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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Monday, January 23, 2006

Alex Singleton: The Effect of Patents on Drug R&D

Excellent post by Alex Singleton at the Globalization Institute Blog: "Can Pharmaceuticals be Developed Without Patents?"

Singleton questions the conventional wisdom that pharmaceuticals are unique because of their high cost of R&D compared to production cost. He cites a study of the Italian drug industry before and after its 1978 adoption of drug patents which found that Italy developed some nine percent of the world's "new molecular entities" (as opposed to tinkering around the edges with "me, too" drugs) before drug patents were introduced. The rate of major innovation actually went down under the new regime.

F.M. Scherer, in his study of the effects of patents on innovation, found drugs to be the one exception to his general conclusion that most product and process innovations would have been adopted even without patents, for the sake of competitiveness. But even in the case of drugs, around half would have been developed without patents. And that figure itself would be more meaningful if it incorporated the distinction between "new molecular entities" and "me, too" drugs.

The Italian case suggests to me, at least, that without patents drug companies are likely to gamble more of their R&D efforts on genuinely new drugs, whereas with patents they're more likely to try to game the patent system with incremental "me, too" research.

It's important also to treat separately the artificial inflation of R&D costs by the FDA and its counterparts. If the market were allowed to set acceptable levels of risk, though insurance and tort liability, and the buyer had more responsibility for assuming risks other than fraud, the cost of development would no doubt fall considerably. It's a damn shame and disgrace that a grown man or woman has to go to Mexico to put (say) laetrile or Hoxsey's red clover formula into their own body.

Check out, also, Singleton's Pharmopoly Blog.

1 Comments:

Blogger Mike said...

Kevin,

I think your dislike of what you call "me, too" drugs is unfounded.

While the drugs may be similar, they are not the same. A great example of this is the SSRI drugs that combat depression. Each drugs works with different results on different people. If we started and stopped with Prozac or Paxil, there would be many people who wouldn't benefit from the two but would benefit from the others. Furthermore, many people experience different side effects from different depression drugs. If there was only one SSRI then people would be stuck with whatever side effects they get. As it is many people cannot find one SSRI that works for them. It would be a shame if they didn't have more than one to try.

For these reasons, I would argue that what you call "me, too" drugs are actually not all the same and that there are many benefits for them in society.

January 29, 2006 7:20 AM  

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