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September 5th, 2009 by Ben Goldacre in africa, aids, bad science, big pharma, patents | 90 Comments »

Ben Goldacre, 5 September 2009, The Guardian

How do patents affect science? This week in India, US drug company Gilead lost their appeal to stop local companies making cheap copies of their Aids drug Tenofovir. They are not alone: in 2007 Novartis lost a lengthy case trying to force the Indian government into strengthening their weak patent laws. India remains the free pharmacy of the world.

Cheap drugs may not be the only benefit of India’s approach, but the drugs are certainly cheap. The cost of Tenofovir in developed countries is $5,700 per patient per year: the Indian generic version is available in the developing world for just $800. Because of this price difference, 75% of the 4m people in the world taking medication for Aids are using generic copies. Almost all of these are made in India, and in fact, about 40% of the world’s aids patients are taking drugs made by one company: Cipla, which is now the biggest manufacturer of antiretroviral drugs in the world.

Ignoring patent and licensing issues has allowed Dr Yusuf Hamied, director of Cipla, to innovate: even though each drug is officially owned by a different company, he could put a common combination of three treatments (Stavudine, Lamivudine and Nevirapine) into one simple, single combination pill. This increases treatment compliance – it’s easier to take your medication correctly – and that keeps you alive longer, while reducing the emergence of resistant strains.

Hamied calls his pill Triomune (he also offers “Antiflu”, a copy of Tamiflu for the developing world, and many more). In 2001 he was selling to MSF clinics for $350 per person per year, more than 30 times cheaper than the official versions of these drugs. Triomune is now only $87 a year. This is amazing. Hamied is a hero.

Richard Sykes, head of GlaxoSmithKline (and now now retired rector of Imperial College London) disagreed. He called Hamied a “pirate” and described the quality of Indian generic drugs as “iffy”. Hamied says GSK is a “global serial killer“ for charging high prices for their medication. So who is right?

Drug patents are a fascinating trade off between the benefit of incentive, and the harm to innovation. It takes about $800m and 10 years to bring a drug to market: during this time you make no money, and your drug could fail at any stage. As a sweetener, after this, you have 10 years of being the sole manufacturer to recoup your costs and make a profit.

There are other benefits for all of us. Instead of relying on obsessive secrecy to protect your idea (which is how Coca Cola protect their recipe) patents allow drug companies to safely disclose more information in public, which helps other people innovate. Protecting ideas also allows a smaller company negotiate outside investment and develop their theories.

But patents can also retard innovation. Even though your competitors may have greater expertise in the relevant fields, they will be hindered from doing research into derivatives of your drug, or other uses for it, or improvements to it. Thomas Edison managed to get a broad patent on his improvements to the light bulb, and this forced his competitors – who had made subsequent technical improvements of their own – out of business. It took a World War to cajole the Wright brothers into finally agreeing licenses for everyone else over their patent on the airplane.

And the other downside, of course, is the monopoly. With patents you are the sole provider of a drug, you get to set the price in each country, and if your drug is lifesaving then everyone has to pay it, or die. In lots of places, they just die. There are 33 million people living with Aids in the world today. 2 million die every year, and at the moment, despite heroic improvements over the last 5 years, 70% of those who need treatment do not get it.

Patents weren’t devised out of a sense of natural justice. They are there to incentivise innovation, to “add the fuel of interest to the fire of genius”, as Abraham Lincoln said. So how much fuel can you get from the developing world? According to MSF, Africa, for example, accounts for a non-massive 1% of the world’s medicine market.

If the global $550bn pharmaceutical industry are trying to make an economic case for patents in the developing world, then they must argue that the benefit to drug development from the financial incentives in these tiny corners of the world market is so significant – so vital, the final link in the incentive chain – that it is more important than millions of unnecessary deaths. I am not a health economist, but I doubt that is a fair swap, and this is not what patent laws were invented for.


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90 Responses



  1. Dr Jim said,

    September 5, 2009 at 12:36 am

    I don’t know where Sykes gets of calling Hamied a ‘pirate'; it was my understanding that patent law allowed for other companies to perfect their own generic production of any given drug (as per patent specifications) within the patent period, such that when the original patent runs out these companies are ready to roll with their generics, often at a cheaper cost.

    Assuming this is adhered to, I hardly see how anyone can have anything to say about it? The whole point of patents is a limited monopoly in return for disclosure.

  2. underblog said,

    September 5, 2009 at 12:55 am

    I have always been pretty convinced that big pharma aggressively defending drug patents in poor countries is pretty evil.

    But what is the the motivation? In most of these places people either get cheap drugs or no drugs. I can’t believe even the most heartless corporation thinks that this is really worth the PR hit?

    So what’s missing? That cheap drugs will leak into other markets? That some rapidly developing countries are potentially huge future markets, as long as they don’t get too attached to generics?

  3. jodyaberdein said,

    September 5, 2009 at 4:59 am

    Don’t usually stoop so low, but typo on line 1: It’s Gilead not Gildea.

    I still have a vivid memory of the only time I have ever stood up and made an angry comment in a lecture: this was at med school when a representative of GSK was debating the issue of patents, around the time they were trying to sue the South Africans. The thing is he was debating against an extremely famous professor of pathology, who had taken the personal risk of doing essentially the first series of post mortem studies on HIV/AIDS, and at one point he cited ACE inhibitors (initial work done in Sao Paulo university) as being drugs we wouldn’t have without patent. Shaking I asked whether he thought the only reason we were in the room is because there was no pecunary alternative more favourable, and whether he considered there to be any possible motivation to drug discovery beyond protecting your profit. To which I got a smirk from the Prof, and a very begrudging I suppose there might be from GSK.

  4. Chris Nedin said,

    September 5, 2009 at 5:22 am

    A couple of corrections.

    Hamied is not innovating, he is simply copying similar ‘multipill’ delivery systems used in other treatments. He can do this for Triomune because he ignores the patents covering the three components. Copying something is not innovating.

    Also you say, “they will be hindered from doing research into derivatives of your drug, or other uses for it, or improvements to it.” This is incorrect. Many countries, including the UK and the US have exceptions in their patent law that explicitly allows research on patented products. In the US this includes everything up to and including manufacturing the product. What you are not allowed to do is stockpile manufacture product, or sell it.

    To avoid others researching the product, Pharma companies will create a ‘patent thicket’ in which they hide the true object of the claim in amongst a ‘thicket’ of other claims in the patent.

    Dr. Jim (@1), you are correct countries can work on generic drugs to be ready once the patent expires, but Hamied is selling generic drugs while the patent is still active.

  5. stevecook said,

    September 5, 2009 at 8:37 am

    Roy Anderson is now the Rector of Imperial College: Richard Sykes’s term ended in July 2008.

  6. Filias Cupio said,

    September 5, 2009 at 8:38 am

    I think our current drug development system is fundamentally broken, but I don’t know quite what to replace it with.

    @Chris: I think you’re missing the point. Say you produce and patent a new drug Wonderofin, which cures all cancers but also causes deafness in 50% of users. I think I can produce a variant which will cause deafness only 20% of the time, and it will cost $100M to develop and test. But if I spend that money, I end up with a product which I can’t sell, because of your patent – so I don’t bother, and cancer patients continue needlessly going deaf.

    On whether Hamied is ‘innovating’, I think this comes down to definitions. He it producing a better product not available elsewhere, so in this sense he is. What he is doing is obvious (and had not been done before for legal reasons rather than because people hadn’t thought of it) so in that sense he isn’t.

    Problems with the current system:
    Patented drugs have enormous markups, often denying people life-saving treatment.
    New uses of old out-of-patent drugs are not developed, because there is no way to recoup the costs.
    Drug companies spend much of their research effort on ‘me too’ drugs, which duplicate the action of some other company’s drugs while avoiding their patents. This doesn’t advance human wellfare.
    Diseases and conditions which are largely confined to poor countries (e.g. malaria) get little attention as there is little money to be made from selling them. Minor problems which affect rich people do get drugs, however.
    Drug companies are encouraged to invent medical conditions to fit their drugs, rather than the other way around.
    Innovations which improve existing drugs but are similar enough to fall under the patent are problematic to develop for any company except the patent holder (who may feel no incentive to do so.)

    I suspect that a good system could be created based on bounties: we’ll pay $X million for a drug which treats Y. The biggest problem is where does the huge pot of money come from to pay the bounties? It could be from governments, drug manufacturers (as opposed to developers), drug users… There are also problems on how the money should be divided: Company A and B produce a drug to treat Y at about the same time. Company A produces a drug first, but a little latter B produces a better drug. Company A figures out how to treat Y with a drug invented by company B for a different purpose, etc. etc.

