Patents and Drugs

In debates over the utility of patents, and whether they can do more harm than good, the issue of pharmaceuticals always seems to be thorny.  In other words, it's hard to imagine our modern pharmaceutical system without patents, since extracting monopoly rents seems like the best way (if not the only way) to recover the enormous R&D costs required to develop a drug. 

But other technology products have enormous R&D costs, while not requiring patent protection.  But the difference between a new pill and a new digital camera is that the digital camera maker didn't need to start from scratch technologically.  The digital camera maker only has to recoup the R&D costs of the marginal improvements over the previous version.   So while an enormous amount of R&D went into developing the camera, that cost is spread out over each iteration it.   But pills don't seem to have successive iterations in the same way.  Each pill is an entity unto its own, and in developing the formulation, researchers seem to start from scratch.

So, does this need to be the case?  Could the pharmaceutical industry move in a direction in which new pills were built upon previous ones, so that the drug only had to recoup the R&D associated with its incremental improvement?  If the patent system were revoked (and the FDA system too) would the industry move in this direction? 

Anyway, at this point I'm just asking questions, though I think such a system would probably relieve the reliance on patent protection, if it's even possible.  Do any readers know anything about this?  If so, please let us know.

Comments

[Trent]

There is no doubt the current system is a mess. Perhaps there would be less patent protection needed if the FDA got out of the way. Why we are "protected" from drugs that can save lives or make them more livable because a small (or even large) number of people have adverse reactions is beyond me. If it cures my headache and doesn't give me an ulcer I should be able to use something even if it doesn't cure yours and does give you an ulcer. I just wouldn't expect you to use it.

If the FDA got out of the way, it might open the door to a new class of "experimental" drugs that could be offered to more people (thus at lower cost) and without the lawsuit risk to the manufacturer (which should again lower cost.)

Besides, just as technology is decentralizing other work processes, already we are reading about basement biotech. Some niche diseases may not be worth Merck's pursual, but could be highly profitable to a scientist pursuing them in her spare time - or even on a funded partnership basis. Again, in these types of situations the patent situation may be less of an issue. I can imagine a basement inventor collaborating with others who have made some process, developing a drug and licensing it to a generic manufacturer at a price per dosage low enough that the patent isn't really necessary - the royalty will be paid on an honor system just so the manufacturer isn't shunned by the next basement inventor with a big idea that costs little.

[Tim Swanson]

Economist Arnold Kling recently discussed this issue, stating:

(b) Executives have an easier time figuring out the return on investment in medical technologies that represent incremental improvements over existing technologies. With incremental improvements, it is easier to gauge the cost of the approval process, the market potential, and so forth. You know that insurance companies will pay for incrementally better technology.

But incrementalism drives costs more than benefits. You diagnose cancers sooner, but at some point earlier diagnosis does not improve longevity. You develop a slightly better pill to treats allergy symptoms or shoulder pain, but in the grand scheme of things it is not so important. Like Glenn Reynolds, I prefer outside-the-box thinkers, such as Aubrey de Grey, who I mentioned in Crisis of Abundance.

[doctorpat]

Digital cameras DO have patent protection. Quite a lot actually.

Furthermore, a great deal of the cost in a new digital camera design is in working out how to make it, getting the yields up, establishing the chip fab plant etc. To copy a camera would require so much expense that it would almost be as expensive as designing a new one. With a relatively simple chemical compound (eg. a drug) you can copy it for a few % of the original cost.

[Anne]

