US blocks cheap drugs agreement

[TCO]

Originally posted by Frogger
Mr. Big economist man...

Lets hope that I can shnooker the pharmas into feeling that way. As I was typing here, got a call from an HR person at a big pharma for a job interview.

[Imran Siddiqui]

Intellectual property should be protected only when it can be economically and socially justified

And who decides if it is economically and socially justified? You? How authoritarian .

Fact is that the process of patenting leads to economic growth. People will not make a new product at considerable cost to themselves if they know it can be copied by others and sold by them.

[Adam Smith]

This is a pretty complicated issue. Attached is a good, recent 20 page overview article if you are interested in the topic. It is in zipped pdf fromat. The conclusions are as follows.

Pharmaceuticals have brought tremendous health improvements to developing countries. The international community could greatly increase these benefits by implementing systems to provide better access to existing pharmaceuticals and to manage their use, as well as by investing in the global public good of R&D on diseases that disproportionately affect the poor. Developing countries could redirect their health budgets away from salaries and toward cost-effective public health measures, such as vaccination and school-based control of intestinal worms, and could explore institutional reforms for health care delivery. Developed countries and international organizations could encourage differential pricing, allow more favorable tax treatment of appropriate drug donations, and encourage R&D and facilitate access to new products by committing in advance to purchase products needed in developing countries if and when they are developed.

As you can see, there is much more much more to this than just patents. In fact, the US proposed a system under which drugs would be distributed under the control of UN agencies, and even offered to kick in some money to fund the scheme IIRC. Sadly, none of issues or alternative approaches made it into the original BBC article. I am very disappointed in their coverage.

GP:

As I was typing here, got a call from an HR person at a big pharma for a job interview.

If you want some prep material I have some more where this came from, though I might not be able to dig it up until this weekend. PM me your address.

[Ned]

Originally posted by Ramo
Patents can be really damaging to industry a lot of times. For instance, look at France when they tried product patents a century ago. It's not a great suprise that their chemical industry was quickly destroyed and the industry moved to Switzerland. Strong patents (as in the status quo) are economically worse than no patents.

I don't know the circumstances that caused this, but I have a clue. The French today don't really examine their patents for novelty. So one can get a patent on existing technology. I can certainly understand how such patents can be harmful if they are actually enforced.

In contrast, Germany has a very good patent system. It is a main factor in Germany strong industrial performance, including its chemical industry.

As to patent not be justified until there is a certain level of development - it seems to me rather that the lack of a patent system is a cause of underdevelopment.

[Ned]

Originally posted by faded glory
For those of you whose english is a FOURTH LANGUAGE.

Let me help you understand a few points.

1)Drugs in the US are expensive.
2)Drugs everywhere else are cheap
3)Drug companies have to make up huge losses from socialized medicine abroad, by raping US buyers.

Sorry. Dont wanna pay for it. Nada.

Faded Glory, Are you telling me that the actual cost, without subsidies, of the very same patented drug is lower outside the US?

If this is true, the problem of high cost lies elsewhere - perhaps in the structure of our health insurance system.

[SpencerH]

Drug costs for the same drug can be lower without subsidies. Just look at the drug price difference between Canada. AFAIK the costs are built into the licensing agreements in each country and in Canada they refuse to pay the American prices.

[SpencerH]

Originally posted by GP

If you think the engine of creation is public discovery, perhaps drugs should be taxed and the money earmarked for public research. But don't underestimate what the drug companies do. You and I know that if we had government development of all those drugs. All the way to market, it would be a lot slower, more political and less innovative, and MORE expensive.

I dont underestimate the drug companies contribution to drug development but since I do basic research (funded by the taxpayers) I dont get shmoozed much .

[Sandman]

Halting the spread of AIDS is more important than safeguarding pharmaceutical company's profits. It's killing a whole continent, and has to be stopped with any means necessary.

[mactbone]

AIDs should be stopped, but there isn't a sure-fire cure is there? So should pharma companies just keep sending every new, expensive drug to see if it'll work?

Sava: The point I was trying to make is that CEOs are as evil as you, as human as you, and the only real difference is that they had the ability to become CEOs and make lots of money by starting a company or being successful in a company.

