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> Bayer Chief Executive Officer Marijn Dekkers called the compulsory license “essentially theft.” He's a bit mixed up. Government enforcement of your temporary

> Bayer Chief Executive Officer Marijn Dekkers called the compulsory license “essentially theft.” He's a bit mixed up. Government enforcement of your temporary monopoly is a privilege. Failing to give you the privilege you think you deserve is not the same thing as stealing from you.

slaxman 13y ago
May be I am over reacting, but I feel that he has no respect for the laws of the country where he wants to do business. I am sure Bayer knew how the patent system in India works before they entered the market.
- mbreese 13y ago
  Maybe I'm missing some history, but I don't think that Bayer ever wanted to enter that market. He doesn't want to do business in India. This basically says that if you aren't in the Indian market or aren't offering your product for a price that India agrees with, your IP protection is meaningless. This starts to get murky from an ethical point of view because we are talking about a cancer medication, and I doubt that software IP would fall under the compulsory licensing. But, cancer drugs are expensive to develop. Bayer should absolutely be afforded some IP protection to recoup the costs of developing the drug. Otherwise, they'll just stop; or more likely, just increase the prices elsewhere around the world. I'm sure that Bayer isn't as concerned with losing the Indian market for the drug. But rather, they should be more worried about the Indian generic version of the drug hitting the international market.
  - cma 13y ago
    " or more likely, just increase the prices elsewhere around the world." Are you saying they will make more money by increasing prices around the world? If so, why wouldn't they do that regardless of India's decision? They basically ignore supply/demand curves until India makes them angry? Or are you making some weird argument where they have to raise their prices in the face of medical tourism as opposed to the lowering everyone usually assumes?
    - mbreese 13y ago
      Let's say the drug cost $1 billion to develop (factoring all of the other drugs that failed that they also need to pay for). Now they price that out so that they can recoup that $1 billion over the lifetime of the patent, plus a reasonable profit (remember these are public companies). Let's say that they want to sell the drug in India, and expect to get $50 million out of that market. Now, since India is no longer a market for the drug, the amount of money that Bayer needed to make from India needs to be made from the rest of the world. That's $50 million more that the rest of the world will need to spend to subsidize India. Even worse - what happens if the Indian generic form of the drug hits the international market? Now Bayer needs to recoup even more from the remaining international patients/insurance. Or, what happens if patients from wealthier countries start going to India for treatment instead of staying home? Even more that Bayer needs to charge the rest of the world. They need to make a profit to finance their next drugs in their pipeline. The cost savings in medical tourism are usually attributed to lower labor and facility costs, not necessarily cheaper drugs.
      - cma 13y ago
        Sorry no. They don't price things so they can recoup a fixed amount + a reasonable profit. Do you really think they say hmm we could price it a little higher and make more but we'll just stick to a reasonable profit. Likewise do you think consumers say, wow they spent a billion dollars developing this, therefore I am willing to pay them ($1 billion + 20% reasonable profit)/(total number of units sold)? That's not how supply and demand works. Drug companies price it to make the most on it regardless of any sunk costs. Why would thyley choose to make more or less money based on whether they are currently angry at India? They will always choose more or the shareholders can actually sue the board for abandoning their interests.
        mbreese 13y ago
        Over the long term... yes, they do try to recoup the costs of developing a drug and a reasonable profit. I was deliberating simplifying things. Over the short term, the costs of developing a drug are a sunk cost that has already been financed using the profits from the previous round of drugs. They try to get as much out of the market as they can with their current lineup of drugs so that they can pay for the pipeline that is developing the next round. Over the long term over many drugs on the market, they are hoping that they are able to make a reasonable profit. They have to recoup the costs of developing each drug (including the ones that failed before getting to market). And to satisfy shareholders, they try to make as much profit as they can. The amount that Pharma charges is based on a variety of factors, but you're right that it is largely what the market will bear in the presence competing drugs. For a cancer drug, the amount is whatever the insurance companies will pay. And that amount is always negotiated. The market will determine what is reasonable. However, they still have a giant research and development machine that must be financed. If they aren't making enough on their current drug lineup, a company either needs to charge higher prices or slim down their drug development pipeline.
