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Ernest Miller Ernest Miller pursues research and writing on cyberlaw, intellectual property, and First Amendment issues. Mr. Miller attended the U.S. Naval Academy before attending Yale Law School, where he was president and co-founder of the Law and Technology Society, and founded the technology law and policy news site LawMeme. He is a fellow of the Information Society Project at Yale Law School. Ernest Miller's blog postings can also be found @
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June 10, 2005

Drug Patent Suspension

Posted by Ernest Miller

Over on Copyfight, Alan Wexelblat writes about the possibility that Brazil will suspend patent rights on antiretroviral drugs in order to afford the fight against the AIDS plague (Patent Suspension? Or Let Them Die?). I sympathize with Brazil's position. However, such an action treats only the symptom, not the cause. If Brazil (and other nations facing similar tragedies) do this, it is not cost free. It effectively shifts the costs to patients in nations, primarily the US, that pay full freight. This is hardly equitable for those suffering from AIDS at the bottom of our economy. We need a comprehensive solution.

Perhaps patent suspension can be part of the spur to a comprehensive solution, but it doesn't seem (to my knowledge) that this is being addressed by either side in the debate. For example, if Brazil were to suspend the patents, shouldn't they then spend some of the money saved on research for the next generation of drugs? Such research has to be paid for somehow.

Comments (12) + TrackBacks (0) | Category: Patent


COMMENTS

1. Dr. wex on June 10, 2005 11:16 AM writes...

I think it's disingenuous to claim that this is a symptom. What Brazil is doing is making the argument that a moral imperative (saving lives) is more important that corporate profits. Nobody except for drug company executives is claiming that Brazil's decision will raise prices elsewhere. The drug industry is far and away the world's most profitable, and has been for about the last 15 years.

I think Brazil is attacking precisely the root of the problem - large corporations using IP protection to increase profits at the cost of human misery. That's not a symptom of anything except perhaps a society that knows no god other than Mammon. The US Constitution establishes intellectual property protections in order to promote the useful arts and sciences, not to promote the quarterly bottom line.

What concerns me is that it sets a potentially bad precedent. If we start here, where do we stop? What justifications of human need will count as good reason to revoke or limit IP protection grants and what will not? I think these are questions that ought to be discussed but I don't see them being raised anywhere outside of tiny academic circles. Thus we end up with point-focused actions, such as Brazil's, where we need broad dialog.

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2. Ernest Miller on June 10, 2005 11:35 AM writes...

If it such a moral imperative, then there is also a moral imperative for full public funding of medical research and drug testing. Tell these private companies that they will not be allowed to profit from their drug patents and they'll stop researching. If their research is so darn wasteful in the first place (spending money on marketing), then this won't be much of a loss and government funding can fill the gap much cheaper.

If Brazil were really attacking the root of the problem they would divert some of the money they save from patent suspensions into research and development of their own. I'm not against Brazil suspending patents, I'm against Brazil free riding.

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3. Dr. wex on June 10, 2005 12:18 PM writes...

OK now you're setting up strawmen. I'll go one more round with you, but please try to keep from the extremes.

then there is also a moral imperative for full public funding of medical research and drug testing

I don't see how that follow at all. The question is if a government grants an IP protection, what (if any) payment is owed for that protection?

Tell these private companies that they will not be allowed to profit from their drug patents and they'll stop researching.

Bullpucky and unnecessary FUD. Of course any company that can't profit goes out of business. Trivially true. But nobody's claiming that companies can't profit from their patents. However, is it really necessary to have 9x factor of profit? Is 2x sufficient incentive? Who gets to decide, and how does that decision balance against other factors, such as human need? We're not talking about VCRs here - we're talking about products necessary for the continuation of human life and products that operate under a government-granted competitive advantage.

If their research is so darn wasteful in the first place (spending money on marketing)

You're conflating two arguments. One is the marketing issue - drug companies always claim that any reduction in price will immediately be felt in reduced R&D, as if they had no other place in their budget to economize. Opponents point out that by the companies' own public statements they spend more on marketing and advertising than on research. So how about we cut back on the free golf trips for doctors a bit instead of cutting back on R&D? The point is that threatening the sacred cow of R&D is itself a red herring.

The other, deeper, argument is about what that R&D is for. Whistleblowers and industry analysts have pointed out for years that much drug industry R&D is invested in trying to find ways to extend the exclusivity of drug patents. A common example is finding a new delivery mechanism for a drug (inhaler as well as pill form) which can be patented separately. The strong form of this argument is that it wouldn't hurt new drug development to eliminate this gaming of the patent system, which falls under the heading of R&D but isn't R&D as the public generally perceives it.

