Patent Elimination
Pharmaceutical Patents Are Harmful
The many adverse effects of pharmaceutical patents are well known:
- Pharma Patents cause life-saving drugs to be unattainable within the so-called Third World, as well amongst the poor of medicine-producing countries themselves.
- Pharma Patents distort how research resources are used, such that even groups willing to forgo profit in order to save lives are prohibited from doing so.
- Pharma Patents enable publicly funded discoveries to be privately owned; a juggernaut of budget draining enterprise, which politicians are unwilling to stop.
Of course, a list of adverse effects is not argument enough to do away with pharma patents. But it's a good start. Of course, the issue comes down to:
Are Pharmaceutical Patents Necessary?
Despite the faults of current medicine, it is certainly clear that medicine saves lives. Somehow, we must ensure that there will be money for pharmaceutical research (even more than currently). The question is, what is the best possible model?
The prevailing logic works something like this:
1) Developing a drug is expensive
2) Copying a drug (so-called generics) is cheap
3) Companies must realize a profit on one product in order to develop another
Therefore, companies must be granted monopoly on their inventions in order to realize profit and produce more drugs.
But this is incorrect.
The first part of the reasoning is of course true. Developing drugs requires a healthy flow of capital. Patents, however, are not the only way to obtain the money. In fact, profit and research are not nearly as closely linked as pharmaceutical companies would have you believe. Why? The State already pays the research today. In a purely autonomous, capitalist setup, the argument for patents may be true. But this premise is simply not today's reality.
Already today, it is the State (we should say "Public," seeing as we're really talking about the tax that is taken from your paycheck) which accounts for most of the pharmaceutical revenue in all European countries, due to the various systems of public health insurance. (See for example page 37 in this report fromt the EFPIA, The European Federation of Pharmaceutical Industries and Associations.) It is the public which funds pharmaceutical research today (again, with your paycheck), by paying for patented medication and even subsidizing research on top of that.
There is no natural order that dictates patent law. The existence of patents are a combination of a holdover from when R&D was funded privately and aggressive lobbying. So, the State grants monopolies in order to guarantee research funding. But the State provides that funding from the public anyway. So, wouldn't it be far more efficient to just give the money directly to funding? To keep this in perspective, note that we are not calling for a state takeover of pharma companies. This is not a planned obsolescence. Pharmaceutical companies will still be needed for production and distribution, an endeavor which will be quite profitable. Many industries already exist today as private companies relying on government contracts.
The relevant question is which model offers the most effective pharmaceutical research. For no one who has alleged that it would be cheap to research drugs. The price to research a new drug is just over one billion U.S. dollars. But given that it is already the Public that accounts for the majority of pharmaceutical companies' revenue, it is a reasonable first step to find out how much of the money actually goes to research.
Its very easy to do because all the big pharmaceutical companies place their financial statements online. As an example, let's look at the figures for Novartis (page 143), Pfizer and AstraZeneca.
All put around 15% of their revenue on research. The other 85% go to things like profit sharing, advertising and, of course, litigation and lobbying. The figure is typical for the industry. That means that for every euro of tax (taken from you) spent on medicine, only about 15 cents goes to research.
So the question is: does the patent system really give us, the taxpayers, the best pharmaceutical research for the money? Or is there room for improvement, when even the pharmaceutical companies themselves acknowledge that they use 85% of the money for other purposes?
If instead the state were to allocate 20% of today's pharmaceutical bill directly to the research, and do away with the patent middle-man, then more money would be spent on research, while tax payers would have a drastically lowered cost. Furthermore, under this model, companies would not need to recoup R&D expenses, because pharmaceutical will be producing modern medicines without having to invest in research themselves. Then, there is no need for patents on medicines. However, there is a need for manufacture and distribution. This will be the area of profit for existing pharma companies!
Patent Exempted Medicines Are Cheap
The price of a product decreases when 30% when removing patents. Add 20% to cover future research as suggested above, and its bill has dropped to 50% of what it is today. A half-ie! While we give more money to pharmaceutical research.
Is not it an idea worth exploring?
To repeat the main features of the proposal:
- Already today, the government accounts for the majority of pharmaceutical companies' revenues, due to the general health insurance.
- Of the money that pharmaceutical companies pull in, 15% goes to research according to their own figures. The remaining 85% goes to other (mainly marketing).
- If the state instead allocated 20% of today's pharmaceutical bill directly to the research, it would mean more money for research. Then the pharmaceutical companies have no cost to recoup and pharma patents become unnecessary. Under this system, current research budgets can be increased 500% before the public starts spending as much as we are today.
- The cost of obtaining medication will drop around 70%, making it feasible to save millions of lives around the world.
Originally in Swedish at piratpartiet.se
Translated and adapted by Brent Blazek