    (Music could benefit from a similar system – you can download anything you want, the powers-that-be monitor what is popular and pay musicians out of a big pot of money in proportion to their popularity. Again, the big issue is where does the big pot of money come from, and how do we decide what a fair size for the pot is?)

  7. ghiro_in_rome said,

    September 5, 2009 at 8:43 am

    “In 2001 he was selling to MSF clinics for $350 per person per year, more than 30 times cheaper than the official versions of these drugs.”

    What does ’30 times cheaper’ mean?

    I hope you didn’t write that, Ben.

  8. phayes said,

    September 5, 2009 at 9:38 am

    “So who is right?”

    Pharma /is/ one of the few industries in which patents really are important to progress and innovation but that is no excuse for depriving people of the drugs they need.

    www.researchoninnovation.org/WordPress/?p=29
    www.researchoninnovation.org/WordPress/?p=7#more-7

    It’s an absolute disgrace that this is still an issue.

  9. scarynige said,

    September 5, 2009 at 9:44 am

    What’s the incentive in increasing prices by 30x in a 1% market? By a rough calculation, the total market goes from 100% of today to about 130% of today, with that 1% forming 30%. So that part of the market goes from 1% to 30/130=23%. Pretty clear incentive to me!

    Not to suggest that I think the balance is right between innovation incentivisation and equitable distribution of healthcare – I think it’s extremely tricky, but it is important as a starting point to see both sides of the argument clearly.

  10. misterjohn said,

    September 5, 2009 at 10:16 am

    I can’t allow scarynige’s figures to go unchallenged, as they are complete nonsense. Increasing prices does not increase the market size as he suggests.
    To simplify, inagine selling 99 items at £30 each, and 1 at £1, so 1% of the market. Total cost is £2971.
    Then increase the £1 to £30, so it’s gone up 30x. The market size is still the same, but now you have 100 items at £30, total £3000.
    So you’ve made an extra £29, which represents an increase of just under 1% on the original amount.
    It probably means that your profit has increased by £29, but that is unlikely to increase it by very much as a percentage, unless your margins are extremely tight.
    If you were selling half the items at the low price, then it would give a huge increase in profit, provided that your customers could afford the new price.
    I think the main issue here is that they can’t.

  11. adzcliff said,

    September 5, 2009 at 10:27 am

    I think the AIDS treatment injustices provide a powerful case in point for discussing the ethics of big pharma. But let’s not forget issues closer to home, such as western psychiatry, which provide another potentially corrupt corner of the industry. Here’s a whole enterprise built on biochemical explanations for emotional distress, for which treatment involves (often) life long, lucrative, daily drug-taking. Here too patents allow companies to charge high prices for newer drugs – albeit not necessarily more effective in how they target ‘symptoms’ – which may have less-worse side-effect profiles. Here it is not uncommon for companies to sit on their patent until its latter stages, before they role out a ‘new improved’ (patented) version of their drug. (Although, when studied in detail, the ‘new improvements’ could be considered a reuse – see Citalopram.) Then there are those drugs with multiple markets such as the anti-epileptics that have been shown to have some efficacy in people who experience mania (as part of a mood disorder). There are those who suggest that one market leader has tweaked slightly its own (cheap, unpatented) anti-epileptic, and re-boxed it as an expensive, patented, ‘new’ mood-stabiliser. We don’t need to look to the third world to find finite financial pots for healthcare, which begs the question as to who’s missing out whilst people are receiving needlessly expensive (and spurious?) treatments for emotional distress. Where there’s profit to be made for pathologising any non-calm state (e.g. shyness to ‘social phobia’), we should always ask whether this practice is based on scientific discovery, or good marketering.

    Any good?

  12. Methuselah said,

    September 5, 2009 at 1:00 pm

    As has been pointed out there are quite a lot of errors in this piece, Ben, which is quite unlike you. I hate to say it, but it looks like you’ve taken a position and back solved rather than employing your usual evidence-based approach.

    BTW, aggressively defending patents in developing countries seems (and probably is) egregious, but there are several exogenous factors such as the US ban on two tier pricing in different territories (if that’s still the case – it used to be) which make such an approach unavoidable if the company is to preserve its business in its core markets.

  13. Josie said,

    September 5, 2009 at 1:18 pm

    It isn’t a difficult issue, it is a simple one. Drug development for serious illnesses should be paid for out of public funds. The companies can carry on making anti-wrinkle creams or other trivial stuff, and that stuff can be patented, or they can make serious drugs without any patent.

    On many issues I like to be all reasonable and see both sides; this is not one of them. No one has any has no business patenting life saving drugs, or else we are not a civilised species. End of story.

  14. Deen said,

    September 5, 2009 at 1:18 pm

    @scarynige: on top of misterjohn’s criticism, you also forget that increasing the price 30-fold doesn’t mean that revenue will go up 30-fold as well. That assumes that the number of sales would stay the same, despite the huge price increase. However, the idea that a 30-fold increase will not decrease the number of purchases that people or organizations like MSF can afford, is absolutely ludicrous.

    In the case of life-saving medicine, unfortunately, a 30-fold price increase would mean more people will die.

  15. Deen said,

    September 5, 2009 at 1:41 pm

    In all fairness, some pharmaceutical companies have offered some of their medicine in the 3rd world at highly reduced prices. One of the unfortunate side effects was that some of that medicine didn’t reach the people in the 3rd world, but was illegally imported back into Europe.

  16. Ben Goldacre said,

    September 5, 2009 at 2:28 pm

    @chrisnedin, i said people will be hindered from researching new ideas around someone else’s drug, not prevented outright. this is absolutely correct.

    however: sykes, i am a massive dumbass, he retired 2 yrs ago, and gildea typo, both corrected, thanks for pointing out.

  17. jdvincent said,

    September 5, 2009 at 4:47 pm

    My understanding is that there are exceptions for developing (and developed, for that matter) countries to issue what are called “compulsory licenses” in the face of a public health emergency to manufacture generic versions of currently on patent drugs. (TRIPS, WTO). The problem a lot of these countries run into is that their infrastructure is so weak they can’t personally manufacture the drugs (what TRIPS allows for). This is where India comes in. Last I checked, India only recognizes process patents not product patents, so as long as they can come to the same end result by a different method, that’s fine under Indian law. (I believe they will have to recognize product patents by 2012 by WTO rules…so we’ll see what that does to this whole discussion). Anyway, India therefore provides the generics to countries who can’t manufacture the drugs on their own. The problem is not with India, but with the language of TRIPS which doesn’t allow a country to import generics in the face of a public health emergency.

  18. Sili said,

    September 5, 2009 at 4:56 pm

    I have to say that there is something completely nuts about patents being limited to, what?, twenty years, while copyrights are easily extended for more than ninety. Doesn’t Disney hold rights to what is essentially public domain fairytales by now (H.C. Andersen for instance)?

    A big problem with current patents is that the clock starts ticking when the patent is registered, not when the drug is brought to market. And the necessary trials will take years to get done to ensure safety and efficacy. I think it makes sense to start giving exclusive rights to drugs from the point when the testing is done and they’re brought to market.

    Next is the issue of how to outlaw parallel import – it’s all fine and dandy if Big Pharma ™ sells they’re stuff at production value in the developing world, but if the cheap stuff is reïmported to the developed world, they’re up shit creek. Also what defines developing? Isn’t India one of the worlds fastest growing economies? Hamied may sell his drugs quite cheap – he didn’t have the development costs after all – but does he not pull a profit? If he does make a mint off this, then it is piracy. Finally there’s the problem of McLawsuits – it may seem excessive to sue South Africa for patent infringement, but how does the businesses ensure, that if they don’t than that won’t be used against them, when profiteers inevitably copy their work here, too?

    It should be obvious that I have a lot of respect for pharma, but for what it’s worth I can assure you that the marketing depts and the MBAs make me wanna scream.

  19. Owenthirdestate said,

    September 5, 2009 at 5:20 pm

    Ben, have you ever read anything about Thomas Pogge’s Health Impact Fund? The basic idea is an intergovernmental fund to pay pharmaceutical companies a lump sum to sell their drugs at cost, which might resolve some of the difficulties you talk about here. There’s a bit about it on Pogge’s wikipedia page (en.wikipedia.org/wiki/Thomas_Pogge), and a lot more detail here: www.yale.edu/macmillan/igh/hif.html

  20. fontwell said,

    September 5, 2009 at 6:54 pm

    I’m not very good at ethics, politics and that, but it strikes me that what we have here is a situation where most people want drug research to be carried out as a public service but it is in fact being done by businesses. A bit like banking.

