Against Intellectual Monopoly

term, particularly in countries where
multinationals might otherwise hesitate because local technical capacity might create competitive pressures. On the other hand, in the longer term that same domestic
capacity could be an alternative source of entry, and we find that a country offering
extensive patent protection may lose the benefits of that activity and have fewer new
products in the market overall as a result. (2005, p. 25)
    Admittedly, Lanjouw is one of the analysts who, albeit in a very tentative form,
has advanced the idea that patent adoption may help poor countries by making
price discrimination more effective. A substantially more robust statement in this
direction can be found in Maskus (2001). The paper focuses mostly on parallel
imports and advocates the strange charity argument, according to which rich countries should be allowed to export drugs to poor ones when the prices are higher in
the poorer than in the richer countries, or at best equal, but not vice versa. Which
piece of economic logic and which social welfare function support this asymmetrical
free-trade rule escapes us, but maybe we missed the whole point. Why this would
be benevolent to poor countries is even more mysterious. To see why we say so, try
applying the same logic to agricultural products. Oops! That is exactly what the EU
agricultural trade policy amounts to.
    24. Chaudhuri, Goldberg, and Jia (2003), abstract.
    25. Our general information about the status of the pharmaceutical industrycomes from
various sources: Commission on Intellectual Property Rights (2002), El Feki (2005),
International Federation of Pharmaceutical Manufacturers (2004, and subsequent
years), Maskus (2001), National Institute for Health Care Management (NIHCM;
2002), Wikipedia, and the Chemical & Engineering News special issue, available at
http://pubs.acs.org/cen/coverstory/83/8325/index.html.
    26. Murphy and Topel (1999).
    27. PhRMA (2007), "Key Facts."
    28. As reported in Andrew Sullivan's blog, on July 1, 2005. This text is no longer directly
available, but it referred to and quoted in various other blogs and internet discussion
groups.
    29. Godlee (2007), p. 1.
    30. Godlee (2007), p. 1. The special issue of the BMJin which this editorial piece appears
lists the top fifteen medical milestones and is available at http://www.bmj.com.

    33. Information about the 1959-61 Kefauver Committee leading, among other things to
the Kefauver-Harris or Drug Efficacy Amendment of 1962, is abundantly available
online. This committee is not to be confused with the more famous one by the
same name, but of 1950-51, which investigated organized crime in the USA. For
an introduction to some of its economic aspects, see Comanor (1966) or the more
recent survery Comanor (1986).
    34. NIHCM (2002).

    35. This and the following most amusing string of quotations on me-too drugs and
their distinctive purple color, on the ratio between R&D and marketing employees
in pharmaceutical companies, and on what consumers are financing with the outrageous prices they are forced to pay for drugs are all from the same The New Republic
piece, but you will need a subscription to access the article. The link is http://www.
thenewrepublic.com/docprint.mhtml?i=20021007&s=thompson 100702.
    36. Ibid.
    37. Ibid.
    38. Harris (2004).
    39. Along, if incomplete, list of rent-seeking practices bordering the highly improper, if
not the strictly illegal, is in Baker and Chatani (2002). Additional information on the
development and patenting of imitative drugs are in Hubbard and Love (2004) and
references therein, whereas more details about marketing to the medical profession
are in Angell and Relman (2002).
    40. Hughes, Moore, and Snyder (2002). We should note that their stated conclusion is
the opposite of ours: they conclude that drug patents should not be abolished. The
reason is that they apparently believe that the relevant interest rate is less than 5%.
    41. The 40 percent estimate of the fraction of drugs that would be developed without
patent is from the Levin et al. (1987) survey. Information about generics in India is
from Lanjouw (1997); information about market share after generic entry is from
Congressional Budget Office (1998), and our own calculations are in Boldrin and
Levine (2005b).

    44. http://www.cepr.net/. The CEPR study comparing the cost of inventing new drugs
for private and public research centers is Baker and Chatani (2002).
    45. Excessive