  - Crito 13y ago
    > This basically says that if you aren't in the Indian market or aren't offering your product for a price that India agrees with, your IP protection is meaningless. That seems reasonable. Why should we expect India to grant privileges to a company that wants nothing to do with India? They are giving India no reason to give a shit. If Bayer has an issue with Indian generics getting into countries that it does have an interest in doing business in, then Bayer can appeal to those countries to block the import of those generics.
  - pgeorgi 13y ago
    That Indian generic sold elsewhere would be subject to patent licenses active elsewhere, payable to Bayer. If people try to get it across borders without paying the license, customs are generally quite helpful with collecting such contraband.
  - warfangle 13y ago
    Dying of cancer is more expensive than developing a cure, if you're ethical and think life is more important than money.
  - cynix 13y ago
    > This starts to get murky from an ethical point of view because we are talking about a cancer medication, and I doubt that software IP would fall under the compulsory licensing. But, cancer drugs are expensive to develop. Bayer should absolutely be afforded some IP protection to recoup the costs of developing the drug. Otherwise, they'll just stop; or more likely, just increase the prices elsewhere around the world. If they wanted to make money in the Indian market and be afforded IP protection, they could've priced the drug reasonably. Surely a smaller profit is better than no profit?
barking 13y ago
You could say the same thing about anything anyone owns. For government read society. Drug companies risk a lot of money in research. The prospect of reward is why they do it Society has determined that it's a good thing (for society) to reward certain types of risk takers. Take that 'privilege' away and society will suffer.
- larubbio 13y ago
  Although I'm sure there has to be more to this story. If Bayer wasn't going to sell the drug in India (since it wasn't made for Indians) has that 'privilege' been taken from them? They still have monopoly rights elsewhere in the world. It does make me wonder why, in an attempt to capture more revenue, it isn't being released and priced locally in the Indian market? I'm guessing fears of re-export degrading sales in the western world?
- timbre 13y ago
  Different societies have determined different things. Indian society in particular has determined that reducing this reward to risk-takers in order to widen access to drugs is a worthwhile trade.
throwaway_yy2Di 13y ago
Arguably the monopoly is intrinsic: pharma companies have the pre-existing ability to hide the product of their R&D, e.g. by only selling it in closed clinics, or by obfuscating pills with thousands of inert ingredients ("DRM for wetware"). In this view, monopoly rights are granted to extract the social benefit of public disclosure. (And "disclosure" still minimal and ineffective: pharma is massively secretive about their research -- rationally -- which certainly isn't globally optimal).
- scotty79 13y ago
  And the goverment by the virtue of having tanks and jets and soldiers has intrinsic monopoly to decide what are the rules that have to be observed to even be allowed access to the market of given country.
  - deleted 13y ago
    [deleted]
  - gus_massa 13y ago
    The companies can move to another country. One with more nuclear bombs! And force the people from the other country to travel if they want the treatment.
    - scotty79 13y ago
      Yes, you can migrate to country with fewer rules and not operate on other markets. Like a brothel with underaged prostitutes that people from other countries travel to to buy services disallowed on their native markets. In practice it doesn't work that great. Stronger countries with richer customers tend to use their leverage and have more rules. It definitely works for illegal products but I doubt it would work for goods that are legal but coming from manufacturer who's illegal. Goods would got cloned by legal manufacturers pretty quick if they were so good they'd be worth traveling for.
  - deleted 13y ago
    [deleted]
jpttsn 13y ago
I'm personally against IP and I don't think he has a right to the temporary monopoly. If the government shut down all patents, I don't think he'd be right to call it theft. Still, perhaps he has some sort of point. The way he government selectively disables this provision has a tinge of dishonesty about it. Perhaps it could be argued he has the right to an equal monopoly protection relative to others.