    We can’t really expect the business management of a drugs company to be interested in anything but recouping money and protecting profits. That’s what businesses do.

    If we want a world where drugs can be sold at cost price plus a normal markup then the research must be paid for by public money. This sounds like the sort of thing that governments are meant to sort out.

  21. scarynige said,

    September 5, 2009 at 7:10 pm

    @misterjohn, I’ll stick to my guns until a qualified economist comes on board (which I’m not). 99x£30 + £1 = £2971 so that £1 is 1/2971 of the market, i.e. 0.03% of the market. If you calculate the total market as the sum of the price of all the units sold. In your example you’d have to sell 30 units at £1 each to make 1% of the market.

    @Deen, I certainly agree that a price increase would decrease the number of purchases – I hope I didn’t suggest otherwise.

  22. jcmacc said,

    September 5, 2009 at 7:29 pm

    “If the global $550bn pharmaceutical industry are trying to make an economic case for patents in the developing world, then they must argue that the benefit to drug development from the financial incentives in these tiny corners of the world market is so significant – so vital, the final link in the incentive chain – that it is more important than millions of unnecessary deaths. I am not a health economist, but I doubt that is a fair swap, and this is not what patent laws were invented for.”

    Ben, sorry but this misses the real world point: drug patents in the Third World are a means of an end to make sure a Pharma can make money in the West by preventing a situation where “parallel importing” would arise.

    If an anti-AIDS drug were virtually free in Africa what would happen would be that it would mainly be re-sold out of Africa back to the West at vast profit to a few people based in the African country, not the original Pharma company trying to initially regain R&D costs and then make a profit. It’s dubious how much drug would remain in Africa to treat anyone there, witness how much African aid money is back in Europe individual bank accounts.

    It’s called “parallel importing” and it’s a well described process in many industries, especially the car buisness. Think how much easier it is to move a pack of pills about than a car and you can see what the problem would be.

    Allowing drug patents to be meaningless in any place in the world would make the patents covering the rest of the world prohibitively expensive to enforce becuase of parallel importing but also because of patent law itself. In patent law, not taking action to enforce your patents in many ways can be used as a supportive reason for other people being able to ignore them : lack of action on your own patents effectively de-validates them. Not patenting a drug in a market like Africa then providing drug to that location would make a patent in the USA difficult to get as the patent agent would argue that if you don’t consider yourself to have genuinely invented something in an African context, there’s little reason to believe you have an invention to protect it in any other market.

    None of the above argues for the current status quo but what it does illustrate, hopefully, is why flooding African with cheap drugs will not be the panacea that this superficial argument on patents makes out. It’s complex.

  23. jodyaberdein said,

    September 5, 2009 at 7:45 pm

    jdvincent:

    Of course one can have a degree of flexibility in how one interprets the TRIPS wording e.g. if you are being paranoid about anthrax and want some cheap ciprofloxacin to hand.

    tinyurl.com/nzz8w4

  24. scarynige said,

    September 5, 2009 at 7:57 pm

    Sorry, don’t mean to be a cock, especially if @misterjohn you are actually an economist! This isn’t really a maths question, it’s a definition one. From my quick research the market share is usually defined as the proportion of the total revenue (which backs my argument) but can also be defined as the proportion of sales volume (which backs yours). I don’t know which definition the 1% claim used – there’s no reference in the doc that Ben linked to.

    refs:
    www.accountingglossary.net/definition/293-Market_Share
    encyclopedia.thefreedictionary.com/market+shares

  25. misterjohn said,

    September 5, 2009 at 8:00 pm

    I really don’t understand what scareynige means by “market”, and I suspect nor does he. Is it the total spent on the items, or the number of items?
    If it is what he says, that is price times number, then I’ll happily sell 30 items at £1 each to make £3000 total. If we then raise the price to £30, and still sell the same total quantity, we gain an extra £870. The total market is then £3870. A 29% increase.
    But as Deen comments, in the real world it is unlikely that a 30 fold price increase would have no effect on sales. Would you travel by car as much if the price of petrol went up to £30 a litre instaed of £1? Or by bus if bus fares went up from £1 a journey to £30?
    If you’re very rich the answer might be “Yes” to the first and “No, more, because the plebs couldn’t afford it,” to the second.
    But then I’m just a statistician, not an economist.

  26. scarynige said,

    September 5, 2009 at 8:03 pm

    And just to complete the picture, yes, I do agree that if the developing world price suddenly went up by 30x the volume of sales would go down and that this would affect the total market.

    I was only considering the incentive to pharmaceutical companies or other innovators, who I suspect would assume they would sell at least 1/30th as many units and possibly hope that other sources of funding would appear, e.g. richer countries subsidising the developing world’s drug budgets further (naive I’m sure).

  27. scarynige said,

    September 5, 2009 at 8:05 pm

    @misterjohn I think we can call a truce then as we’re agreeing as far as we can given the facts available.

  28. scarynige said,

    September 5, 2009 at 8:36 pm

    [Slaps forehead] of course the other completely obvious point here that I missed is that the incentive to protect the status quo is that if the global price dropped by 30% that would massively reduce the income for pharma regardless of how you calculate market share.

  29. randytoad said,

    September 5, 2009 at 8:41 pm

    “It takes about $800m and 10 years to bring a drug to market: during this time you make no money, and your drug could fail at any stage. As a sweetener, after this, you have 10 years of being the sole manufacturer to recoup your costs and make a profit.”

    Just thought I’d point out that the $800M figure for the cost of developing a drug for market has been hotly contested. Marcia Angell in her book The Truth About the Drug Companies, makes a pretty good case for actual cost being a fraction of this.

  30. omnis said,

    September 5, 2009 at 10:13 pm

    One more correction – Richard Sykes was head of Glaxo Welcome, but left the company in 2002 when it merged with Smithkline Beecham.His comments now have nothing to do with that company.

    I have an issue with the implication that because the market share is only 1% therefore it should be trivial to dismiss any loss of profits and give stuff to them for nothing. Surely it’s only 1% because that’s all they can afford? It’s as low as 1% because they get the stuff so much cheaper than anywhere else in the world. Despite regular criticism of how much big pharmas charge compared to generics, it’s still a fact that the developing world only pays a tiny fraction of the amount that the US does for the same drugs. Europe just about breaks even, but basically the US health insurance companies are subsidising the healthcare of everyone else in the world.

    It’s very easy to get emotive on the subject when you’re discussing existing drugs that could save lives right now if they were available more widely. But the fact remains that without those patent laws they would never have been developed in the first place and no lives would have been saved at all.

    I agree with Josie that until pharmaceutical supply is managed by a public non-profit entity, the evils of capitalism will always make this situation exist. But whose public funds should then pay for it globally? The US? The EU? Why not India or China as they have big chunks of the population that would benefit. Because they still wouldn’t be able to afford it. “End of Story”? Pure science fiction, unfortunately.

  31. SimonW said,

    September 5, 2009 at 11:58 pm

    The trade secret idea probably isn’t relevant to finished product.

    The Coca Cola secret recipe is largely a marketing ploy anyway. The ingredients are listed on every can, and at least two genuine Coca Cola recipes are listed on the relevant Wikipedia page. Worse still as the Pepsi Challenge showed, we know people don’t buy it because of the taste because there are other better tasting Colas available.

    Similarly with medicines, they aren’t going to be licensed without the company revealing the active drug. Like Coca Cola we can require the label to list the drug. It maybe that they reveal this drug earlier with patent protection.

    This does leave the issue of process patents, i.e. steps in production that could remain secret, Indian law seems superior in this regard to me.

  32. edw said,

    September 6, 2009 at 7:27 am

    Comparing Coca Cola with life saving medication is, in my opinion, a sick one. Understood, putting new medication on the market is a huge investment, and in order to survive as company you have to be able to earn it back, one way or the other. To keep the price of the medication artificially high, though, it seems immoral towards the patients who can’t afford to buy the medication. The way out would be that some instance, preferably an international one (WHO?), would reward a company sufficiently for their invention and development of the medication so that the price can be kept low.

  33. PM said,

    September 6, 2009 at 7:37 am

    Dr Jim said,

    “…it was my understanding that patent law allowed for other companies to perfect their own generic production of any given drug (as per patent specifications) within the patent period, such that when the original patent runs out these companies are ready to roll with their generics…”

    One of the issues here is that American/Multinational companies have been putting intense pressure on India to change their patent laws in such a way that a drug patent would protect not just the particular chemical created by a company but also ANY method of manufacturing it!