[Ned]

Originally posted by SpencerH
Drug costs for the same drug can be lower without subsidies. Just look at the drug price difference between Canada. AFAIK the costs are built into the licensing agreements in each country and in Canada they refuse to pay the American prices.

SpencerH, all you are proving is that the high cost in America has as much to do with the number of dollars chasing the drug as anything else.

This price differential between US and elsewhere must create a hugh grey market problem.

[Sandman]

AIDs should be stopped, but there isn't a sure-fire cure is there?

We can still fight the disease with drugs given to HIV-positive mothers who can then give birth to HIV-negative children. Not to mention education in the use of condoms. Frankly, the pharmaceutical companies are on the side of the disease here.

So should pharma companies just keep sending every new, expensive drug to see if it'll work?

Uh? The reason that new drugs are expensive is because they are tested to see if they work.

[Ned]

Originally posted by Sandman
Halting the spread of AIDS is more important than safeguarding pharmaceutical company's profits. It's killing a whole continent, and has to be stopped with any means necessary.

So - stealing the drugs from the company that invented them is the cure for AIDS? Such actions simply will not incent further research into aids cures.

The alternative to theft is to actually buy the drugs at prevailing prices. If the third world cannot afford it, perhaps the genereous and wealthy Europeans will help.

[SpencerH]

As I said before, the price of most anti-retrovirals has dropped because of the pressure on the drug companies. The cost of HAART outside of the 'developed' world is running between 200-300 USD/yr which is a fraction of what it costs here.

EDIT- that HAART does not include the latest and greatest drugs

[Sandman]

So - stealing the drugs from the company that invented them is the cure for AIDS? Such actions simply will not incent further research into aids cures.

It's not stealing in a legal sense if a country changes the law. Do you also think that it's wrong for a man to steal bread to feed his starving family? Is it wrong for a government to steal (in the loosest possible sense) drugs to lenghten the lives of it's AIDS victims and to reduce the chances of parent-child transmission?

According to the 'monetary incentive' theory, it seems to me that we will never get an AIDS cure from a company; it would destroy their market. Even if one company did come up with a cure, it'd probably cost a fortune.

Do you think that if an AIDS type disease was ravaging the US, or any developed nation, the people or the government would care about patents or drug company profits?

The alternative to theft is to actually buy the drugs at prevailing prices. If the third world cannot afford it, perhaps the genereous and wealthy Europeans will help.

Or legislate so that it's not theft. Some of the tougher developing world countries have done this. And Europeans are not generous. Our corporations are gits as well.

[Imran Siddiqui]

Halting the spread of AIDS is more important than safeguarding pharmaceutical company's profits. It's killing a whole continent, and has to be stopped with any means necessary.

What happens with the next AIDS? Then phara companies don't try to make a cure because Hell, they'll lose money on it because some government nitwit will make them sell it for peanuts, causing them to go in the red.

It is a socially desirably goal that phara companies make a profit... so that new drugs are made in the future.

Do you also think that it's wrong for a man to steal bread to feed his starving family?

Actually yes.. it is still stealing. Maybe more justified, but still...

[Sandman]

What happens with the next AIDS? Then phara companies don't try to make a cure because Hell, they'll lose money on it because some government nitwit will make them sell it for peanuts, causing them to go in the red.

Well, if the next AIDS is anything like the first, it'll be a continent devastated whilst the pharmaceutical companies whine about patents being violated.

In any case, they can sell the product for whatever they want, it's just that poor countries should be able to make cheap analogues. To argue that this is wrong because the cheap drugs might find their way back to the developed world is unbelievably petty, given the huge profits the drugs companies make.

It is a socially desirably goal that phara companies make a profit... so that new drugs are made in the future.

Is it socially desirable that 23 million HIV-positive Africans are unable to afford treatment, in order for new drugs to be made in the future, which they will also not get?

[Ned]

Originally posted by Sandman


It's not stealing in a legal sense if a country changes the law. Do you also think that it's wrong for a man to steal bread to feed his starving family? Is it wrong for a government to steal (in the loosest possible sense) drugs to lenghten the lives of it's AIDS victims and to reduce the chances of parent-child transmission?

According to the 'monetary incentive' theory, it seems to me that we will never get an AIDS cure from a company; it would destroy their market. Even if one company did come up with a cure, it'd probably cost a fortune.

