tag:blogger.com,1999:blog-4159906646513306121.post8010087450245090254..comments2023-11-19T20:38:50.237-08:00Comments on Economic Logic: Why so few drug innovations?Economic Logicianhttp://www.blogger.com/profile/10171296292101248614noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-4159906646513306121.post-74737888953728315442010-09-02T08:04:13.079-07:002010-09-02T08:04:13.079-07:00Patents, I think, are more the cause of the decrea...Patents, I think, are more the cause of the decrease in innovation. Several studies have shown countries with less patent protection on drugs produce more drugs with greater innovation because they must to compete. U.S. drug companies, instead of developing new drugs, can instead find new uses for current drugs allowing them to extend their patents. Or they can and do pay off generics keeping competition out of the market. This is why the research costs of drugs are over inflated, often including marketing budgets with actual research and development.<br /><br />A congressional study back in the 1960s even found U.S. drug companies to innovate slower and charge more than their European counterparts. We've only made things worse by expanding what is allowed to be patentable. University research, for instance, was not allowed to be patented before the Bayh-Dole Act in 1980. Much of this research is funded by the government and donations, but now gets patented and sold to drug companies who can prevent any one else from competing.<br /><br />And patents also prevent basic research from happening. From brain research being blocked for three years in court cases (http://science.slashdot.org/story/10/05/24/171220/Stem-Cell-Patent-Halts-Hospitals-Collection), databases for AIDS research being sued (http://www.techdirt.com/articles/20090610/2202565196.shtml), to 20+ genes related to cancer being controlled by patent holders who refuse to license or charge too much for access, the costs of simply doing research are becoming astronomical if not impossible.<br /><br />You are correct that every major breakthrough leads to many smaller breakthroughs. That is because innovation happens by building on the work of others. Patents ban others from building on your work. They add a major time and monetary cost by requiring permission to do research as we are naturally inclined to do. This is why India, after being forced by the U.S. and WIPO to institute drug patents ended up rejecting them after they shrank their thriving and growing drug market. Yes many companies copy the drugs of others, but that's competition. That's what encourages the more innovative drug companies to create NEW drugs. If you want to see innovation in an industry, create more competition. That's how capitalism works.Michael Sherrinhttp://www.prodigeek.comnoreply@blogger.com