    PM

  34. smurf said,

    September 6, 2009 at 7:45 am

    Everyone interested in patent law should have a look the IPKat Blog:
    ipkitten.blogspot.com/

    My view on the topic is very much in agreement with Lord Justice Jacob, more details here:
    ipkitten.blogspot.com/2008/12/that-pied-piper-speech-full-text-now.html

    Ben,

    I struggle to get your point. Do you want to say that profit is immoral as long as there are poor people elsewhere on this planet? I actually agree, but try to make a policy out of it, and win an election. Good luck to you.

    Or do you want to imply that pharmaceutical companies are responsible for the political and economic mess in Africa? I am more convinced by Paul Collier’s analysis of the problem.

    I do believe that pharmaceutical companies have a some moral obligation to make their drugs accessible to patients in non-developed countries, as long as they can make money in the developed world.

    But blaming the companies for the poverty in Africa – this is how I interpret your article – is perhaps a bit over the top: I would start with African politicians, then work my way through a very long list of wrongdoers.

  35. jodyaberdein said,

    September 6, 2009 at 9:59 am

    Omnis said:

    ‘But the fact remains that without those patent laws they would never have been developed in the first place and no lives would have been saved at all’

    An argument which has always intrigued me, as it is so often wheeled out as a given, an a priori truth, that nobody would possibly get off their arse as a scientist, no government could stump up said $800 million, and no doctors would ever put in their own time free on matters of research.

    After all, as Jane S Smith points out Salk couldn’t patent his vaccine, so did a bit of political spin and said he wouldn’t, but none the less a world almost free of polio is what we have. Penicillin manufacture was managed by the government essentially banging the heads of companies together and rigging the ‘market’, the patent for insulin was sold by Banting to University of Toronto for $1.

    Possibly drug development would be a hell of a lot cheaper if we didn’t spend money on making ‘yet another drug that did the same thing’, or indeed on people who come round and bug me to use their ‘yet another drug that does the same thing’ by giving me a nice free pen (and I assume free holiday if I actually had any clout).

  36. bigspinflip said,

    September 6, 2009 at 12:27 pm

    A patent lasts 20 years not 10.

  37. phayes said,

    September 6, 2009 at 12:30 pm

    @smurf

    “Everyone interested in patent law should…”

    One should never develop an interest in patent law without first (and foremost) developing an interest in patent economics. :)

    Nice link to Jacob’s speech though – he certainly is worth listening to.

  38. jcmacc said,

    September 6, 2009 at 12:34 pm

    bigspinflip said:
    “A patent lasts 20 years not 10.”

    True but the patent has to be taken out when you originally identify a molecule at a point before clinical trials start i.e. there’s still 10 years of testing after that point before you can market it

    Thus Ben is broadly correct, on most drugs at the time they are launched and sales start to come in, there’s roughly 10 years of patent life remaining.

  39. phayes said,

    September 6, 2009 at 1:43 pm

    @jcmacc

    “lack of action on your own patents effectively de-validates them.”

    Where do you get that idea from?

    “Not patenting a drug in a market like Africa then providing drug to that location would make a patent in the USA difficult to get”

    No, it would make it impossible to get!

    Also, parallel importing may be a problem for (pharma) companies but it’s no different in principle than any other infringement activity and does not and should not be used to justify a uniform approach to patents and patent law – esp. not wrt. the developing world (q.v. the links I gave earlier).

  40. Stoove said,

    September 6, 2009 at 3:41 pm

    @scaryninge and @misterjohn ,
    The market is generally measured in revenue ($). Therefore, @scaryninge is broadly correct. Monopolies (as in this case) tend to maximise profits by maximising prices. There is a specific model for this which is in common use, but it’s of little use here because we have no data to back it up.
    However, in general terms the market for medicines is very incontestable, ie: patent laws make it extremely hard for other companies to make any profit in an already filled niche.
    What the Indian government has done is make the market more contestable in the short and medium term by relaxing patent laws. The thing about short and medium term contestability is that it is not necessarily at the expense of the dominant companies in the world market.
    Imagine a coffee shop opening in a village without a Starbucks, Costa, NERO etc. Even if these companies had some loss of business from the village, they could easily make it up by raising the price of a cup in other areas by a couple of pence. It’s similar here.
    If the 1% of the market that is in poor countries suddenly stops buying the product in favour of a cheaper alternative, then the companies can compensate by raising their prices in the developed world accordingly. The developed world can afford it: it’s denamnd curve for this kind of drug is pretty much a vertical line.
    The one potential problem is the cheaper products being exported from that 1% into the developed world. Only then would it be unsustainable for the likes of GSK.

    However, I have no evidence to support this so it could well be absolute drivel.

  41. Stoove said,

    September 6, 2009 at 3:46 pm

    I should say: I just finished studying Economics at A-level, and this is the kind of thing that’s covered in my syllabus. That kind of thing would probably get me 10 marks (10% of the paper, 100% of a suitable question) in an exam. Make of that what you will :)

  42. phayes said,

    September 6, 2009 at 4:01 pm

    @Stoove

    “The one potential problem is the cheaper products being exported from that 1% into the developed world.”

    A U.S. patent (for example) grants “the right to exclude others from making, using, offering for sale or selling the invention throughout the United States or *importing* the invention into the United States”.

    www.uspto.gov/web/offices/pac/doc/general/nature.htm

  43. turnip said,

    September 6, 2009 at 4:40 pm

    @smurf

    Thanks for the link to Jacob’s article, which is a good read. But his comments only relate to the European situation, in the context of a report on competition in the pharmaceutical sector by the European Commission. He highlights in this context the problem of not having a central patent court in Europe, which makes it more difficult to challenge dubious patents (or enforce solid ones) due to cost. This seems fair but, like the other issues he raises, is mainly a European issue, not a global one.

    The points he makes on the costs of R&D and the role patents play in enabling pharma to invest in new drugs are important in the wider context. But, accepting that, I still agree that lower prices (or no patent protection) in the poorest countries should be tolerable to pharma, given that they can recoup their investment in richer countries.

    As others have said, this will depend upon pharma’s ability to stop cheaper products being exported into the developed world. But here I agree with phayes’s point – parallel importation is patent infringement and, while patent enforcement could be made easier, pharma companies are already adept at using every means available to them to stop infringement taking place.

  44. jcmacc said,

    September 6, 2009 at 7:06 pm

    Phayes #39:

    ““lack of action on your own patents effectively de-validates them.”
    Where do you get that idea from?

    Bitter experience with US patent officers. I’m a patent holder and have had this argument used against potential patents alongside other arguments.

    “Also, parallel importing may be a problem for (pharma) companies but it’s no different in principle than any other infringement activity and does not and should not be used to justify a uniform approach to patents and patent law – esp. not wrt. the developing world (q.v. the links I gave earlier).”

    “Should not” and “in principal” are the key phrases. The real world problem is Pharma and Health agencies increasingly can’t even avoid totally illegal fake drugs entering the Euro-drug supply chain at the moment, more grey market problems like parallel imports would be virtually impossible to control.

  45. Nile said,

    September 6, 2009 at 7:13 pm

    The pharmaceutical industry manufactures at least one category of product with a ‘built-in-obsolescence’ that renders patent expiry irrelevant: antibiotics, which have a useful lifetime defined by the emergence of bacterial resistance.

    Perhaps we should ask an economist to analyse the incentives and the profit-maximisation strategies available; should the ‘majors’ refrain from making agricultural derivatives (‘growth promoters’ that are fed to healthy cattle), knowing full well that this accelerates the ‘expiry’ of their drug as resistance becomes widespread? Or tolerate (or secretly encourage) indiscriminate prescribing in countries with poor  course-of-treatment compliance?

    The loss in these strategies is exactly the same as in a patent expiry; the economic niche vanishes – the difference being that an expiry is predictable, and the economic shift is driven by the unwelcome arrival of low-cost producers who didn’t pay for the R&D; bacterial resistance is, by contrast, less-predictable and its economic impact is a gradual reduction in demand for the now-useless antibiotic.

    The gain in these strategies is that there’s a constantly-renewed demand for new products, and the core competence of the majors (and the justification for the excess profit conferred by patents) is innovation, research and development. Or so we are told, by the majors, as they denigrate the generic manufacturers in general and Indians in particular.

    But the strategy – whatever strategy there may be – appears to have been unused or incompetently-implemented for the last forty years. Almost all the antibiotics in use today were brought to market in the nineteen-sixties, and almost all have been overtaken by bacterial resistance. There has been a glaring unmet need – a hugely-profitable market ignored – for a  safer ‘antibiotic of last resort’ since Vancomycin resistance spread out from the factory farms of Europe and America a decade ago.

    So why was nothing done? Could it be that Big Pharma is characterised by institutional stupidity and laziness as well as a pervasive greed that has perverted the incentives to innovation?