2005 Top 100 China Drug Manufacturers by Sales

Rank Company
1 Jiangsu Yangtze River Pharmacy Group Co.
2 Harbin Medical Group Co., Ltd.
3 Shijiazhuang Pharmaceutical Group Co., Ltd.
4 North China Pharmaceutical Industry (Group) Co., Ltd.
5 Shandong Weigao Group Co., Ltd.
6 Shenghua Group Holding Co., Ltd.
7 Northeast China Pharmaceutical Group Co., Ltd.
8 Shandong Xinhua Pharmaceutical Co., Ltd.
9 Tianjin Xhongxin Pharmaceutical Group Co., Ltd.
10 Tianjin Tasly Pharmaceutical Co., Ltd.
11 Jilin Xiouzheng Pharmaceutical Co., Ltd.
12 Xi'an Janssen Pharmaceutical Co., Ltd.
13 Huiren Pharmaceutical Group Co., Ltd.
14 Shandong Lukang Pharmaceutical Group Co. Ltd
15 Tianjin Jinyao Group Co., Ltd.
16 Shandong Luzhou Food Group Co., Ltd,
17 Zhejiang Hisun Group Co., Ltd.
18 Shanghai Leiyunshang Pharmaceutical Co., Ltd.
19 Yantai New Era Health Industry Co., Ltd.
20 Nanjing Pharmaceutical Industry (Group) Co., Ltd.
21 Hangzhou Fast China Pharmaceutical (Group) Co., Ltd.
22 GE Hangwei Medical Systems Co. Ltd.
23 Astra-Zeneca Pharmaceutical Co. Ltd.
24 Zhejiang Medicine Co.,Ltd. Xinchang Pharmaceutical Factory
25 Shenzhen Wanji Pharmaceutical Co.,Ltd.
26 Shanghi Roche Pharmaceutical Co. Ltd.
27 Guangzhou Beiyunshan Pharmaceutical Group Co., Ltd.
28 Chengzhi Shareholding Co., Ltd.
29 Yishui Dadi Corn Development Co., Ltd.
30 Chongqing Holley Shareholding Co., Ltd.
31 Zhejiang NHU Company Ltd.
32 Weihai Weigao Group Co., Ltd.
33 Bayer (China) Healthcare Co., Ltd.
34 China (Hangzhou) Qingchunbao Group Co., Ltd.
35 Sino-American Shanghai Squibb Pharmaceutical Co. Ltd.
36 Tianjin SmithKline & French Pharmaceutical Co. Ltd.
37 Fujian Fukang Pharmaceutical Co., Ltd.
38 Novo Nordisk (China) Pharmaceutical Co., Ltd.
39 Jiangsu Hengrui Pharmaceutical Co. Ltd.
40 Pfizer Pharmaceuticals Ltd (Dalian)
41 Zouping Yikang Group Co., Ltd.
42 Shangdong Xiangyu Chemical Fibre Textile Co., Ltd.
43 Taiji Group Fuling Pharmaceutical Plant
44 Shanghai New Asiatic Pharmaceuticals Company
45 Shandong Lunan Pharmaceutical Co. Ltd.
46 Beijing Tongrentang Technology Development Co. Ltd.
47 Beijing Tongrentang Co. Ltd.
48 Agriculture Industrial Commerce Association of Xinxiang County Liu Village
49 Shandong Zibo Shanchuan Medical Instrument Co., Ltd.
50 OMRON Dalian Co., Ltd.
51 Dankong Industry & Trade Group Co., Ltd.
52 Hunan Jiuzhitang Co., Ltd.
53 Shenzhen Mindray Bio-Medical Electronics Co., Ltd.
54 Zhuhai United Laboratories Co., Ltd.
55 Shandong Yuwang Industrial and Commercial Co., Ltd.
56 Jiangxi Renhe Pharmaceutical Group Co.
57 Shandong Shansong Bioengineering Group Co., Ltd.
58 Qilu Pharmaceutical Co., Ltd.
59 Beijing Novartis Pharmaceutical Co., Ltd.
60 Jilin Aodong Pharmaceutical Group Co., Ltd.
61 Shandong Dong'e Donkey-Hide Gelatin Group Co., Ltd.
62 Sanjiu Medical and Pharmaceutical Co., Ltd.
63 Zibo Jincheng Industry Co., Ltd.
64 Jiangxi Jimin Kexin Co. Ltd.
65 Hubei Wuhan Jianmin Pharmaceutical Factory
66 Hebei Hengli Group Pharmaceutical Co.
67 Chendu Di'ao Group Co., Ltd.
68 Xi'an Lijun Pharmaceutical Co., Ltd.
69 Zhejiang Conba Group Co., Ltd.
70 Heze Ruiying Pharmaceutical Group
71 Novozymes (China) Biotechnology Co., Ltd.
72 Shandong Shida Shenghua Chemical Co., Ltd.
73 Tianjin Tianyao Pharmaceutical Co., Ltd.
74 Shenwei Pharmaceutical Co., Ltd.
75 Hangzhou Minsheng Pharmaceutical Group Co., Ltd.
76 Shouguang Fukang Pharmaceutical Co., Ltd
77 Glaxo&SmithKline Pharmaceutical (Suzhou) Co. Ltd.
78 DSM Vitamins (Shanghai) Co.,Ltd.
79 Jiangzhong Pharmaceutical Co. Ltd.
80 Shandong Yimeng Xinhua Pharmaceutical Factory
81 Shandong Lvye Pharmaceutical Co., Ltd.
82 Zhejiang Zhongbei Jiuzhou Group Co., Ltd.
83 Jiangsu Jichuan Pharmaceutical Co., Ltd.
84 Jiangsu Suzhong Pharmaceutical Co. Ltd.
85 Sichuan Kelun Pharmaceutical Co., Ltd.
86 Jiangsu Kangyuan Pharmaceutical Co., Ltd.
87 Shijiazhuang No. 4 Pharmaceutical Co., Ltd.
88 Zhejiang Hisoar Pharm. & Chem. Co., Ltd.
89 Yunnan Baiyao Pharmaceutical Factory
90 Shanghai Asia Pioneer Pharmaceutical Co., Ltd.
91 Henan Topfond Pharmaceutical Co., Ltd.
92 Guizhou Yibai Pharmaceutical Factory
93 Suzhou Dawnrays Pharmaceutical Co., Ltd.
94 Ningxia Traditional Chinese Medicine Factory
95 Guilin Sanjin Group Co., Ltd.
96 Rexton (Suzhou) Hearing Systems Co. Ltd
97 Knowles Electronics (Suzhou) Co., Ltd.
98 He`nan Wanxi Pharmaceutical Factory
99 Jiangsu Lianyungang Hansen Pharmaceutical Co., Ltd.
100 Hangzhou Sanofi-Synthelabo Minsheng Pharmaceutical Co Ltd

For more detials, please visit http://www.pharmaceutical-market.com/ . China Pharmaceutical Market

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