October 21, 2005

If France Gets Its Way, 38 Million People Will Die

"All of healthcare is in crisis." Well, Chirac is not helping matters.Healthcare policy has two concurrent and dangerous trends developing. In the first trend, as detailed recently by Dr. Marcia Angell in the New York Review of Books ("The Truth [sic] About Drug Companies") is the pervasive notion that pharmaceuticals are a need and a right, and cannot be left to the drug companies to disburse with an eye to profits. Leading us to the second trend, as evidenced by France's recent swipe at the U.S. for not allowing poor countries to bypass patents and create cheap generic HIV drugs, which specifies that when medical need arises, government should be allowed to commandeer treatments and prices for the good of the people who need the drugs. Looks like the old argument: social justice vs. personal responsibility.  Except the argument isn't grounded in reality. Saying something vague like "people need these drugs," misses the immediate point: which drugs? On what grounds is it even possible to say that people "need something" that didn't exist until a company created it? Under what circumstances can we say people now need a drug that won't be invented for another 10 years?

The problem, in part, in this debate arises from scientists confusing discovery or research with invention. Looked at in terms of the production of novel material, certain distinctions can be made. Discovery and research are not creative acts. While they require creative thinking, they do not add anything materially new to the world. Alternatively, invention is the act of creating something that did not exist. There was no Prozac or Tylenol until someone invented it. You may think the rainforests have all the cures, but they don't.  As of right now (things could change) the law appreciates this, and only allows for the grant of the patent right when the invention in question is new, useful, and not obvious. However unfair this may seem, that is the system. Ordinarily, no one debates what is new or useful. Obvious, by contrast, is the source of much debate. Can something be not obvious if it was the logical next step? Or if someone else would have done it sooner or later? Many do not understand this debate, lamenting the unfairness of assigning property rights in science "when discoveries that depend on generations of prior science are patented by the person who made the last step."

This is the classic mistake. The last step is not obvious before it is taken. Perhaps there exists an example of a patent in which the inventive step was obvious to everyone before the inventor himself took that step? It seems obvious now for surgeons to wash their hands before operating, but tell me, why wasn't it obvious to the doctors who performed surgery in the hundreds of years before the practice was conceived? It is common in many fields to look at patents and say "oh, I could have thought of that." This is impermissible hindsight, because the determination of obviousness can't be made after the fact.

I suspect, however, that the current debate among politicos over drug patents has little to do with the assignment of property rights (which is best left to lawyers and judges skilled in the practice of assigning rights generally). Rather it is a land grab to curry favor with voters at the expense of the health of future voters. This is what is so damaging about the controversy over HIV drugs. The drugs exist, and they are needed now. But how to hand them out?

Note that the debate is not about changing patent law with respect to future drug patents. Rather, the debate is over changing the laws on existing patents for successful and safe drugs that were developed under the assumption that the patent to them would last 20 years.

This is "patently" unfair, because it amounts to changing the rules after the game has already been won. Drug companies invest hundreds of billions to create (not discover - create) these drugs. Scientists like to dismiss this part of the argument, because they feel that crass commercialism sullies the purity of science. This is as childish as it is preposterous. Scientific research is massively expensive. The investment is made by investors who don't care about science, but do care about returns, based on the understanding that anything they invent they will be able to sell exclusively, at least for a while. To threaten abrogating the patent right for successful drugs, or artificially manipulate their prices will cause investors to pull out of drug companies now and into more predictable and less regulated industries. This will reduce the investment in future drugs. You don't appreciate the strategic problem here, because the future drugs that will never get invented don't exist, so it does not seem like you are losing anything.

But you are.

If you do not think that this is true, consider the fact that many of the newest drugs are cosmetic or lifestyle drugs, like Viagra et al, or are "me-too drugs" (other versions of the same kind of drug, i.e. 5 different Prozac like drugs.) Drugs which treat conditions that are not life-threatening and which are therefore not prone to federal or HMO price control. Compare this to the fact that drug companies invest comparatively little in new antibiotic research to combat the well-known problem of drug resistant bacterial strains. Public and social policy has distorted the market and predictability of patent rights, so drug companies stay away from research that is likely to become a political issue. Why bother investing to invent an antibiotic (or HIV drugs) when it could be commandeered by the government because it is "needed?" And the public suffers. It is convenient for France to demand the commandeering of the patent to HIV drugs to allow for cheaper generics. But current HIV drugs are not curative. Who, exactly, does France expect to invent the actual cure--- that will then likewise be commandeered? In a flashback from the Fountainhead, France wants to take credit for charity that someone else will pay for.

Would you rather have Viagra or a new HIV vaccine? Both are a question of money, but if you are going to place a value judgment on one over the other, then you have to incentivize the drug companies to do what you want. At the very least, you shouldn't disincentivize them.

Good drugs cost a lot, and we are going to have to pay it. Period. Because the alternatives are completely unfathomable: that good drugs are never invented; or, that they are invented but kept secret. Maybe they are used only to cure members of one's family, or race, or class, or religion. That is perfectly legal, by the way. France should think about this before they sentence millions to death.

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