Photo by David Trunks
The New York Times had an interesting article about the consequences of the Olympics being common in India, China and several other countries. The rate reduction in these countries could eventually approach 99 percent.
According to the piece, Ozympic sells about $300 for a month’s worth of food in developing countries like China and India. It is expected to sell for about $15 for a one-month dose when generics are introduced, and the price will eventually drop to about $3 once there is enough competition in the market.
In the United States and other wealthy countries, price differences are even greater. People without insurance can pay $1,000 for a month’s dose, although there are discounts that can cut that price in half. Drugs still have several more years of patent protection in the United States because of regulations put into law, due to pharmaceutical industry lobbying, that extend that protection when the FDA approval process takes longer.
Drugs are cheap: patent monopoly makes them expensive
This piece is useful for showing the dramatic difference it can make in people’s lives if medicine is available at generic prices. With rare exceptions, drugs are cheap to manufacture and distribute; However, they can become expensive because governments grant drug companies patent monopolies or other forms of protection.
As the piece notes, hundreds of millions of people in these countries suffer from diabetes or obesity that could potentially be helped by Olympic. Many are unable to get insurance, or the government, to pay the patent-protected price and cannot afford to pay out-of-pocket. However, when it becomes available as a generic, it will be affordable for many of these people.
If Ozympic and other drugs are available as generics from the day of approval, only the poor will not be able to afford them. And governments and aid agencies can realistically hope to even pick up the tab for them.
There are alternatives to patent-pending-funded research
The reason for the patent monopoly is that they are necessary to provide incentives for research. But patents are only one way to fund research. There are other mechanisms, such as direct payments through the public sector, that are now in place. The government spends more than $50 billion annually on biomedical research through the National Institutes of Health and other government agencies.
That figure would have to triple or even quadruple to accommodate the research now supported by patent monopolies, but the United States would spend more than $500 billion a year ($4,000 per household) to be able to buy all drugs at generic prices. This will cover the cost of additional public expenditure on research.
There are good reasons to think that such a mechanism would make the research process more efficient. As a condition of receiving funding, the government may require that all results be implemented on the website as soon as possible. In this way, researchers around the world will be able to quickly take advantage of promising findings and warn of dead ends.
It will also reduce the amount of money wasted in researching counterfeit drugs. When there is a major breakthrough drug like Ozympic, other companies try to develop comparable drugs that can get around the patent, in order to get a share of the patent rent of the successful drug. It is desirable to have more than one drug to treat a condition or disease, but research money would usually be better spent developing treatments for diseases where there is no effective treatment.
Perhaps most importantly, removing patent dependency removes the incentive for drug companies to lie about the safety and effectiveness of their drugs. The most egregious example of this was when drug companies misled doctors about the addictiveness of the new generation of opioids, which contributed greatly to the opioid crisis. But this problem arises all the time with drug companies constantly creating new schemes to push their drugs on doctors and patients, even when they may not be the best treatment.
We need a serious discussion about funding drug development
The actual debate on the best mechanisms for funding drug development is long overdue. Much of the economics profession has actively resisted such discussions and claimed that state-granted patent monopolies are free market This apparently absurd claim has been taken seriously in policy circles for decades.
Maybe if we survive the Trump madness we can finally have a serious discussion about this very important issue. And perhaps a post-Trump realist speech will force economists to shut up about the 10 percent tariff, admitting that government-granted patent monopolies that raise prices by 10,000 percent are also market interference.
This first appeared on Dean Baker’s Beat Press blog.
#freemarket #Olympics #huge #difference #tens #millions #people