Message-ID: <38527FCD.62B3@erols.com> Date: Sat, 11 Dec 1999 11:46:05 -0500 From: John Daly <mailto:dalyj@erols.com> Subject: Re: What is property? To: mailto:DEVEL-L@LISTSERV.AMERICAN.EDU
Christian Labadie wrote: >
snip > I wrote to John the following: "Would you be kind enough to give a few
> words for a novice like me, to explain why the "intellectual property" is
> important? Assume I don't know: as a scientist, we were encouraged to give
> our findings to "science". I think it would be nice to have some convincing
> arguments, especially when it comes down to explaining them to patients who
> are about to die and to leave behind them orphans; perhaps if that
> "intellectual property" is going to give a bright and sunny future to those
> orphans, their parents will be willing to make the sacrifice of their life.
> So please, enlighten us."
snipThis question is too important to treat lightly.
A lot of people over many years have believed that it was not ethically correct to patent pharmaceutical innovations - new drugs or new processes for their production. As I recall there was a case in the United States in which endowment funds for a medical school were withdrawn when the donor discovered the school planned to seek patents for the drugs its researchers discovered. Some countries did not allow drug patents feeling that such patents would be disadvantageous to their people. We would condemn a physician who developed an effective new surgical technique but demanded to received royalties from each future patient it benefited.
Yet pharmaceutical research is carried out vigorously by the pharmaceutical industry, while clinical medical research seems to be in a state of continuing crisis. Is there a lesson?
There are of course different justifications for patents. Natural rights arguments are that an author or inventor has a right to benefit from his creative work. The utilitarian view provides property rights as an incentive to invention and the dissemination of information on the invention. In the case of pharmaceutical patents, it seems to me we ought to look at the overall benefits to patients (and their families, friends and communities).
The innovation process has costs. The invention of a new drug is perhaps the least expensive part. Thus the work Christian’s "scientists" were encouraged to give away is relatively cheap. (And there are roots to the idea that scientists should not profit from their research going back to a time when research was done by aristocrats, for whom it was not "gentlemanly" to work for money.) Testing for safety and efficacy is now costing hundreds of millions of dollars for each new drug. Developing manufacturing and distribution capabilities more millions. Training those prescribing and dispensing drugs in their use still more millions. The money has to come from somewhere. If it doesn’t come from profits from the sale o the drugs, it has to come from governments.
If companies don’t profit from their investments in pharmaceutical innovations, we will have to depend on governments to support the process. There are efficiency arguments, but privatization of pharmaceutical innovation funding can be based on distrust of the willingness of governments to fund innovation at adequate levels.
Many studies of rates of return to research have been done. It has been suggested that rates of return to firms are on the order of 20 to 25 percent, but the pharmaceutical industry cites studies suggesting that its internal rates of return to investments in innovation are lower (and more comparable to other investments. Social rates of return to R&D investments in the US are estimated to be over 50 percent. The difference is because many benefits of the research accrue to workers and consumers rather than to the firms and investors. It is estimated that rates of returns from government funded research are higher than for that funded by private enterprise; if you think about it that implies governments are not accepting responsiblities for funding research other than that with a very high rate of return.
Christian is wrong to infer that allowing pharmaceutical companies to profit from the sales of their products requires that patients go without drugs. Certainly economic development in Africa would allow more patients to pay. Insurance systems can allow people to share risks and generate funding to pay for medications for those who need them. We can subsidize medications for those in need. Indeed it is probably easier to get the political will to finance drugs for sick patients, than to finance R&D and product innovations.
But patients will never benefit from drugs that we fail to invent, produce and distribute.
-- ------------------------------- John A. Daly Consultant mailto:dalyj@erols.com mailto:stconsultant@yahoo.com http://www.geocities.com/ResearchTriangle/System/8616/ phone: (301) 460-6364 fax: (773) 913-0403 -------------------------------