Against Intellectual Monopoly

phenobarbital, prontosil, quinine, Ritalin
(methylphenidate), Salvarsan, vaccines, vitamins). The remaining twentysix products somehow owe their existence to the availability of drug patents
(Allegra, Botox, cisplatin, Crixivan, erythropoietin, fentanyl, Fosamax,
hydrocortisone, ivermectin, L-dopa, Librium, lovastatin, oral contraceptives, Premarin, Prozac, Rituxan, salbutamol, Tagamet, Taxol, thalidomide,
Thorazin, thyroxine, Viagra, Vioxx, RU-486, 6-mercaptopurine). Notice,
though, that of these twenty-six, four were discovered completely by chance
and then patented (cisplatin, Librium, Taxol, Thorazin,), two were discovered in university labs much before the Bayh-Dole Act was even conceived
(cisplatin and Taxol). Further, a few of them were also simultaneously discovered by more than one company, leading to long and expensive legal
battles, but we will spare you those three or four sad stories.
    The bottom line is rather simple: even today, more than thirty years after
Germany, Italy, and Switzerland adopted patents on drugs and a good half
a century after pharmaceutical companies adopted the policy of patenting
anything they could put their hands on, more than half of the top-selling
medicines around the world do not owe their existence to pharmaceutical
patents. Are we still so certain that valuable medicines would stop being
invented if drug patents were either abolished or drastically curtailed?
    This is not particularly original news, though. Older American readers may remember the Kefauver Committee of 1961, which investigated
monopolistic practices in the pharmaceutical industry.33 Among the many
interesting things reported, the study showed that ten times as many basic
drug inventions were made in countries without product patents as were
made in countries with them. It also found that countries that did grant
product patents had higher prices than those that did not - again something
we seem to be well aware of.
    The next question, then, is, if not to fundamental new medical discoveries,
where does all that pharmaceutical R&D money go?

Rent Seeking and Redundancy
    There is much evidence of redundant research on pharmaceuticals. The
National Institute of Health Care Management reveals that over the period
1989-2000, 54 percent of FDA-approved drug applications involved drugs
that contained active ingredients already in the market. Hence, the novelty
was in dosage form, route of administration, or combination with other
ingredients. Of the new drug approvals, 35 percent were products with
new active ingredients, but only a portion of these drugs were judged to
have sufficient clinical improvements over existing treatments to be granted
priority status. In fact, only 238 out of 1,035 drugs approved by the FDA
contained new active ingredients and were given priority ratings on the basis
of their clinical performances. In other words, about 77 percent of what the
FDA approves is redundant from the strictly medical point of view.34 The
New Republic, commenting on these facts, pointedly continues:
    If the report doesn't convince you, just turn on your television and note which
drugs are being marketed most aggressively. Ads for Celebrex may imply that it
will enable arthritics to jump rope, but the drug actually relieves pain no better
than basic ibuprofen; its principal supposed benefit is causing fewer ulcers, but the
FDA recently rejected even that claim. Clarinex is a differently packaged version
of Claritin, which is of questionable efficacy in the first place and is sold over the
counter abroad for vastly less. Promoted as though it must be some sort of elixir, the
ubiquitous "purple pill," Nexium, is essentially AstraZeneca's old heartburn drug
Prilosec with a minor chemical twist that allowed the company to extend its patent.
(Perhaps not coincidentally researchers have found that purple is a particularly good
pill color for inducing placebo effects.)33
    Sad but ironically true, me-too or copycat drugs are pretty much the only
available tool capable of inducing some kind of competition in an otherwise
monopolized market. Because patent protection lasts long enough to make
future entry by generics nearly irrelevant, the limited degree of substitutability and price competition that copycat drugs bring about is actually valuable.
We are not kidding here, and this is a point that many commentators are
often missing in their anti-Big Pharma crusade. Given the