Homer (was Re: [dvd-discuss] "back door legislation:" Must Canada extend its patent term ?)

From: Eric Eldred <eldred[_at_]eldritchpress.org>
Date: Wed, 18 Oct 2000 22:52:24 -0400

On Tue, Oct 17, 2000 at 10:35:45AM -0400, David Hale wrote:

>... 

> Actually, there is a good argument that extending the term should *lower*
> the cost of medicines under patent. A pharmaceutical company must apply for
> a patent on a drug when it is first developed, before any approval stages
> are entered. Then it must go through a lengthy FDA approval process, the
> end result of which is that the pharmaceutical companies have only a few
> short years to recoup their R&D expenses before the drug goes generic. The
> market for drug prices is driven in large part by the goverment because of
> Medicare. The government will agree to prices which the pharmaceutical
> companies can show have some reasonable relationship to their costs plus a
> reasonable profit level. With a longer patent term over which to recoup
> costs, the government, in theory at least, should accept a lower mark-up
> over marginal costs to cover the fixed R&D costs, which can now be amortized
> over a longer period. That's the theory anyway. Reality is more likely to
> be that the price point is set at the maximum the market will accept for a
> drug, and with most drugs, that's really high, because health is so highly
> valued. Extending the patent term just extends excessive profits.

Sounds reasonable. I would just add that the phamaceutical industry (what used to be called the "ethical" drug companies) see their business model much as the movie industry does: a very few blockbusters finance the many losers or break-evens. Thus they try to hold onto their "intellectual property" (in the form of patents) for as long as they can, on those few drugs that make tons of bucks.

The New York Times reported recently that some drug companies are being investigated because they were caught bribing lawyers and generic drug companies *not* to produce competitive drugs when their patents on the proprietary preparations had expired. And the senior senator from my own state has been pushing to get an extension on one patent for his alma mater, Columbia-- to give more income to them from the public (and, as you point out, from the government) through the companies that license the patent.

Some drug companies have found it profitable to buy up patents that might become competitive, just so as to keep those off the market and keep prices up. But almost all drug companies strive to patent--they can make so much more money from a proprietary drug than through some generic drug, even if the generic might be better. Then they claim that they cannot afford to develop drugs for poor people, nor sell them at a reasonable price in the developing world.

I'm reading Thomas Jefferson on patents. He wrote, "The fact is that one new idea leads to another, that to a third, and so on through a course of time until some one with whom no one of those ideas was original, combines all together and produces what is justly called a new invention."

In 1787, he wrote, "I see from the Journal of this morning, that they are robbing us of another of our inventions to give it to the English." He claimed this new "English invention" was known to every Philadelphian who had ventured across the river into New Jersey, and that it had been taken from there to Europe by Benjamin Franklin. The "invention," a wheel made of one piece, Jefferson pointed out, was found in Homer, and that is where New Jersey farmers had learned of it, "because ours are the only farmers who can read Homer." And, "if a new application of our old machines be a ground of monopoly, the patent law will take from us much more than it will give." Jefferson also was unhappy about the practice of permitting sales of patented devices by geographical districts only. "Every man should be free to use anywhere what he can lawfully buy anywhere. This abuse with the plagiarisms committed & imposed on us render the advantage of the patent law problematical."

Jefferson and Franklin alike disclaimed patent rights for their own extremely useful and potentially profitable inventions. And Jefferson as Secretary of State was responsible for administering the first U.S. patent law. Where have their spirit and ideas gone and what has happened to us now? Received on Thu Oct 19 2000 - 02:50:46 GMT