    If so, the pharmaceutical industry makes a challenging subject for a studied argument about the value of the patent system in fostering or smothering innovation.

    It could also be the case that innovation is fundamentally unprofitable for some other reason, unrelated to expiry, biological or legislative. Or at least, unrelated to patent law: the cost of legally-mandated testing places drug-development beyond the reach of all but a few billion-dollar corporations and even they are constantly tripped-up by failures in the process – both in blocking useful treatments on flawed calculations of risk, and in a lack of rigour that leaves constantly leaves manufacturers exposed to crippling lawsuits. 

    That’s two potential causes of this glaring failure, unrelated to the economics of patent law: I am sure that others can be suggested. 

    A further point to note is that the past five years have seen three new classes antibiotics come to market: one’s a derivative of a recently-discovered fungal weapon against bacteria; one’s a derivative of the obsolete Tetracyline class that’s gained a new lease of life because a medium-sized pharma company has used recent discoveries about membrane pumps and the mechanisms of resistance… And one’s arisen from a follow-up of old reports that out-of-patent MonoAmine Oxidases have an antibiotic effect.

    All three innovations could be heralded as victories for patent-based monopolies, or used to illustrate the evils of the system.

    A final point, and an unpleasant warning: take care when using economic arguments and analyses when moral issues are at stake. Dead paupers do not matter in an economic sense because they do not constitute a ‘market’ of paying consumers; arguably (in a horribly flawed and amoral argument) their death is an economic benefit, in the sense that funds amd resources should not be diverted from productive economic actors to an unproductive sink.

    Personally, I respond to this hard-nosed attitude with the argument that happiness (or moral gratification) can be considered a tradeable consumer product of measurable economic worth, and that charitable acts are therefore a tangible and fungible economic gain. But there are important players in the manufacturing and marketing of pharmaceuticals who will never share this view and are, at best, indifferent to the death of any human being who is not a direct or potential source of money.

  46. phayes said,

    September 6, 2009 at 7:58 pm

    @jcmacc

    “I’m a patent holder and have had this argument used against potential patents”

    I still don’t understand what exactly the situation is that you’re alluding to. Of course you’re going to have trouble patenting an invention in e.g. the US if you’ve contributed to the prior art by practising it somewhere else¹!

    @Nile

    The economics of innovation, including that part of it concerned with patents and other IP, is in fact surprisingly congruent with our moral concerns. Unfortunately it has been largely ignored (and worse) and development of policy and law in this area has been especially vulnerable to another interesting economic phenomenon: regulatory capture.

    ¹ Unless you’re still within the grace period.

  47. jodyaberdein said,

    September 6, 2009 at 9:08 pm

    Re Nile

    Interesting stuff. How do you think we might be viewed in a millenium or so having maximised our profits on beta lactams withing a few decades?

  48. boro_dave said,

    September 6, 2009 at 9:19 pm

    @jcmacc
    @phayes
    Lack of action enforcing a granted patent against an infringer does not mean that you lose your legal monopoly to the invention. Unlike with trade marks, your patent monopoly can’t be diluted i.e. later inventions don’t make the scope of your patent any narrower or weaker.

    However, in the real world, if competitors see that a patent is not being enforce against apparent infringers then it could encourage others to take a risk to infringe as well. At the end of the day though, the patent holder could wait until near the end of the 20 year patent before trying to enforce it – this would maximise the damages they could seek. (Although obviously the patent-holder could have gone bust by then).

  49. PM said,

    September 6, 2009 at 9:24 pm

    Phayes quoted Nile as saying “The economics of innovation, including that part of it concerned with patents and other IP, is in fact surprisingly congruent with our moral concerns”

    It has been a long, long time since I read a paper on the economics of patents but if my memory serves me correctly maximum benefit to society occurs with patent lengths in the 9 to 10 year range. Longer patent lengths of course provide grater monopoly profit to the patent holder but tend to stifle true innovation. With long lasting patents firms spend enormous effort trying to break or prevent other firms’ patents rather than investing in innovation, and the patent holders similarly spend their resources on lawyers rather than engineers/scientists.
    In general then our patent laws are already too long/strong. Of course pharmaceuticals, with their long lead times to market, may differ from the general case.

    PM

  50. phayes said,

    September 6, 2009 at 10:27 pm

    @boro_dave

    “Lack of action enforcing a granted patent against an infringer does not mean that you lose your legal monopoly to the invention.”

    I’m well aware of that of course but then so is the USPTO! So whatever jcmacc’s problem has been with their officers I don’t really think it can have been anything to do with that.

    @PM

    Determining optimal patent duration, along with (and not independently of) all the rest of the patent and patent system parameters and with regard to the wildly varying needs of different fields and industries, is a very difficult problem, yes. However, I’d say the greatest folly of the patent system ‘policy makers’ in recent history has been the reckless and unjustified extension of scope of subject matter rather than of duration. Machlup is surely spinning in his grave.

  51. phayes said,

    September 6, 2009 at 11:09 pm

    @PM that wasn’t me quoting Nile, btw.

  52. RJM said,

    September 7, 2009 at 4:55 am

    The pharmaceutical industry’s “research and development” is contentious too…
    – in terms of actually how much is spent on R&D, and why the figures are kept so top secret; and
    – how much of the innovative research is actually done/paid for by the pharmaceutical companies (vs government funded institutions)

    IMHO, this book is very definitely worth a read:
    www.bmj.com/cgi/content/full/329/7470/862

    I don’t live in the States, but unfortunately Australia is not far behind…in all manner of badness…

  53. Filias Cupio said,

    September 7, 2009 at 5:01 am

    @Omnis (#30): “It’s very easy to get emotive on the subject when you’re discussing existing drugs that could save lives right now if they were available more widely. But the fact remains that without those patent laws they would never have been developed in the first place and no lives would have been saved at all.”

    I.e. “Using patents as an incentive is better than having no incentive”, which is true. But we can look for alternative incentives which do not have the major drawbacks of medicine patents.

    @ Sili (#18) “I think it makes sense to start giving exclusive rights to drugs from the point when the testing is done and they’re brought to market.”

    This would lead to its own, probably worse problems. Companies would be encouraged to take a long time in the pre-clock-ticking stage to set up extra well to be able to sprint though any formalities between clock-start and market, and to develop variants on a new drug while competitors are still unable to compete. This could lead to a much longer time periods between drug discovery and the drug entering public domain.

    The time from patenting until market is a problem however. Maybe a compromise would work: instead of 17 years of patent you only get 12, but years between patenting and market only count for half time.

  54. msjhaffey said,

    September 7, 2009 at 7:42 am

    Good grief.

    Most (pretty much all) other columns in this blog read like a good bit of analysis. This, including the comments, reads like a Militant Tendency rant.

    It is enormously expensive to develop drugs. Patents give companies an opportunity to recover those costs. Look at big pharma’s profits. They’re not excessive and the reason is that so much money is sunk into R&D.

    The talk of getting government to do the R&D is also fantasy thinking. Why should Britain (or any other government) invest? We’ll just wait for the USA (Switzerland/Norway/ …) to do so and then grab the results.

    What a load of woolly-headed nonsense.

  55. boro_dave said,

    September 7, 2009 at 8:54 am

    @phayes
    “I’m well aware of that of course but then so is the USPTO! So whatever jcmacc’s problem has been with their officers I don’t really think it can have been anything to do with that.”
    – I totally agree! I don’t understand where jcmacc’s confusion has come from.

    By the way, the other patents do is guarantee publication 18 months after filing. This is an important part of encouraging innovation – you see what competitors are doing so can a) avoid going down avenues that will be soon have a monopoly of OR b) find prior art which would invalidate your competitor’s patent and press on regardless. Or a legitimate strategy is to ignore all patents (thereby saving a fortune in legal fees) and put the money aside for when you get sued.

    Early publication also means that competitors can work on an improvement which could be even more valuable to the original patent holder. The new invention mught still infringe the first patent, but the improvement could be so desirable that the original inventors want to pay you a royalty to license it.

    This is how patents are supposed to drive innovation. The patent system works well in lots of industries but not where you have aggressive, highly resourced companies who find a small technical benefit for one chemical feature, but then apply for patents covering dozens of versions of a parent molecule. If you’re being aggressive then you apply for a patent on your idea, on the ideas that your competitors might like to use to get around your first idea and on every conceivable future development you’d like to make in the future – the ‘patent thicket’. I can say from personal experience that other people’s thickets are a nightmare to get around, but give you a very secure feeling when you create your own thicket!

