Re: AltInst: Cheaper drugs if governments buy the patents at auction

From: Tom Breton <>
Date: Thu Jun 22 2000 - 21:14:37 PDT

Lee Daniel Crocker <> writes:

> > The government should buy drug patents at auction and make them publicy
> > available. The present patent system means that drugs are very expensive, as
> > companies take advantage of their monopoly their reward for successful
> > innovation.
> In other words, have the government create the monopoly, and then
> subsidize those damaged by it. Why not just limit the patent in the
> first place? Make the drug company account for all its research
> costs and all its profits from drug sales, and then cancel the patent
> as soon as they've recouped their investment, forcing them to
> compete in the free market for further sales.

I'm going to treat that rhetorical question as a literal question.

Because not all research is successful. The successful research in
effect subsidizes the unsuccessful research.

OK, you say, but let's lump all research together for each drug
company. Accounting problems aside, ISTM you'd change the break-even
point at which it becomes undesirable to fund more research.
"break-even point" in terms of the ~a priori~ likelihood of success, I
mean. It would no longer match the social utility of research.

ISTM the situation would be more effectively improved by loosening the
FDA (US govt agency in charge of medicinal drugs) regulations.

ObAltInst: Perhaps privatizing that function of the FDA? Insurers
would bundle a sort of health insurance policy with individual sales
of the drug. They could test it, or in some other way assure
themselves that the drug was OK. If there were unexpected
side-effects, they'd pay much as health insurance does.

One drawback is that such private insurers would undervalue effects
that the consumer couldn't easily or quickly detect: long-term
side-effects and side-effects that looked like unrelated
problems. (eg, a small increased risk of heart attack)

> For some limited-
> market drugs, this would be much the same as the system now. For a
> popular drug like Viagra, the patent would last maybe 6 months, and
> then competing companies would manufacture it for less.

Tom Breton,
Not using "gh" since 1997.
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Received on Thu Jun 22 21:25:17 2000

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