- wlievens 13y ago
  Just curious: how would an economy work in you hypothetical world where intellectual property does not exist? Honest question.
  - gnaritas 13y ago
    The same way it did before we introduced the absurd notion that someone can own an idea. Innovation will flourish as constraints are removed and expensive stuff will shift to public funding or crowd funding rather than private funding. Rich people trying to make a killing is hardly the only place to find money these days.
    - wlievens 13y ago
      Intellectual property is about much more than patents. Are you seriously saying that if I copy your work directly (eg source code) and rebrand it, I'm not doing anything wrong? Just innovating?
      - gnaritas 13y ago
        I'm saying we've pushed the notion of IP too far when I can't see your work and duplicate it on my own without running foul of some bullshit patent. I'm fine with the general idea of copyright, but not it's implementation. But software patents, hell no. Patents on drugs, hell no, patents on processes to make those drugs, maybe, but not on the drug itself. People should be free to reverse engineer anything without violating the law. Reverse engineering should never be illegal. Ideas should not be own-able. Your software is not an idea, it's an implementation of an idea, you should get some protection of your implementation, nothing more. If someone else can do it better, or at all, they should be able to. Ideas are not property, copying an idea is not theft.
huhtenberg 13y ago
Witty sarcasm much? Without this "privilege" a company has no incentive to develop anything new, leave alone anything that requires massive R&D investments. What India did is it effectively said that they don't want to participate in the development of new drugs, so their stance on this matter is frankly quite ludicrous. Try this for a comparison - Germany declares that all software sold in their country should be priced at $1 or less. Would you still be talking about software companies being crybabies for objecting this? Doubt it.
- hobs 13y ago
  I think something that hasn't been mentioned is how much they spent to develop the drug, and how much they expect to recoup. If someone has to take a drug for 3 years and pays 195,000 dollars, and there are tens of thousands of patients, they can certainly price it lower than that. If the price per year is 1950 (3%) and a million people are using the drug, that that 1.95 billion dollars. Per Year.
  - nostromo 13y ago
    It's important to remember that you're not just paying for the successful drug. You're paying for all of the unsuccessful ones as well.
    - code_duck 13y ago
      Plus, you're also paying for the rather large profits made by companies in this sector.
      - btian 13y ago
        If you think profits are high, why don't you set up shop and develop your own drugs and undercut your competitors? After all, profits attract competition.
        arg01 13y ago
rayiner 13y ago
What is "theft" other than something that only exists in the context of government enforcement of an artificial privilege? And is this privilege particularly artificial relative to others we accept readily? Most people believe that people should have the privilege to own land. Yet if you think about it, land possession is far less deserving of the government's protection than a drug formula. This drug is something Bayer created, that didn't exist before. Land is something that nobody created, that people simply claimed (in the U.S., those who "own it" derive their ownership from dispossessing Indians), that will continue to exist long after everyone who claims to "own it" is long dead. Why is land more deserving of an artificial government monopoly than a drug formula?
- larubbio 13y ago
  Governments can take your land through Eminent Domain if it is shown to benefit society as a whole. Also is the government "taking" the drug, or just not extending monopoly patent rights for it? Also even patents (in the US) have a provision that they be reasonable licensed in exchange for gaining the temporary monopoly.
  - tokenadult 13y ago
    Governments can take your land through Eminent Domain if it is shown to benefit society as a whole. By the United States Constitution, in the United States such a taking must be with compensation (reasonable, market-based compensation). And the same is true in most democratic countries with an independent judiciary. (This is notably not true in China, which is why seizing land from peasants is a favorite way for corrupt local officials to enrich themselves.)
    - larubbio 13y ago
      Correct, I called out the provision that patents must be licensed at a reasonable rate in the attempt to draw the parallel with the reasonable market rate compensation for eminent domain, but left that portion out by accident. Thank you for calling it out.
  - 13y ago

