Against Intellectual Monopoly

prevent
drug companies from deciding that, for whatever reason, they carry
out their clinical trials privately and pay for them; that is their choice.
Nevertheless, allowing the public financing of stages 2 and 3 of clinical
trials - by far the largest component of the private fixed cost associated
with the development of new drugs - would remove the biggest (nay,
the only) rationale for allowing drugs' patents to last longer than a
handful of years.
    • Begin reducing the term of pharmaceutical patents proportionally.
Should we take pharmaceuticals' claims at their face value, our reform eliminates between 70 percent and 80 percent of the private fixed cost.
Hence, a patent's length should be lowered to four years, instead of
the current twenty, without extension. Recall that, again according to
the industry, effective patent terms are currently around twelve years
from the first day the drug is commercialized; hence, we propose to
cut them down by two-thirds, which is less than the proportional cost
reduction. To compensate for the fact that NIH-related inefficiencies
may slow down the clinical trial process, start patent terms from the
first day in which commercialization of the drug is authorized. A tenyear transition period would allow enough time to prepare for the new
regulatory environment.

    • Sizably reduce the number ofdrugs that cannotbe sold without medical
prescription. For many drugs, this is less a protection of otherwise wellinformed consumers than a way to enforce monopolistic control over
doctors' prescription patterns and to artificially increase distribution
costs, with rents accruing partly to pharmaceutical companies and
partly to the inefficient local monopolies called pharmacies.
    • Allow for simultaneous or independent discovery, along the lines of
Gallini and Scotchmer.29 Further, because patent terms should be running from the start of commercialization, but applications should be
filed (without being disclosed) earlier, mandatory licensing of idle or
unused active chemical component and drugs should be introduced.
In other words, make certain that the following monopolistic tactic becomes unfeasible: file a patent application for entire families of
compounds, and then develop them sequentially over a long period of
time, postponing clinical trials and production of some compounds
until patents on earlier members of the same family have been fully
exploited.
    This sequence of reform may not be a panacea - nothing is - but we are
willing to bet that a pharmaceutical industry organized along these lines
will produce no fewer valuable drugs than the current one, at a much lower
cost for consumers. Should any congressperson or senator be interested
in working out the details that are necessary to make this operational, we
hereby volunteer our time and expertise to the enterprise, for free.
    Next we examine the issue of poor countries, with Africa and the AIDS
epidemic at center stage. From a global perspective, this is a more dramatic and urgent problem than the high cost of drugs in more advanced
countries. Here positions oscillate between the dura sed lex of TRIPS (forcing the introduction of medical patents in India, South Africa, China, and so on) to requests for a temporary but long-lasting suspension of patents
rights for poor countries.30 Even if our road map for reform were to be
implemented - we are theorists; do not forget that detail - the transition
time of about ten years is long enough to make the current situation in
Africa degenerate much further. There is no doubt, therefore, that a tenor fifteen-year suspension of drugs' patents for developing countries would
be an improvement over the current situation. Recent unilateral actions
along these lines, taken by Brazil in relation to AIDS drugs, suggest that this
theoretical possibility is becoming a political possibility and its economic
and social implications seriously waged. Because it is especially the fear of
parallel import of cheap medicines from those countries to the rich ones
that fosters the strong opposition of Big Pharma to such a proposal, temporarily suspending free trade in medicines may even be worth considering.
In other words, a parallel temporary suspension of medical patents in poor
countries and of medicines' trade from them to the rest of the world may,
in the end, increase social welfare in those areas. This is not an obvious call,
though, and we must