[Infowarrior] - Scrooge and intellectual property rights

[Richard Forno]

(The esteemed Michael Crichton said pretty much the same thing at the press
club last month........rf)

BMJ  2006;333:1279-1280 (23 December), doi:10.1136/bmj.39048.428380.80

Scrooge and intellectual property rights
A medical prize fund could improve the financing of drug innovations
http://www.bmj.com/cgi/content/full/333/7582/1279

At Christmas, we traditionally retell Dickens's story of Scrooge, who cared
more for money than for his fellow human beings. What would we think of a
Scrooge who could cure diseases that blighted thousands of people's lives
but did not do so? Clearly, we would be horrified. But this has increasingly
been happening in the name of economics, under the innocent sounding guise
of "intellectual property rights."

Intellectual property differs from other property‹restricting its use is
inefficient as it costs nothing for another person to use it. Thomas
Jefferson, America's third president, put it more poetically than modern
economists (who refer to "zero marginal costs" and "non-rivalrous
consumption") when he said that knowledge is like a candle, when one candle
lights another it does not diminish from the light of the first. Using
knowledge to help someone does not prevent that knowledge from helping
others. Intellectual property rights, however, enable one person or company
to have exclusive control of the use of a particular piece of knowledge,
thereby creating monopoly power. Monopolies distort the economy. Restricting
the use of medical knowledge not only affects economic efficiency, but also
life itself.

We tolerate such restrictions in the belief that they might spur innovation,
balancing costs against benefits. But the costs of restrictions can outweigh
the benefits. It is hard to see how the patent issued by the US government
for the healing properties of turmeric, which had been known for hundreds of
years, stimulated research. Had the patent been enforced in India, poor
people who wanted to use this compound would have had to pay royalties to
the United States.

In 1995 the Uruguay round trade negotiations concluded in the establishment
of the World Trade Organization, which imposed US style intellectual
property rights around the world. These rights were intended to reduce
access to generic medicines and they succeeded. As generic medicines cost a
fraction of their brand name counterparts, billions could no longer afford
the drugs they needed. For example, a year's treatment with a generic
cocktail of AIDS drugs might cost $130 (£65; {euro}170) compared with $10
000 for the brand name version.1 Billions of people living on $2-3 a day
cannot afford $10 000, though they might be able to scrape together enough
for the generic drugs. And matters are getting worse. New drug regimens
recommended by the World Health Organization and second line defences that
need to be used as resistance to standard treatments develops can cost much
more.

Developing countries paid a high price for this agreement. But what have
they received in return? Drug companies spend more on advertising and
marketing than on research, more on research on lifestyle drugs than on life
saving drugs, and almost nothing on diseases that affect developing
countries only. This is not surprising. Poor people cannot afford drugs, and
drug companies make investments that yield the highest returns. The chief
executive of Novartis, a drug company with a history of social
responsibility, said "We have no model which would [meet] the need for new
drugs in a sustainable way ... You can't expect for-profit organizations to
do this on a large scale."2

Research needs money, but the current system results in limited funds being
spent in the wrong way. For instance, the human genome project decoded the
human genome within the target timeframe, but a few scientists managed to
beat the project so they could patent genes related to breast cancer. The
social value of gaining this knowledge slightly earlier was small, but the
cost was enormous. Consequently the cost of testing for breast cancer
vulnerability genes is high. In countries with no national health service
many women with these genes will fail to be tested. In counties where
governments will pay for these tests less money will be available for other
public health needs.

A medical prize fund provides an alternative. Such a fund would give large
rewards for cures or vaccines for diseases like malaria that affect
millions, and smaller rewards for drugs that are similar to existing ones,
with perhaps slightly different side effects. The intellectual property
would be available to generic drug companies. The power of competitive
markets would ensure a wide distribution at the lowest possible price,
unlike the current system, which uses monopoly power, with its high prices
and limited usage.

The prizes could be funded by governments in advanced industrial countries.
For diseases that affect the developed world, governments are already paying
as part of the health care they provide for their citizens. For diseases
that affect developing countries, the funding could be part of development
assistance. Money spent in this way might do as much to improve the
wellbeing of people in the developing world‹and even their productivity‹as
any other that they are given.

The medical prize fund could be one of several ways to promote innovation in
crucial diseases. The most important ideas that emerge from basic science
have never been protected by patents and never should be. Most researchers
are motivated by the desire to enhance understanding and help humankind. Of
course money is needed, and governments must continue to provide money
through research grants along with support for government research
laboratories and research universities. The patent system would continue to
play a part for applications for which no one offers a prize . The prize
fund should complement these other methods of funding; it at least holds the
promise that in the future more money will be spent on research than on
advertising and marketing of drugs, and that research concentrates on
diseases that matter. Importantly, the medical prize fund would ensure that
we make the best possible use of whatever knowledge we acquire, rather than
hoarding it and limiting usage to those who can afford it, as Scrooge might
have done. It is a thought we should keep in mind this Christmas.3 4 5 6

Joseph E Stiglitz, professor

1 Columbia University, New York, NY 10025, USA

jb2632 at columbia.edu

Competing interests: JES was chief economist of the World Bank from 1997 to
2000 and a member and then chairman of President Clinton's Council of
Economic Advisers from 1993 to 1997. He won the Nobel Prize for economics in
2001.

References

   1. Médecins Sans Frontières. People not getting the treatment they need
to stay alive. Newer AIDS drugs unaffordable and unavailable. Geneva: MSF,
29 November 2006.
   2. Andrew J. Novartis chief in warning on cheap drugs. Financial Times 29
September 2006.
   3. Stiglitz JE. Making globalization work. New York: WW Norton, 2006.
   4. Hollis A. Optional rewards for new drugs for developing countries.
Geneva: World Health Organization, 5 April 2005.
www.who.int/entity/intellectualproperty/submissions/Submissions.AidanHollis.
pdf.
   5. Pogge T. Human rights and global health: a research program.
Metaphilosophy 2005;1/2(36).
   6. Love J. Submission of CPTech to IGWG. 15 November 2006.
www.who.int/entity/public_hearing_phi/summary/15Nov06JamesLoveCPTech.pdf