If Brazil were really attacking the root of the problem they would divert some of the money they save from patent suspensions into research and development of their own.

Why is that more important than delivering generic drugs to people who need them to go on living? Why is one an acceptable justification and the other not?

I'm not against Brazil suspending patents, I'm against Brazil free riding.

Free riding on what? You make it sound like someone was getting rich on this. You seem to be against Brazil saving lives at the expense of drug company profit margins, which is precisely the challenge I posed in my original posting.

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4. Ernest Miller on June 10, 2005 12:38 PM writes...

You call these arguments straw men, but in the absence of alternatives, they're all that is out there on the table. Has Brazil made any proposals as to what is an appropriate level of profit? Has Brazil said, let us look at your budget and we will provide appropriate recompense, including an appropriate profit, and not a penny more for outrageous marketing budgets or other wasteful spending?

If you're saying it is a moral imperative for drug companies to give up profits to save lives, why isn't it a moral imperative for the government to fund research to save lives? Ultimately, if one is to manage how companies spend their money, including what type of research they do and determine appropriate profit levels, it isn't very far from just having the government fund the research and distribute the results in the first place.

I'm not saying that Brazil shouldn't give drugs to those who need them. However, it hardly shows that Brazil really cares about developing future drugs. Prove that the drug companies are lying when they say they can't do R&D without obscene profits. Sell the drugs at generic prices and have the gov't fund the R&D out of the savings. How does this hurt the power? Certainly Brazil is willing to pay more than the generic cost, otherwise they wouldn't even be negotiating.

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5. Ernest Miller on June 10, 2005 01:01 PM writes...

In the end what I want from Brazil is not simply a "give us the drugs at a price we like or we'll suspend your patents," but a positive policy prescription. "This is how one would calculate a just price for drugs." "If drug companies say they cannot afford R&D, we will prove them wrong."

It is okay to steal bread for your starving family. Sometimes it has to be done. However, it isn't right to steal bread when you're not trying to get a job. Let Brazil show us the "trying to get a job" part of the equation.

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6. Dr. wex on June 10, 2005 01:12 PM writes...

A straw man is a fake argument erected for the purpose of scaring the other side or the audience and positioning the discussion in a way that the original participants have not. There are other proposals out, primary among them Brazil's request to the patent holders to negotiate a lower price. This request has been refused. I'm not privy to the terms that might have been offered, so speculating on them is pointless. It's also not the thrust of the issues I'm raising, which you don't seem to want to engage with.


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7. Ernest Miller on June 10, 2005 01:29 PM writes...

I put a straw man out there because Brazil hasn't put out a real argument. Saying "we want a lower price" doesn't really get to the point of explaining the justification behind that lower price point. We all want a lower price for medicine. How to determine a fair price is the real question. Once we determine that, then the rest is trivial.

We're not privy to the terms offered, but why not? Why doesn't Brazil go public with its offer and its justifications? Where's the policy proposal?

Your original question in your post was "where does intellectual property protection rate when stacked against 155,000 lives in Brazil alone?" Where, indeed? Merely saying "we want a cheaper price" doesn't do a lot to answer that question. Its a bit ad hoc. How will we answer future issues? I'm not saying Brazil is wrong to suspend patents, I'm saying they need to make their justifications clearer. Is that too much to ask?

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8. Branko Collin on June 10, 2005 05:03 PM writes...

"It is okay to steal bread for your starving family. Sometimes it has to be done. However, it isn't right to steal bread when you're not trying to get a job. Let Brazil show us the "trying to get a job" part of the equation."

Brazil isn't stealing anything. It's not property and it's not yours.

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9. Ernest Miller on June 10, 2005 05:12 PM writes...

The point is, it's free riding on the costs of the research. If you think Brazil should be permitted to do that, fine.

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10. Branko Collin on June 10, 2005 06:53 PM writes...

Free riding on the costs of research was the default in an academia where peer review was the highest good, not twenty years ago. The idea being that many eyeballs make research move forward.

Permalink to Comment

11. Ernest Miller on June 10, 2005 07:03 PM writes...

Yes, in academia, which receives quite a bit of support from the state, and whose educational mission directly benefits. I'm not against free information, but I think we should consider spreading the costs of creating that information around.

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12. Branko Collin on June 10, 2005 07:44 PM writes...

Well, information is like water: if you do not contain it, it will spread. If you do contain it, it is of no use to you and will go bad in a while.

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