I happened across Lew Rockwell's Illusions of Power [4] recently. Rockwell is a guy I agree with 95% of the time, and this column, like most, is both hard-hitting and inspirational. But just as I was getting into the second chorus of "Right on!" I hit a sour note:
The issue of the price of prescription drugs will be a big one in this coming campaign. The problem is high prices. Popular wisdom has it that this is because of the greed of the medical industry. The truth is that these high prices are partly a result of subsidized demand due to Medicare and Medicaid, as well as the restricted supply due to patent laws. In other words, the political class is responsible for the high prices. It's true that the pharmaceutical industry is not complaining. In fact, high prices are precisely what its friends in government want to bring about.
Rockwell is right, of course, to say that the pharmaceutical industry is in bed with the government in various ways, and we share the goal of eliminating that corrupt relationship. But I think he's on the wrong track in calling for an elimination of patent (or some similar) protection for new drugs.
For the sake of discussion, let us imagine a slightly idealized situation: It is possible with an affordable machine to manufacture any particular chemical one wishes to (subject to the laws of physics; it must be stable!). It is also possible to analyze the chemical structure of any compound quickly and cheaply. Imagine too that the government has stopped regulating the manufacture and consumption of drugs. Now the question: To have patent protection for drug innovators or not?
There are an astronomical number of possible chemicals. Some are poisonous. Some are metabolized without much effect upon our bodies. Some have beneficial results for particular afflictions, along with (perhaps) negative side-effects. Some work well for some people but do no good or great harm to others.
It takes a huge amount of creative energy to know which potential drugs to investigate, and a huge amount of effort (and money) to research the effects of a given drug.
If any new drug can be stolen painlessly the moment it appears on the market, what are the chances of anyone spending any significant energy whatever to develop new drugs? I would guess, no chance whatever. We will have killed the goose that lays golden eggs.
And make no mistake, the flow of new drugs is a wonderful blessing to mankind. Just a few generations ago, it was routine to lose half or more of one's children before they reached adulthood to diseases we can now knock out in a heartbeat. Bacteria mutate to resist the compounds originally used to treat them, so new medicine is essential to keep from losing ground already gained. My own bacon was saved a few months ago by an exotic new drug which cost several thousand dollars for three days' IV treatment. I paid those dollars (some directly, some through insurance costs) willingly.
Perhaps one might object that the idealization above is so different from reality as to negate the argument. The exact process required to manufacture a new drug in today's world can be difficult to reverse engineer, and there does not yet exist a machine which can do the hard work at the push of a button. But is the absence of such a machine the basis upon we wish to rest a lack of legal protection for inventors? It will likely come along, in gradual stages, as technology progresses.
The analysis of the molecular structure of an unknown compound is already quite advanced, and can only become more so as time goes on.
All in all, then, I think it is clear that there would be an immediate chilling effect on drug research if patent protections were removed today, and that the effect would become steadily worse as time goes on.
There is a persistent body of writings which claims to establish the notion that Intellectual Property is meaningless and unworthy of legal protection. I have written elsewhere [5] that I think such claims are nonsense. But surely even those who are immune from persuasion as to the immorality of stealing someone else's creative work must give weight to practical considerations.
As an aside, let me include a quick rant about one of the primary causes of high prices for new drugs: the mountains of micro-managed hoops mandated by the government before a drug can be brought to market. Study after study has shown that many lives are lost because new drugs are endlessly delayed by government bureaucrats, whose sole motivation is fear of letting something through too fast (think: thalidomide). It is of course quite true that a new drug might have a horrible side-effect which early testing has not identified. But evaluating such risks vs. benefits is precisely what it means to be an adult. Someone who is dying of cancer, with no remaining options in the well-proven world, may welcome a promising but largely untested new treatment. The notion that an individual should supplicate for permission, and die quietly and without protest if such permission is denied, is obscene.
I hope that Rockwell will reconsider his dismissal of patents for drug manufacturers. A free people, engaging in voluntary trades for mutual benefit, deserve better.
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