Do you think that if an AIDS type disease was ravaging the US, or any developed nation, the people or the government would care about patents or drug company profits?



Or legislate so that it's not theft. Some of the tougher developing world countries have done this. And Europeans are not generous. Our corporations are gits as well.

The government has a compulsory license right in the US. If it wanted to, it could buy AIDS drugs from a generic and sell them anywhere it wanted to. I suspect the same is true in most countries outside the US.

However, the government still owes the patent holder royalties. Moreover, most government contracts have indemnity provisions - so that the generic manufacturer has to reimburse the government for its out-of-pockets costs of the royalties.

But, in truth, the Government has the power today to flood the market with cheap AIDS drugs or any drugs for that matter - but it still has to pay the patent holder his reasonable royalties.

There simply is no need for theft. In fact, theft of patent rights like any other property right by the government is against the US constitution - see the 5th Amendment. Not even congress can, by legislation, take someone's patent without compensation.

[TCO]

Originally posted by SpencerH


I dont underestimate the drug companies contribution to drug development but since I do basic research (funded by the taxpayers) I dont get shmoozed much .

Yeah. I've been part of that government gravy train too at one time.

[Ned]

Originally posted by Sandman


Well, if the next AIDS is anything like the first, it'll be a continent devastated whilst the pharmaceutical companies whine about patents being violated.

In any case, they can sell the product for whatever they want, it's just that poor countries should be able to make cheap analogues. To argue that this is wrong because the cheap drugs might find their way back to the developed world is unbelievably petty, given the huge profits the drugs companies make.



Is it socially desirable that 23 million HIV-positive Africans are unable to afford treatment, in order for new drugs to be made in the future, which they will also not get?

Sandman, countries do not make cheap analogues. Private companies do. Those companies tend to be located in countries with strong patent systems. So, while a particular country may want to pirate someone's else's patents for a noble purpose, the company that makes and sells the pirated drugs to such country will undoubtedly be in for a treble-damage award for intentional infringement.

But as I said, there is absolutely nothing preventing governments from actually "buying" the analogues from a generic so long as they pay royalties to the patent holder. Theft is not necessary to meet the AIDS epidemic. That is a false premise - a strawman argument.

[Sandman]

There simply is no need for theft. In fact, theft of patent rights like any other property right by the government is against the US constitution - see the 5th Amendment. Not even congress can, by legislation, take someone's patent without compensation.

There is a need for 'theft' if the country can't afford reasonable royalties. Some other countries have got constitutions which allow them to make cheap drugs, and not pay a penny back to the original developer. This is perfectly justified in humanitarian terms and also in terms of national sovereignty.

[Sandman]

Sandman, countries do not make cheap analogues. Private companies do. Those companies tend to be located in countries with strong patent systems. So, while a particular country may want to pirate someone's else's patents for a noble purpose, the company that makes and sells the pirated drugs to such country will undoubtedly be in for a treble-damage award for intentional infringement.

You're just wrong here, I'm afraid. India (for example) doesn't recognise international patent laws, and has companies which legally make the drugs.

But as I said, there is absolutely nothing preventing governments from actually "buying" the analogues from a generic so long as they pay royalties to the patent holder. Theft is not necessary to meet the AIDS epidemic. That is a false premise - a strawman argument.

Um, what you're really accusing me of is a false dilemma: "Countries must infringe on patents or suffer enormous, ongoing suffering." You're saying that there's a third option, which is buying 'legally' produced generics. This is scarcely an option for impoverished countries, it would alleviate the problem of AIDS, whilst destroying their economy, eroding their tax base and plunging them into debt, not to mention that they would be unable to afford non-AIDS related healthcare.

[TCO]

Originally posted by Adam Smith
This is a pretty complicated issue. Attached is a good, recent 20 page overview article if you are interested in the topic. It is in zipped pdf fromat. The conclusions are as follows.



As you can see, there is much more much more to this than just patents. In fact, the US proposed a system under which drugs would be distributed under the control of UN agencies, and even offered to kick in some money to fund the scheme IIRC. Sadly, none of issues or alternative approaches made it into the original BBC article. I am very disappointed in their coverage.

GP:
If you want some prep material I have some more where this came from, though I might not be able to dig it up until this weekend. PM me your address.