  56. CampFreddie said,

    September 7, 2009 at 9:54 am

    My view is that India has saved big pharma.
    India makes cheap drugs that can only be sold in developing countries, which make up a trivial market share (measured in money). Developed countries can’t buy the indian drugs, because of stricter patent law enforcement.

    If india didn’t do this, then big pharma has 2 options.

    1) Charge full price everywhere, poor countries can’t afford it, millions die, big pharma gets very bad PR.

    2) Sell cheap drugs to poor countries, get parallel (grey) imports into to developed countries, big pharma loses lots of profit in their major market. Some developing countries still can’t afford the cheap drugs, so big pharma is still seen as evil.

    I wouldn’t be suprised if parralel imports caused an ‘irish famine’ effect, where the cheap drugs weren’t given to the needy, but instead exported for profit.

  57. phayes said,

    September 7, 2009 at 10:25 am

    “In any case, the empirical economic evidence strongly rejects simplistic arguments that patents universally spur innovation and economic growth. … On the other hand, we can also reject the view that patents uniformly stifle innovation … Of course we have asked and answered an intentionally narrow question here. We have not asked whether the patent system is the /best/ way to encourage innovation. Nor have we even asked whether the total net effect of the patent system is positive.” — Bessen & Meurer.

    :)

  58. gentleben said,

    September 7, 2009 at 11:24 am

    how come the comments section always ends in petty squabbles between different readers.

    When you start putting @ at the the begining of your reply, writing in CAPITALS or using lots of !!!! you should chill out and go do something else.

  59. Stoove said,

    September 7, 2009 at 1:15 pm

    @gentleben – I do NOT need to chill out!!!!!!!!!! OR DO something ELSE!!!!

    Joking aside, and my apologies for not taking that seriously initially. I believe it’s important to have some form of feedback from the readers, and this particular blog generally has constructive and beneficial conversation on the topic. Most of the posters here seem to realise that there are two sides to the argument, and they cannot be solved by either a solely monetary or a solely passionate argument.

    It seems to be an unfortunate consequence of Human nature that we do sometimes lose sight of the main issue in debates such as this, but I’d like to say I think this community has the best collective eloquence of any I’ve been part of on the internet. So please don’t despair too much :)

    Back on topic: I agree that there needs to be a valuable and rigourous evaluation of patent law compared to other incentives to encourage innovation in this field and in general. I’m afraid I have neither the expertise to carry this out, nor the money to fund such a venture… but I will lend my moral support if that counts for anything. Interest free, of course ;)

  60. Stoove said,

    September 7, 2009 at 1:25 pm

    Further, I believe that CampFreddie made a good point in his post number 56. I wasn’t aware that patents prevent import as well as manufacture, and so the production of such drugs in 3rd world countries has little economic argument against it. The production of these drugs will not damage the main part of the drug companies profits, as long as patent enforcement is strong in developed countries.
    The issue then becomes whether patent law is an effective incentive for the development of the most needed drugs. In fact, the best way to solve this is to start from the beginning and define how to determine what the “most needed” drugs are. Most profitable? Highest number of potential lives saved? Highest number of potential people treated?
    The issue of patent law is a domestic one, and the drug companies are wasting their time pressuring the Indian government to change their laws. They should instead be joining the debate over how best to incentivise the drug development process.

  61. Andy Graham said,

    September 7, 2009 at 2:06 pm

    Further to gentleben’s comment, I thought I’d suggest a few general patent areas that don’t seem to have been addressed as yet and will hopefully avoid the SHOUTING.

    Fritz Machlup has been mentioned very briefly and without reference. Find his economic review of the patent system here:
    mises.org/etexts/patentsystem.pdf

    This paper is old (1958) so arguably no longer to applies to the modern world, although his points are sufficiently general that in my opinion the paper is still relevant. His conclusion was that the patent system may harm and may help but it would be nigh on impossible to tell. Therefore, already having a patent system we should keep it to be on the safe side, but if we didn’t have one we may not want it.

    I would add that this is a sufficiently complicated question that it’s a bit like asking if any given law is worth it. You know, rich people often get away with stuff and laws are expensive to police so why bother? There is no likelihood of a verifiable answer to the question, whichever law you choose, because the implications of such a general social construct as a patent system or a law are too widespread and indirect. So, we avoid the question and try to solve the perceivable problems (like making sure the law is applied fairly and that patents don’t kill people) instead of chucking it altogether.

    Next point: we’ve done some of this already with patent law. Look up the Doha agreement, which allows suspension of patent rights in countries in the grip of a medical emergency (which is sufficiently poorly defined in the agreement that swine flu, malaria or AIDS could well constitute one). Or the UK provisions which allow a competitor to apply for a compulsory license (at a reasonable, independently adjudicated, tariff) for any patented product the demand for which is not being satisfied by the patentee (first three years excluded to give the patentee time to get going).

    I am not, of course, suggesting that all is fair in the world of patents. The Doha agreement is extremely rarely exercised. Perhaps this is due to economic pressure from first world countries not to do so. Moreover, and more to the point, many poor countries only have patent systems in the first place so as to comply with the requirements of WTO membership, which allegedly confers many benefits. I can find no requirements for human rights laws in the WTO membership package but I’d be glad to hear if there are any.

    Note that these apparent failures are down to politics and not national or international patent law. Surely it is at least possible that the broad problem here is just rich countries/companies using economic and political advantage over poor countries to gain yet further advantages. In that case, the patent system is merely a stick to beat the poor countries with, and without that stick they could readily find another. Ask yourself this, if there were no patents tomorrow and country A allowed generic pharma to set up on a large scale within its borders, how long would it take for country A to fall to the bottom of the USA’s favoured trading partner list? Or aid list?

  62. Andy Graham said,

    September 7, 2009 at 5:21 pm

    Addendum:

    The problems mentioned earlier in relation to Doha and exporting to least-developed countries is in the (inexorably slow) process of being solved by amendment. In the meantime, I understand there is a temporary waiver in place which allows country B (with industrial capability) to issue compulsory licenses for the manufacture of drugs exclusively for export to country A (without such capability) in the event that country A is in the grip of a medical emergency. More info on the acceptance of the amendments is here.

  63. Rune said,

    September 7, 2009 at 6:54 pm

    Pharma nets a hefty profit margin, but they are doing nothing that other businesses are not doing (“corporate social responsibility” notwithstanding). If we think that drug development is too serious a matter to be handled purely as business – and I agree that it is – then something else is needed. As someone mentioned earlier in the discussion, the Health Impact Fund of Thomas Pogge seems a good proposal. It works like this: developed countries contribute to a 6bn dollar fund. Drugs enrolled in the project would be sold at cost, with the developer being compensated out of the fund in proportion to the impact of the drug on global health. It’s nicely summed up by Peter Singer here www.guardian.co.uk/commentisfree/2008/sep/16/health.pharmaceuticals .

  64. Arthur Dent said,

    September 7, 2009 at 11:03 pm

    The big issue for Pharma companies is parallel importing either legal or illegal. Thos posters who comment that the law should be upheld are, I am afraid living in cloud cuckoo land.

    There is currently a shortage of some medication in the UK because of a change in pricing policy introduced by the DoH. This means that drugs supplied to UK pharmacies can fetch higher prices in other EU states, and surprise surprise a large volume of said drugas have been re-exported (perfectly legally) thusleading to a shortage of supply.

    After the South African Patent case in which Big Pharma got its CR fingers wll and truly burnt, GSK began to supply retroviral drugs at cost price in Africa. It then found that the number of patients receiving treatment had not changed; those low cost retrovirals were being exported with the knowledge (or direct connivance) of the governements concerned. You can earn a very large amount of dollars exporting low cost retrovirals to the USA. As a result GSK stopped the supply of low cost retrovirals and instead began to operate clinics of their own so that the drugs actually got to the patients.

    Those people who think that the problem can be solved by the state taking on drug development should see a doctor. Can anyone mention any activity that the state runs effectively? History also shows us that the USSR and China under Mao were unable to develop any useful drug therapy under such a state controlled system. Can you just imagine the discussion at the UK Treasury: Mr Brown, the State Drug Company has requested another $800m dollers to develop their latest drug. They think it is going to be really useful and there is at least a 1 in a 100 chance that it may reach the patient in 10 years time.

  65. jodyaberdein said,

    September 8, 2009 at 6:55 am

    At the risk of being accused of being a communist: Can anyone mention any activity that the state runs effectively?

    Might I suggest healthcare, education, and most recently banking?

  66. PsyPro said,

    September 8, 2009 at 9:05 am

    Wow!

