Drug patents are not a fact of nature

Yesterday, the New York Times headlined a business article about that perennial point of contention: drug company patents.

NEW DELHI — People in developing countries in Africa and Asia will continue to have access to low-cost copycat versions of drugs for diseases like H.I.V. and cancer, at least for a while. … The debate over global drug pricing is one of the most contentious issues between developed countries and the developing world. While poorer nations maintain they have a moral obligation to make cheaper, generic drugs available to their populations — by limiting patents in some cases — the brand name pharmaceutical companies contend the profits they reap are essential to their ability to develop and manufacture innovative medicines.

… In the United States, companies can get a new patent for a drug by altering its formula or changing its dosage. The companies contend that even minor improvements in medicines — changing a pill dosage to once a day instead of twice a day — can have a significant impact on patient wellness. But critics say the majority of drug patents given in the United States are for tiny changes that often provide patients few meaningful benefits but allow drug companies to continue charging high prices for years beyond the original patent life.

… While advocates for the pharmaceutical industry argue that fairly liberal rules on patents spur innovation, a growing number of countries are questioning why they should pay high prices for new drugs. Argentina and the Philippines have passed laws similar to the one enacted in India, placing strict limits on patents.

This article is a fine example of journalists accepting framing that constrains possible understandings of the issues involved. The writers could have improved their grasp of the competing interests here by considering the viewpoint in a free e-book by economist Dean Baker, The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer. Consider this:

In policy discussions, patents and copyrights are usually treated as part of the natural order, their enforcement is viewed as being as basic as the right to free speech or the free exercise of religion. In fact, there is nothing natural about patents and copyrights, they are relics of the Medieval guild system. They are state-granted monopolies, the exact opposite of a freely competitive market. The nanny state will arrest an entrepreneur who sells a patent-protected product in competition with the person to whom it has granted a patent monopoly.

Patents and copyrights do serve an economic purpose — they are a way to promote research and innovation in the case of patents, and a means of supporting creative and artistic work in the case of copyrights. However, just because patents and copyrights can be used for these purposes, it does not follow that they are the only mechanisms or the most efficient mechanisms to accomplish these purposes.

… It is necessary to have mechanisms for supporting innovation, and many alternatives to patents and copyrights already exist. The government directly funds $30 billion a year in biomedical research through the National Institutes of Health, a sum that is almost as large as the amount that the pharmaceutical industry claims to spend. A vast amount of creative work is supported by universities and private foundations. While these alternative mechanisms would have to be expanded, or new ones created, in the absence of patent and copyright protection, they demonstrate that patents and copyrights are not essential for supporting innovation and creative work. The appropriate policy debate is whether they are the best mechanisms.

My emphasis. Just because enterprises have long been organized in a familiar fashion doesn't mean that this is the only way. The patent system is a social invention; if we chose, we could try other incentives. In the book, Baker suggests alternative spurs to innovation that don't involve monopoly profits for a few companies or exclude the world's poor from access to drugs.

Not only can Baker's book be freely downloaded at the link above, you can even get it as a free audiobook here.