Thanks. Glanced through the article. Seems to be some reasonable agreement with some of the concerns that the McKinsey team found with their AIDS in Africa pro bono study. Send me your other stuff. I'm not likely to do any policy stuff, but it may be helpful.

[Ned]

Originally posted by Sandman


You're just wrong here, I'm afraid. India (for example) doesn't recognise international patent laws, and has companies which legally make the drugs.



Um, what you're really accusing me of is a false dilemma: "Countries must infringe on patents or suffer enormous, ongoing suffering." You're saying that there's a third option, which is buying 'legally' produced generics. This is scarcely an option for impoverished countries, it would alleviate the problem of AIDS, whilst destroying their economy, eroding their tax base and plunging them into debt, not to mention that they would be unable to afford non-AIDS related healthcare.

As I said, Sandman, the world should unite and kill AIDS by buying drugs and giving them to those who need it. If one operates legitimately, instead of by theft, the drug companies would make huge investments in further AIDS research. That is what we need. That is what the world needs.

[Ramo]

The amount of innovation in the third world has never been brought up as a reason for opposing the sales. (
You're attacking a red herring that you brought up.)

Innovation has been brought up, and problems with innovation would only be relevant in the third world, hence my post.

Drug firms are justifiably opposed ot losing profits. That is what drove them to make the drugs. Gray marketing is a real problem. Don't just wave your hand at it.

Gray marketing? I'm not familiar with that term...

How authoritarian .

Yes it is. But I think authority can be justified when it causes a net decrease in authority. Reasonable intellectual property law in certain circumstances can be economically and socially beneficial.

I don't know the circumstances that caused this, but I have a clue. The French today don't really examine their patents for novelty. So one can get a patent on existing technology. I can certainly understand how such patents can be harmful if they are actually enforced.

That's not the problem. The French were allowing patents on products, which means that if firm a developed some neat chemical and patents it, while firm b figures out how to make the chemical in a much more effective manner, firm b and everyone else become screwed, so the industry moves away. Incidentally, these are the same kinds of patents we're trying to force on the developing world.

[TCO]

Originally posted by Ramo


Innovation has been brought up, and problems with innovation would only be relevant in the third world, hence my post.

Come on. Use that 1560-SAT head. And think. The point made was that companies innovate in the expectation of returns. The rate of innovation in Africa is not at issue. (Nobody is saying that they are worried about Africa becoming a competetive leader in R/D. Access to drugs would not give them R/D capabilities. But nobody was trying to say that having the drugs would do that.)

The concern is that they will pharmas will lose profits by allowing their products to enter Africa at steep discounts. The LOST RETURNS are what may impact pharma R/D. Now if you want to argue whether pharmas will lose profit...that is a much mroe fruitful area. But saying that Africa has no drug R/D is irrelevant. Noone was worried about Africa being the next R/D center of competition. (And OF COURSE access to physical drugs doesn't drive research...access to scientists and facilities and markets and capital drives research.)

Gray marketing? I'm not familiar with that
term...

Basically transshipment of cheap goods from the cheap country to the expensive country. Arbitrage. In this case, people sending the drugs from Africa back to other markets and making big profits. This is what I said you needed to do more than wave your hand at. There is a loooooooong history of aid to Africa getting stolen, greyed, etc.

And of course, ANY time a company seeks to sell a product at one price in one country and a radically different price in another it is an unnatural situation. Like having water at two different levels. It wants to equalize...

[Proteus_MST]

Originally posted by Ned


As I said, Sandman, the world should unite and kill AIDS by buying drugs and giving them to those who need it. If one operates legitimately, instead of by theft, the drug companies would make huge investments in further AIDS research. That is what we need. That is what the world needs.

Interesting point,
wasn´t it the USA, which threatened to "steal" the Patent for the Anthrax-Antidote Cipro from BAYER and let an US-Concern produce it, if BAYER wouldn´t sell Cipro much cheaper?

[Ned]

Originally posted by Ramo

Gray marketing? I'm not familiar with that term...

Grey markets exist where there is a large price differential from one country to another. The crafty grey marketer buys the good cheaply in country A, and imports them into country B, the higher priced country. He makes a handsome profit.

That's not the problem. The French were allowing patents on products, which means that if firm a developed some neat chemical and patents it, while firm b figures out how to make the chemical in a much more effective manner, firm b and everyone else become screwed, so the industry moves away. Incidentally, these are the same kinds of patents we're trying to force on the developing world.

