weren't any. Currently, private drug research is very expensive, but a more open source and less proprietary model might still allow profitable drug development, though in perhaps a more incremental way. There are also the various alternative funding models that have been proposed for other kinds of intellectual work, such as completion bonds, mass pledges held in escrow, etc.

Odd coincidence, there was recently a discussion on patents in libertarianism, where the poster took a stance quite similar to yours.
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From:kenoubi
Date:February 22nd, 2005 01:29 am (UTC)
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However, I'm not convinced that drug research is special when it comes to patents, or that drug research wouldn't get done if there weren't any. Currently, private drug research is very expensive, but a more open source and less proprietary model might still allow profitable drug development, though in perhaps a more incremental way.

I'm not 100% convinced that drug research is special either, but I've seen quite a few people claiming that it is, and I find it plausible because the most valuable drugs are not variants of existing drugs (which might have fewer or different side effects, but are generally pretty similar) but brand new drugs, and it's incredibly hard to predict how the development of a brand new drug will go. Basically, I meant to take “drug patents encourage the development of new drugs more than the lack thereof would” as an axiom relative to the arguments I was making here.

There are also the various alternative funding models that have been proposed for other kinds of intellectual work, such as completion bonds, mass pledges held in escrow, etc.

One thing to note is that those funding models can be implemented under a system with patents, although of course if the patents grant an unfair advantage to a different development arrangement (namely, the current proprietary model) then they won't work.

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