    The comments contain a lot or politics but not much on Ben’s polemic. I thought Ben’s point was quite simple: the point of patent protection was (and still is?) to encourage innovation *from the patented source* not to provide a guaranteed or any necessary profit to the patent holder, only the possibility of same. Big Pharma was highlighted as an example in which that model was challenged strictly in the interests of stockholder profit, NOT the innovation originally advanced, and Ben argued in favour of the original intention of patents and patent law: subsequent innovation. I suspect Ben may respond at some point to make clearer his original polemic, but the comments here have just twisted it beyond recognition.

    Read what Ben actually wrote (yes, there was one infelicitous, backwardly-worded phrase, so what?), and ignore most of the comments.

  67. phayes said,

    September 8, 2009 at 9:47 am

    Wow!

    This thread’s full of rude and ironic “OMG what stupid comments” metacomments.

    Ignore them, ignore them all I tell you!

  68. AbyssUK said,

    September 8, 2009 at 2:09 pm

    The pirate party of Sweden have a decent proposal for how drug patenting can be abolished Europe wide.

    www.piratpartiet.se/an_alternative_to_pharmaceutical_patents

    Also the UK pirate party is now a fully paid up licensed political party in the UK. Patent law reform is one of its core policies.

    www.pirateparty.org.uk

  69. jodyaberdein said,

    September 8, 2009 at 6:01 pm

    I think I got confused and interpreted the piece as having some political intent rather than just being a comment on the proper use of patent protection. I guess it was the final paragraph about millions of unnecessary deaths that swung it that way. Still all is clear now, if rather silent.

  70. Arthur Dent said,

    September 8, 2009 at 8:13 pm

    Ben’s clearly doesn’t think that Pharma can justify patent protection in the third world when comparing sales to unnecessary deaths. What he fails to recognise is that without patent protection in the third world income from patents in the developed world will severely erode due to parallel trading. This is not a theoretical possibility but a practical reality.

    We (society) need to find a way around this problem, but simply eliminating patent protection will lead to unitneded consequences

  71. phayes said,

    September 8, 2009 at 8:50 pm

    @Arthur Dent

    The situation w.r.t. parallel imports is largely orthogonal to the question of patent protection in the third world. Patenting cannot stop legal arbitrage. It’s also a rather more complex situation in other ways:

    www.wipo.int/about-ip/en/studies/pdf/ssa_maskus_pi.pdf

  72. jodyaberdein said,

    September 9, 2009 at 7:06 am

    And presumably the unintended consequences would be worse than millions of unnecessary deaths.

  73. Arthur Dent said,

    September 9, 2009 at 10:23 am

    The unintended consequences would include a further reduction or even cessation of innovation in drug development across the world. So for an immediate reduction in unecessary deaths you might end up with no further drug development at all. Remember that the current imperfect system means that new drugs are available to all 10 years post launch

    Currently investors put money into drug development because, although it is a risky business (only 1 in 100 potential drugs actually makes it to the market) there are considerable rewards to be made from the few successful drugs in their first 10 years of sales. After 10 years all drugs are patent free and relatively cheap.

    If there is no patent protection there is no incentive to invest (that was Ben’s point). My point was that if patent protection is not global, then for easily exportable high value products like pharmaceuticals, patents are almost worthless.

    The system is by no means perfect and alternative mechanisms are needed to ensure maximum availability of new medicines whilst preserving appropriate rewards for those who risk the necessary finance. I don’t think governments would be willing to take the risks.

  74. tielserrath said,

    September 9, 2009 at 11:24 am

    tangential (if not OT):

    Ben, there seems to be a rash of Guardian articles about the swine flu vaccination that are bringing up the whole GBS thing again. Even Dr Crippen is referring to the vaccination as ‘untested’, when it’s simply a slight variation on the standard flu vaccination issued every year. I have nurses using these articles as justification for not having the vaccine, putting patients in my emergency department at serious risk.

    I know it’s rehashing old territory, but any chance you would consider a rebuttal to this crap? i am running out of patience and I’m going to start screaming soon…

  75. jhnycmltly said,

    September 9, 2009 at 2:10 pm

    This is an example of HOW the pharmaceutical companies .. **hide** .. the WHY the drug works.
    They are protecting their **investment** .. just like any good capitalist would and does.

    “Someone might steal the drug” ..

    When in FACT .. ? .. all it is is a .. ? .. phytol .. ?

    ” m-chlorocres-ol ”

    They tested one of the drugs which is very good in malaria and found
    almost ALL of its’ efficacy was due TO .. ? .. the preservative they
    added.

    Out of TWELVE substances IN the drug what did they find .. ?

    “Virtually all activity was m-chlorocresol included as a
    preservative”

    Antileishmanial activity of sodium stibogluconate fractions.
    Antimicrob Agents Chemother. 1993 Sep ;37 (9):1842-6 8239593
    (P,S,G,E,B)
    W L Roberts, P M Rainey
    Department of Laboratory Medicine, Yale University, New Haven,
    Connecticut 06510.

    Sodium stibogluconate, a pentavalent antimony derivative produced by
    the reaction of stibonic and gluconic acids, is the drug of choice
    for
    the treatment of leishmaniasis.
    It has been reported to be a complex mixture rather than a single
    compound.
    We separated sodium stibogluconate into 12 fractions by anion-
    exchange
    chromatography.
    One fraction accounted for virtually all the leishmanicidal activity
    of the fractionated material against Leishmania panamensis
    promastigotes, with a 50% inhibitory concentration (IC50) of 12
    micrograms of Sb per ml; that of unfractionated sodium stibogluconate
    was 154 micrograms of Sb per ml.
    Further analysis of this active fraction revealed that a major
    component was m-chlorocresol, which had been included in the sodium
    stibogluconate formulation as a preservative.
    The IC50 of pure m-chlorocresol was 1.6 micrograms/ml, a
    concentration
    equivalent to that present in unfractionated sodium stibogluconate at
    a concentration of 160 micrograms of Sb per ml. After ether
    extraction
    to remove m-chlorocresol, the IC50 of sodium stibogluconate was >
    4,000 micrograms of Sb per ml.
    In contrast, when L. panamensis amastigotes were grown in
    macrophages,
    the IC50 of ether-extracted sodium stibogluconate was 10.3 micrograms
    of Sb per ml.
    The 12 fractions of ether-extracted sodium stibogluconate obtained by
    anion-exchange chromatography had IC50s of 10.1 to 15.4 micrograms of
    Sb per ml.
    We conclude that preservative-free sodium stibogluconate has little
    activity against L. panamensis promastigotes but is highly active
    against L. panamensis amastigotes in macrophages.
    This activity is associated with multiple chemical species.

    Mesh-terms: Animals; Antimony Sodium Gluconate :: chemistry; Antimony
    Sodium Gluconate :: pharmacology; Antiprotozoal Agents ::
    pharmacology; Cell Line; Chromatography, Ion Exchange; Cresols ::
    pharmacology; Leishmania :: drug effects; Leishmania :: growth &
    development; Leishmania :: metabolism; Macrophages :: drug effects;
    Macrophages :: microbiology; Mice; Microbial Sensitivity Tests;
    Spectrophotometry, Ultraviolet; Support, Non-U.S. Gov’t; Support,
    U.S.
    Gov’t, P.H.S.; Uracil :: metabolism

  76. Minsx said,

    September 9, 2009 at 4:13 pm

    Sili said (#18):

    “I have to say that there is something completely nuts about patents being limited to, what?, twenty years, while copyrights are easily extended for more than ninety. Doesn’t Disney hold rights to what is essentially public domain fairytales by now (H.C. Andersen for instance)?”

    I made this point in a previous blog post. Unfortunately, as copyright terms are extended perennially, it makes a greater and greater case for potentialy extension of patent laws. After all, what is Congress supposed to say to the pharma company who brings up the point that Britney Spears’s work is protected for for 120 years from release – 12 x longer term than a lifesaving drug?

    I know that most people think that because drugs are so important, laws would never be passed to extend the patent because it could hurt people. But what kind of ground is it to stand on to say that “we punish the scientists (relative to the musicians) because their work is so important”? It’s almost enough to make me throw The Fountainhead at somebody.

  77. phayes said,

    September 9, 2009 at 5:10 pm

    @Minsx

    Even the most misguided (but not completely ignorant and irrational) defenders of the patent system I’ve come across haven’t been foolish enough to try to argue that the appalling folly of copyright term extension makes or has made a greater case for (general) patent term extension.

  78. Guy Chapman said,

    September 9, 2009 at 6:59 pm

    In general there is nothing really wrong with drug patents, for the reasons you describe but HIV is a special case – the existence of a massive pool of infected people increases risk to the whole world and increases the chances of new strains arising.

    Volvo did not patent the three-point seat belt because they felt it would be invidious to do so. The transnational drugs companies come out of this looking like the bad guys – but I guess that is nothing new to them.