Ramo, this is not abnormal. This is the patent law everywhere.

For example, I invent the telephone - powered wires connecting two sets of speakers and mircophones. You invent the improved microphone. Does this entitle you to build the entire telephone in competition with me? No. Still, I cannot build my telephones with your microphone. I have to buy them from you.

[Ned]

Originally posted by Proteus_MST


Interesting point,
wasn´t it the USA, which threatened to "steal" the Patent for the Anthrax-Antidote Cipro from BAYER and let an US-Concern produce it, if BAYER wouldn´t sell Cipro much cheaper?

As I said, the US government has the power to have others produce the patented drug - it simply has to pay royalties. The hard bargaining obviously was on the amout of royalties.

[Ramo]

Come on. Use that 1560-SAT head. And think. The point made was that companies innovate in the expectation of returns.

I was responding to the assertion Bodds, Imran, et al. were making on the idea that loose patent controls wrt drugs going to developing areas will hurt innovation here. And going on a slight tangeant. Don't get your panties in a twist.

Basically transshipment of cheap goods from the cheap country to the expensive country. Arbitrage. In this case, people sending the drugs from Africa back to other markets and making big profits. This is what I said you needed to do more than wave your hand at. There is a loooooooong history of aid to Africa getting stolen, greyed, etc.

It just requires some thought and responsible decisions on our side. Hell, a lot of the "aid" to Africa isn't meant to get to the people in the first place. Don't give to states. Don't give to untrustworthy organizations. Give to NGO's that have acted responsibly with some guarantees of transparency. Not that hard if you put a little effort into it.

And of course, ANY time a company seeks to sell a product at one price in one country and a radically different price in another it is an unnatural situation. Like having water at two different levels. It wants to equalize...

There are software developers that sell their products at far less than the prices here (i.e. 10% of the original price) so they can compete with the black market in areas where piracy is rampant. Yet these aren't being imported back to the West. If there are certain factors in the situation, the markets won't equilibrate.

Ramo, this is not abnormal. This is the patent law everywhere.

No it isn't. They tried product patents, most intellectual property laws involve only process patents. If I figure out a better way to produce some chemical already produced by another firm, I can sell it without problems.

[TCO]

Originally posted by Ramo


It just requires some thought and responsible decisions on our side. Hell, a lot of the "aid" to Africa isn't meant to get to the people in the first place. Don't give to states. Don't give to untrustworthy organizations. Give to NGO's that have acted responsibly with some guarantees of transparency. Not that hard if you put a little effort into it.

That is very much a non-trivial problem. Just getting food to people is dificult because of the corruptions and robbers and such. THINK about the cash value of these drugs and what that represents in Africa. Read some of the reports of people who've looked at this issue. Than come up with YOUR solution and than tell us it is no problem.

There are software developers that sell their products at far less than the prices here (i.e. 10% of the original price) so they can compete with the black market in areas where piracy is rampant. Yet these aren't being imported back to the West. If there are certain factors in the situation, the markets won't equilibrate.

1. It is a TENDANCY towards equiibration. Not a hard and fast rule.

2. What are the factors? (I actually know something about this...since I've helped companies try to combat greying...just love to hear your answer.)

3. What is your basic point? That greying is not an endemic problem?

4. I bet I can come up with reports of pirate software coming back into the states. The only reason why you wouldn't be worried specifically with the lower price software in this case is that it would be easier to just copy the software anyway. (so low price of copies is not the issue.) In this case, we are talking about chemicals with complex synthesis (often with undisclosed steps in the production), with sterile production, etc. So of course the physical product is much more valuable as a greyable commodity versus jus the IP. You might think of a better thing to compare these AIDS drugs to than computer discs. Perhaps heroin.

No it isn't. They tried product patents, most intellectual property laws involve only process patents. If I figure out a better way to produce some chemical already produced by another firm, I can sell it without problems.

Not really sure what you are driving at here. But I've actually submitted a patent for a new chemical entity*
Most new chemical entities are product patents. They add some process patents on as well to sheild it further and to try to extend the duration and crap like that.

*In(2-2x)Sn(x)Zn(x)O(3+delta) where x = 0-0.8