Against Intellectual Monopoly

prospective of a patent to be sold to a big pharmaceutical
company were not in the cards.
    Next there is the not-so-small detail that most of those university laboratories are actually financed by public money, mostly federal money flowing
through the National Institutes of Health. The pharmaceutical industry is
much less essential to medical research than its lobbyists might have you
believe. In 1995, according to a study by two well-reputed University of
Chicago economists, the United States spent about $25 billion on biomedical research. About $11.5 billion came from the federal government, with
another $3.6 billion of academic research not funded by the feds. Industry
spent about $10 billion.26 However, industry R&D is eligible for a tax credit
of about 20 percent, so the government also picked up about $2 billion of the
cost of "industry" research. That was then, but now are things different? It
does not look that way. According to industry sources, total research expenditure by the industry was, in 2006, about $57 billion, while the National
Institutes of Health budget in the same year (the largest but by no means
the only source of public funding for biomedical research) reached $28.5
billion.27 So, it seems things are not changing: private industry pays for
only about one-third of biomedical R&D. By way of contrast, outside of the
biomedical area, private industry pays for more than two-thirds of R&D.
    Many people infected with HIV can still recall the 1980s, when no effective
treatment for AIDS was available, and being HIV-positive was a slow death
sentence. Not unnaturally, many of these individuals are grateful to the
pharmaceutical industry for bringing to market drugs that - if they do not
eliminate HIV - make life livable:
    The "evil" pharmaceutical companies are, in fact, among the most beneficent organizations in the history of mankind and their research in the last couple of decades
will one day be recognized as the revolution it truly is. Yes, they're motivated by
profits. Duh. That's the genius of capitalism - to harness human improvement to
the always-reliable yoke of human greed. Long may those companies prosper. I owe
them literally my life.28
    But it is wise to remember that the modern drug cocktail that is used to treat
HIV was not invented by a large pharmaceutical company. It was invented
by an academic researcher, Dr. David Ho.

    Still, one may say, the issue we are debating here is patents and whether,
in particular, medical patents are socially beneficial or not. Lots of, even
most, important medical discoveries may come from publicly sponsored
research laboratories, but it is a fact that, without the strong incentive that
the prospect of a successful patent induces, those researchers would not be
working as hard as they do. That is true, so let us think the issue through
once again. We observe that, while the incentive to patent and commercialize
their findings should have been increased by the Bayh-Dole Act allowing
patentability of such research results, there is no evidence whatsoever that,
since 1980 when the act was passed, major medical scientific discoveries have
been pouring out ofAmerican universities' laboratories at an unprecedented
rate. Good research was done before; good research is done now. Medical
and biological scientists comparing then and now may complain, more often
than not, about the direction of research (more commercially oriented now,
and less directed toward big problems and pure scientific discovery than it
was then), but they are not claiming that the quality went visibly down. At
the same time, we are not aware of anybody claiming, let alone documenting,
that after the Bayh-Dole Act took effect, the quality of biomedical research
in U.S. universities and federally sponsored laboratories visibly increased.
It just remained roughly where it was, meaning that patentability made no
difference as far as general incentives are concerned.
    Let us proceed, though. There are not just general incentives; there are also
specific ones, and it may be that patents have biased biomedical research in
a more socially valuable direction. The substantive findings emerging from
Petra Moser's research (discussed in Chapter 8) suggest that the opportunity
patents offer to achieve large private gains may push innovation in a certain
direction instead of another. As interesting as this question may sound,
apparently it has not been