slaxman 13y ago

May be I am over reacting, but I feel that he has no respect for the laws of the country where he wants to do business. I am sure Bayer knew how the patent system in India works before they entered the market.

mbreese 13y ago
Maybe I'm missing some history, but I don't think that Bayer ever wanted to enter that market. He doesn't want to do business in India. This basically says that if you aren't in the Indian market or aren't offering your product for a price that India agrees with, your IP protection is meaningless. This starts to get murky from an ethical point of view because we are talking about a cancer medication, and I doubt that software IP would fall under the compulsory licensing. But, cancer drugs are expensive to develop. Bayer should absolutely be afforded some IP protection to recoup the costs of developing the drug. Otherwise, they'll just stop; or more likely, just increase the prices elsewhere around the world. I'm sure that Bayer isn't as concerned with losing the Indian market for the drug. But rather, they should be more worried about the Indian generic version of the drug hitting the international market.
- cma 13y ago
  " or more likely, just increase the prices elsewhere around the world." Are you saying they will make more money by increasing prices around the world? If so, why wouldn't they do that regardless of India's decision? They basically ignore supply/demand curves until India makes them angry? Or are you making some weird argument where they have to raise their prices in the face of medical tourism as opposed to the lowering everyone usually assumes?
  - mbreese 13y ago
    Let's say the drug cost $1 billion to develop (factoring all of the other drugs that failed that they also need to pay for). Now they price that out so that they can recoup that $1 billion over the lifetime of the patent, plus a reasonable profit (remember these are public companies). Let's say that they want to sell the drug in India, and expect to get $50 million out of that market. Now, since India is no longer a market for the drug, the amount of money that Bayer needed to make from India needs to be made from the rest of the world. That's $50 million more that the rest of the world will need to spend to subsidize India. Even worse - what happens if the Indian generic form of the drug hits the international market? Now Bayer needs to recoup even more from the remaining international patients/insurance. Or, what happens if patients from wealthier countries start going to India for treatment instead of staying home? Even more that Bayer needs to charge the rest of the world. They need to make a profit to finance their next drugs in their pipeline. The cost savings in medical tourism are usually attributed to lower labor and facility costs, not necessarily cheaper drugs.
    - cma 13y ago
      Sorry no. They don't price things so they can recoup a fixed amount + a reasonable profit. Do you really think they say hmm we could price it a little higher and make more but we'll just stick to a reasonable profit. Likewise do you think consumers say, wow they spent a billion dollars developing this, therefore I am willing to pay them ($1 billion + 20% reasonable profit)/(total number of units sold)? That's not how supply and demand works. Drug companies price it to make the most on it regardless of any sunk costs. Why would thyley choose to make more or less money based on whether they are currently angry at India? They will always choose more or the shareholders can actually sue the board for abandoning their interests.
      - mbreese 13y ago
        Over the long term... yes, they do try to recoup the costs of developing a drug and a reasonable profit. I was deliberating simplifying things. Over the short term, the costs of developing a drug are a sunk cost that has already been financed using the profits from the previous round of drugs. They try to get as much out of the market as they can with their current lineup of drugs so that they can pay for the pipeline that is developing the next round. Over the long term over many drugs on the market, they are hoping that they are able to make a reasonable profit. They have to recoup the costs of developing each drug (including the ones that failed before getting to market). And to satisfy shareholders, they try to make as much profit as they can. The amount that Pharma charges is based on a variety of factors, but you're right that it is largely what the market will bear in the presence competing drugs. For a cancer drug, the amount is whatever the insurance companies will pay. And that amount is always negotiated. The market will determine what is reasonable. However, they still have a giant research and development machine that must be financed. If they aren't making enough on their current drug lineup, a company either needs to charge higher prices or slim down their drug development pipeline.
- Crito 13y ago
  > This basically says that if you aren't in the Indian market or aren't offering your product for a price that India agrees with, your IP protection is meaningless. That seems reasonable. Why should we expect India to grant privileges to a company that wants nothing to do with India? They are giving India no reason to give a shit. If Bayer has an issue with Indian generics getting into countries that it does have an interest in doing business in, then Bayer can appeal to those countries to block the import of those generics.
- pgeorgi 13y ago
  That Indian generic sold elsewhere would be subject to patent licenses active elsewhere, payable to Bayer. If people try to get it across borders without paying the license, customs are generally quite helpful with collecting such contraband.
- warfangle 13y ago
  Dying of cancer is more expensive than developing a cure, if you're ethical and think life is more important than money.
- cynix 13y ago
  > This starts to get murky from an ethical point of view because we are talking about a cancer medication, and I doubt that software IP would fall under the compulsory licensing. But, cancer drugs are expensive to develop. Bayer should absolutely be afforded some IP protection to recoup the costs of developing the drug. Otherwise, they'll just stop; or more likely, just increase the prices elsewhere around the world. If they wanted to make money in the Indian market and be afforded IP protection, they could've priced the drug reasonably. Surely a smaller profit is better than no profit?

barking 13y ago

You could say the same thing about anything anyone owns. For government read society. Drug companies risk a lot of money in research. The prospect of reward is why they do it Society has determined that it's a good thing (for society) to reward certain types of risk takers. Take that 'privilege' away and society will suffer.

larubbio 13y ago
Although I'm sure there has to be more to this story. If Bayer wasn't going to sell the drug in India (since it wasn't made for Indians) has that 'privilege' been taken from them? They still have monopoly rights elsewhere in the world. It does make me wonder why, in an attempt to capture more revenue, it isn't being released and priced locally in the Indian market? I'm guessing fears of re-export degrading sales in the western world?
timbre 13y ago
Different societies have determined different things. Indian society in particular has determined that reducing this reward to risk-takers in order to widen access to drugs is a worthwhile trade.

throwaway_yy2Di 13y ago

Arguably the monopoly is intrinsic: pharma companies have the pre-existing ability to hide the product of their R&D, e.g. by only selling it in closed clinics, or by obfuscating pills with thousands of inert ingredients ("DRM for wetware"). In this view, monopoly rights are granted to extract the social benefit of public disclosure. (And "disclosure" still minimal and ineffective: pharma is massively secretive about their research -- rationally -- which certainly isn't globally optimal).

