4 ms·

I'm less anti-patent than most people here, but I think that's a very good article. In particular, the treatment of pharmaceuticals is not the absurd "if we ju

by kvb 14y ago

I'm less anti-patent than most people here, but I think that's a very good article. In particular, the treatment of pharmaceuticals is not the absurd "if we just got rid of patents, innovation would continue at the same rate" argument that some patent opponents advance, but a more nuanced take on what other changes could be made to the larger system to maintain appropriate incentives.

yxhuvud 14y ago
When it comes to pharmaceuticals, one has to remember that the vast majority of the costs involved are with the late stage trials that society mandates. That medicine is properly tested is not a bad thing, but there may be other ways to finance such tests without having to resort to monopolies.
- rayiner 14y ago
  You can't lump all clinical testing into the approval process. Drug companies have to do a certain amount of clinical testing just to see if the drug does anything. To make a computer comparison: just because you don't get your OS POSIX certified doesn't mean you don't need to run any tests. This graphic suggests that pre-FDA clinical trials still account for about 30% of the cost of developing new drugs: http://blogs-images.forbes.com/aroy/files/2012/04/fda_05t2.jpg http://blogs-images.forbes.com/aroy/files/2012/04/fda_05t2.j.... Even if you assume that all of the costs after that are allocable to the regulatory process (which is a liberal assumption--it's unlikely that drug companies would need to do zero human trials in the absence of regulation), developing a new drug is still a billion dollar endeavor. The reason drugs are such a great example of the applicability of patents is because they're the worst case scenario for the economic issue (free riding) that patents address: high capital costs for a product that is trivially reproduced. That dynamic exists independent of the regulatory process, and exists in other capital-intensive areas too (Tesla has a raft of patents on its technology, and Google has patents on self-driving cars, etc). The reason patents often seem ridiculous in the software context is that by and large they are not a bad scenario for free-riding. The capital requirements for software inventions tend to be very small. Looking at capital requirements also exposes a weakness in the article, which uses historical data. Capital requirements for new inventions was much lower in the past than they are today. The era of "lone inventors" is largely dead outside the software realm. We live in the era of "big science" where it costs $1 billion to get anything done. Patents are a lot more relevant in the face of high capital costs than in the face of low capital costs.
  - kvb 14y ago
    Note that I was commenting on the article from the parent to my comment, not to the one from the OP (which I found much less persuasive, and where the historical focus does seem like a real weakness). Even if a monopoly is the best way to incentivize pharma research, patents aren't the only way to achieve it - even today there is a complex set of mechanisms outside of patents, such as clinical trial data exclusivity for FDA approval.
- Someone 14y ago
  Also, there are indications pharma spends about twice on marketing what it spends on research: http://dcc2.bumc.bu.edu/hs/sager/pdfs/020402/Pharmaceutical%20Marketing%20and%20Research%20Spending%20APHA%2021%20Oct%2001.pdf http://dcc2.bumc.bu.edu/hs/sager/pdfs/020402/Pharmaceutical%... (2001), http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0050001 http://www.plosmedicine.org/article/info:doi/10.1371/journal... (2008)

by kvb 14y ago

yxhuvud 14y ago

When it comes to pharmaceuticals, one has to remember that the vast majority of the costs involved are with the late stage trials that society mandates. That medicine is properly tested is not a bad thing, but there may be other ways to finance such tests without having to resort to monopolies.

rayiner 14y ago
You can't lump all clinical testing into the approval process. Drug companies have to do a certain amount of clinical testing just to see if the drug does anything. To make a computer comparison: just because you don't get your OS POSIX certified doesn't mean you don't need to run any tests. This graphic suggests that pre-FDA clinical trials still account for about 30% of the cost of developing new drugs: http://blogs-images.forbes.com/aroy/files/2012/04/fda_05t2.jpg http://blogs-images.forbes.com/aroy/files/2012/04/fda_05t2.j.... Even if you assume that all of the costs after that are allocable to the regulatory process (which is a liberal assumption--it's unlikely that drug companies would need to do zero human trials in the absence of regulation), developing a new drug is still a billion dollar endeavor. The reason drugs are such a great example of the applicability of patents is because they're the worst case scenario for the economic issue (free riding) that patents address: high capital costs for a product that is trivially reproduced. That dynamic exists independent of the regulatory process, and exists in other capital-intensive areas too (Tesla has a raft of patents on its technology, and Google has patents on self-driving cars, etc). The reason patents often seem ridiculous in the software context is that by and large they are not a bad scenario for free-riding. The capital requirements for software inventions tend to be very small. Looking at capital requirements also exposes a weakness in the article, which uses historical data. Capital requirements for new inventions was much lower in the past than they are today. The era of "lone inventors" is largely dead outside the software realm. We live in the era of "big science" where it costs $1 billion to get anything done. Patents are a lot more relevant in the face of high capital costs than in the face of low capital costs.
- kvb 14y ago
  Note that I was commenting on the article from the parent to my comment, not to the one from the OP (which I found much less persuasive, and where the historical focus does seem like a real weakness). Even if a monopoly is the best way to incentivize pharma research, patents aren't the only way to achieve it - even today there is a complex set of mechanisms outside of patents, such as clinical trial data exclusivity for FDA approval.
Someone 14y ago
Also, there are indications pharma spends about twice on marketing what it spends on research: http://dcc2.bumc.bu.edu/hs/sager/pdfs/020402/Pharmaceutical%20Marketing%20and%20Research%20Spending%20APHA%2021%20Oct%2001.pdf http://dcc2.bumc.bu.edu/hs/sager/pdfs/020402/Pharmaceutical%... (2001), http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0050001 http://www.plosmedicine.org/article/info:doi/10.1371/journal... (2008)