There
is a general debate on whether patents are incentivizing or hurting innovation
in various industries. Here, I want to focus on medical care, including
pharmaceuticals and medical devices. It is well known that developing drugs
requires a large amount of investment from long term research and expensive
clinical trials. So what incentivizes the development of drugs, other than the
desire and need to treat and cure diseases? Some would say it is the protection
offered by patents that allows pharma companies to gain a financial return on
their investments. However, there is another side to the story, as some argue
that patents are holding back medical research, since researchers can no longer
access patented materials or methods. Another con due to patents is that they
are responsible for the increased prices of essential medicines in developing
countries.
I
read an article that was published in January 2010 by E. Richard Gold, et al.
In both high and low income countries, existing patents increase the cost of
medicines. But what about other services, such as diagnostics? For other
services, is usually depends on whether the newly patented medicines turn out
to be cheaper than those that are existing or not. Overall, the patent system
has resulted in a huge increase in healthcare costs and decreasing levels of
innovation. Overall healthcare costs are increasing rapidly, but the fastest
growing sector of these costs are pharmaceutical products. A shockingly
surprising fact is that "the cost of developing new medicine from
discovery through clinical trials appears to double every decade. Yet, …
industry is producing fewer new drugs every year of which a declining
percentage is truly innovative"[1]. As I mentioned in my earlier blog post
with drug patent evergreening, many new patents are just on small changes to
existing drugs. It is essential to find a balance between the rights of patent
owners and the general public needs. Patents in the public health arena are
really interesting because the financial incentives provided by patents is not enough
to assure that products in areas such as neglected diseases will be pursued [2].
What changes do you think need to be implemented in the patent system to
account for this?
Links:
I have thought of this before. For developing countries it is very difficult to strike the balance between affordable medicine and the encouragement of research investment. I think that there has been numerous studies done in order to solve this problem. One proposal that I want to explore is the idea of subsidizing. If the government subsidized the medicine cost, the consumer surplus will increase and the profit will remain for the drug companies. The only key point is the government expenditure. In which case this would be determined by countries that seek to deliver aid for developing countries.
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