scotty79 13y ago
And the goverment by the virtue of having tanks and jets and soldiers has intrinsic monopoly to decide what are the rules that have to be observed to even be allowed access to the market of given country.
- deleted 13y ago
  [deleted]
- gus_massa 13y ago
  The companies can move to another country. One with more nuclear bombs! And force the people from the other country to travel if they want the treatment.
  - scotty79 13y ago
    Yes, you can migrate to country with fewer rules and not operate on other markets. Like a brothel with underaged prostitutes that people from other countries travel to to buy services disallowed on their native markets. In practice it doesn't work that great. Stronger countries with richer customers tend to use their leverage and have more rules. It definitely works for illegal products but I doubt it would work for goods that are legal but coming from manufacturer who's illegal. Goods would got cloned by legal manufacturers pretty quick if they were so good they'd be worth traveling for.
- deleted 13y ago
  [deleted]

jpttsn 13y ago

I'm personally against IP and I don't think he has a right to the temporary monopoly. If the government shut down all patents, I don't think he'd be right to call it theft. Still, perhaps he has some sort of point. The way he government selectively disables this provision has a tinge of dishonesty about it. Perhaps it could be argued he has the right to an equal monopoly protection relative to others.

wlievens 13y ago
Just curious: how would an economy work in you hypothetical world where intellectual property does not exist? Honest question.
- gnaritas 13y ago
  The same way it did before we introduced the absurd notion that someone can own an idea. Innovation will flourish as constraints are removed and expensive stuff will shift to public funding or crowd funding rather than private funding. Rich people trying to make a killing is hardly the only place to find money these days.
  - wlievens 13y ago
    Intellectual property is about much more than patents. Are you seriously saying that if I copy your work directly (eg source code) and rebrand it, I'm not doing anything wrong? Just innovating?
    - gnaritas 13y ago
      I'm saying we've pushed the notion of IP too far when I can't see your work and duplicate it on my own without running foul of some bullshit patent. I'm fine with the general idea of copyright, but not it's implementation. But software patents, hell no. Patents on drugs, hell no, patents on processes to make those drugs, maybe, but not on the drug itself. People should be free to reverse engineer anything without violating the law. Reverse engineering should never be illegal. Ideas should not be own-able. Your software is not an idea, it's an implementation of an idea, you should get some protection of your implementation, nothing more. If someone else can do it better, or at all, they should be able to. Ideas are not property, copying an idea is not theft.

huhtenberg 13y ago

Witty sarcasm much? Without this "privilege" a company has no incentive to develop anything new, leave alone anything that requires massive R&D investments. What India did is it effectively said that they don't want to participate in the development of new drugs, so their stance on this matter is frankly quite ludicrous. Try this for a comparison - Germany declares that all software sold in their country should be priced at $1 or less. Would you still be talking about software companies being crybabies for objecting this? Doubt it.

hobs 13y ago
I think something that hasn't been mentioned is how much they spent to develop the drug, and how much they expect to recoup. If someone has to take a drug for 3 years and pays 195,000 dollars, and there are tens of thousands of patients, they can certainly price it lower than that. If the price per year is 1950 (3%) and a million people are using the drug, that that 1.95 billion dollars. Per Year.
- nostromo 13y ago
  It's important to remember that you're not just paying for the successful drug. You're paying for all of the unsuccessful ones as well.
  - code_duck 13y ago
    Plus, you're also paying for the rather large profits made by companies in this sector.
    - btian 13y ago
      If you think profits are high, why don't you set up shop and develop your own drugs and undercut your competitors? After all, profits attract competition.
      - arg01 13y ago

rayiner 13y ago

What is "theft" other than something that only exists in the context of government enforcement of an artificial privilege? And is this privilege particularly artificial relative to others we accept readily? Most people believe that people should have the privilege to own land. Yet if you think about it, land possession is far less deserving of the government's protection than a drug formula. This drug is something Bayer created, that didn't exist before. Land is something that nobody created, that people simply claimed (in the U.S., those who "own it" derive their ownership from dispossessing Indians), that will continue to exist long after everyone who claims to "own it" is long dead. Why is land more deserving of an artificial government monopoly than a drug formula?

larubbio 13y ago
Governments can take your land through Eminent Domain if it is shown to benefit society as a whole. Also is the government "taking" the drug, or just not extending monopoly patent rights for it? Also even patents (in the US) have a provision that they be reasonable licensed in exchange for gaining the temporary monopoly.
- tokenadult 13y ago
  Governments can take your land through Eminent Domain if it is shown to benefit society as a whole. By the United States Constitution, in the United States such a taking must be with compensation (reasonable, market-based compensation). And the same is true in most democratic countries with an independent judiciary. (This is notably not true in China, which is why seizing land from peasants is a favorite way for corrupt local officials to enrich themselves.)
  - larubbio 13y ago
    Correct, I called out the provision that patents must be licensed at a reasonable rate in the attempt to draw the parallel with the reasonable market rate compensation for eminent domain, but left that portion out by accident. Thank you for calling it out.
- 13y ago