  79. jodyaberdein said,

    September 9, 2009 at 9:08 pm

    Regarding motivation and innovation though: I think we’re going a bit around in circles here. I thought I gave a few examples of revolutionary medicines, not just me-too medicines, that weren’t produced with patent protected profit in mind. Alright this may well be cherry picking, but to push things a little further Stuart Sutherland’s chapter on appropriate use of reward and punishment in ‘Irrationality’ would suggest material reward is definitely not the best way to get the best out of people.

  80. JerryW said,

    September 10, 2009 at 9:15 am

    To me the existing system seems close to ideal. The developed world gets its patent protection and innovation, and it also subsidises the developing world, which gets its cheap medicines via India. And it gets to have a good moan in the process. Where’s the problem?
    The big pharmaceutical companies can scarcely complain, in view of their own success and their frequent lapses in moral standards. The most obvious drawback at present is that the Indian cloners are inefficient, or at least the distribution of their products is inefficient, since so many remain untreated. I suggest that GSK and others second a few production staff to them to pass on knowledge and help them improve…

  81. Arthur Dent said,

    September 10, 2009 at 4:15 pm

    jodyaberdeen is correct that many revolutionary drugs were “invented” without the profit motive. Big pharma today still gets many of its new drugs from academic and government institutes. It doesn’t cost a lot of money to “invent” or “discover” a new drug. What costs the money is developing that invention into a licensed product. The recent EU study of competitiveness in the pharmaceutical industry showed that >90% of originator pharma companies R&D spend was in the D.

    Look at the problem like this: I, as an academic, have discovered what may be a revolutionary treatment for AIDS. In order to turn that into a drug that can be given safely to patients and to prove that it actually does work I need to go through the preclinical, and Phase I, II and III clinical trials. I have to find a way of producing a drugable substance from my initial material i.e. one that can be ingested/injected and will ensure that the active ingredient gets to the target site. I also need to develop a manufacturing route of appropriate quality and consistency and then go through the long bureaucratic process of gettin gthe drug approved for sale.

    I ask the bank for a loan (I will need about $500 to 800m for about 5 to ten years). The bank asks for the business plan, I tell them that if successful the product will sell $1b per annum whilst under patent (max 10 years)at possibly 15% margin but if unsuccessful (which might happen at any point in the development chain) all the money will be lost (every single $).

    Currently there are investors out there that will take that risk. Now change the plan slightly and add – “Oh, by the way we may actually have to give the drug away at cost price for ethical reasons, or our patent may only last for 2 years not ten, or an Indian generic company may decide to break the patent and flood the market with cheap copies. The investors will drain away like water into the desert sand.

    Remember that these costs & risks apply to any new drug regardless of who is involved academic, government or private company.

  82. Andy Graham said,

    September 11, 2009 at 12:07 am

    A couple of points:

    Copyright and Patents are completely different things. Copyright is a right not to have a specific work you have produced copied by anyone else. The term was decided upon so as to allow the right to be transferred to your grandchildren (as it was believed any heirs who actually knew you should be allowed to benefit from your work). Arbitrary I know, but not completely unreasonable. Patents on the other hand are a monopoly right. That’s not just copying. Even if someone else comes up with something independently which is within the scope of your patent they still infringe. I don’t know where the term for patents comes from but it may have something to do with the likely period you could keep an industrial secret for or the pace of innovation perhaps. Whatever it is, the breadth of the monopoly right means that it should always have a
    much shorter term than copyright.

    Second point, I feel I must challenge the “millions of deaths due to the patent system” comments made above. Overpricing of medicines is surely a reason why some people die in the developing world but it’s not everything. It would be difficult for the poorest countries to by even generics. This is a common problem when people talk about the world’s poor, a single problem is singled out and its impact is overemphasised. If we all feel so strongly about the 96% of the population of the earth who are poorer than us (no reference, might be made
    up) then we need more general action to make the world fairer.

    Incidentally, surely we have a valid argument in the UK against the price of certain medicines? We have the NHS, which has a finite amount of money, and big pharma, who are accused here of making money hand over fist from the same NHS. So when NICE has to decide which of two medicines to make available because they are both expensive, shouldn’t we blame the patentees? It seems to me that the general problem people have is that big pharma are making lots of money. If we want to stop them profiteering in healthcare in general then we should say so, but we should also suggest a genuine alternative to profit for stimulating innovation. I am not aware
    of any good alternatives.

  83. phayes said,

    September 11, 2009 at 8:02 am

    @Andy Graham “The term was decided upon so as to allow the right to be transferred to your grandchildren (as it was believed any heirs who actually knew you should be allowed to benefit from your work). Arbitrary I know, but not completely unreasonable.”

    Yes completely unreasonable!¹ – and not actually the (sole) ‘reason’ given for any of the numerous term extensions since the Statute of Anne anyway AFAIK.

    “I am not aware of any good alternatives.”

    As far as pharma is concerned, nor am I, but I know other people have been thinking about it² and we certainly shouldn’t assume that we are getting a good deal the way things are now³.

    ¹ James Boyle’s book: www.thepublicdomain.org/ very good on copyright and copyright folly, poor on patents and patent folly.

    ² www.sanger.ac.uk/Users/th/
    ³ www.dklevine.com/general/intellectual/againstfinal.htm (Chapter 9. Sobering.)

  84. Geeb said,

    September 11, 2009 at 10:35 am

    Ben, how confident are you in your source(s) for the assertion that “It takes about $800m and 10 years to bring a drug to market”?

    Your article has been picked up over at Techdirt, where they claim that those figures have been “widely debunked”:
    www.techdirt.com/articles/20090909/0412576143.shtml

    Of course, they are as guilty as anyone else of readily believing “facts” that support their opinions and discounting those that don’t, so it would be interesting to get a feel for how authoritative/unbiased/reliable the figures are.

    I guess the real answer is going to be “a lot”, regardless…

  85. flexdream said,

    September 11, 2009 at 1:20 pm

    India can afford nuclear weapons, aircraft carriers and to develop military jets. China can afford nuclear weapons and a manned space programme. These countries can surely ‘afford’ to make some payments for the cost of drug treatments? Even South Africa is hosting the World Cup and buying Gripen fighter jets.
    I think the point has been made, that the free market model will not deliver public benefit without private reward, and the greater good will require inter-government assistance. People profitting by copying patented medicines are not innovating. Maybe the WHO needs to buy out the patent and then licence production.

  86. molyneux1000 said,

    September 11, 2009 at 10:39 pm

    Flexdream, the point you make is very interesting. It is a genuine shame that the way in which governments choose to spend their revenue can be to the detriment of the people for which they are suppose to serve. Although I concur with the overall sentiment of Ben’s article, what schemes governments pursue (nuclear weapons, military armament, whatever) are not predominantly the fault of the pharmaceutical industry.

  87. DrJG said,

    September 16, 2009 at 7:31 am

    @ Fontwell
    (Sorry, I’ve been away)
    Call me cynical, but although we may have a situation where most people want drug research to be carried out as a public service, I reckon many of them would do some serious backtracking when faced with the potential tax bill for that research.
    Consider the numbers of those who reckon that paying for private medical insurance should exempt them from the NHS portion of income tax, but would probably still expect an NHS ambulance to pick ‘em up if the got run over, and would probably also expect the NHS to pick up the burden again when they reached retirement age and health insurance costs started to rocket, but they did not have to worry about the income tax side any more.

  88. heavens said,

    September 16, 2009 at 10:44 pm

    Why doesn’t the phrase “black market” appear anywhere on this page?

    Ben, the black market is the answer to your question. Differential pricing really doesn’t work. You cannot sell a lot of a medication in South Africa for a tiny price, and realistically expect none of those subsidized pills to appear in southeastern Europe, which is able to pay five times the amount, or in the UK, which able to pay ten times the amount.

    If the price in the developing world is less expensive than creating a manufacturing facility to make generic version, the developing world simply gets all of its pills “stolen” by drug traffickers — traffickers that operate exactly like the meth makers in the developed world, who find that hiring someone to buy two boxes of Sudafed from each pharmacy in town is a perfectly profitable model. There will always be some poor woman who thinks that this week’s supply of pills is less important than this week’s supply of food for her children. Various schemes are being attempted to reduce this (including only dispensing a single day’s pills at a time, or marking the pills to look different), but it still happens.

    I’m on a medication that runs US$10 per day. The “affordable”, “patent-free” price in most of the developing world would be much closer to ten cents. Don’t you think, that for a gross profit of US$9.90, you could figure out how to get a half a gram of pills from South Africa or India to the US?

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