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TOPIC: Patent Laws and Market Failures

Patent Laws and Market Failures 4 years 11 months ago #23271

  • jorge soler
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I have constitutional issues with the patent system as it alienates individuals from their own property preventing them from making commercial use of their capital goods and assets. However, my problem here boils down to the market failure governments are trying to prevent in terms of promoting novelty and invention. Innovation represents a direct result to market and enterprising expansion in the context of free market competition. Contra-intuitive as though it might be, patent laws hinders as a matter of fact innovation depriving markets from all needed stimulus for inventive effort. The innovators’ risks are not proportional to the costs and results of the inventive efforts, but investment. As Machlup puts it " this presupposes, however, as do most other problems under discussion, that it is invention rather than enterprising innovation which the patent system is supposed to encourage"1 When the social objectives are not promoted but rather jeopardized by the very same laws that are intended to overcome a problem, patent protection amounts to tariff protection. Intellectual property is neither control of a thing nor an idea, but rather, control of a market. Ideas are both "non-rivalrous" and "non-excludable" in that they can be used by two or more individuals without causing scarcity. In order for a material thing to be used it needs to be taken from someone before it can be used by someone else. By contrast, an idea can belong to an indefinite numbers of individual and its use by one person does not prevent its use by another. Hence, patent laws creates artificial scarcity where there is no need for it pushing the prices up thanks to the monopoly they create.

Machlup , AN ECONOMIC REVIEW OF THE PATENT SYSTEM
Last Edit: 4 years 11 months ago by jorge soler.
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Patent Laws and Market Failures 4 years 11 months ago #23272

  • splitdog
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I disagree wholeheartedly. Nothing drives innovation and hard work like personal gain does. It is inherent in man.
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Genotype 3
VL 4,100,000
ALT 101 AST 71
Treatment Naive
Started Sof/Dac Jan 12, 2016
VL= <15 4 weeks in. AST/ALT normal.
VL=UNDETECTED 8 weeks in.
SVR4= Virus back. 3,300,000

Started generic Epclusa Sep. 23, 2017

4 weeks in <15 *Detected.
12 weeks in <15 *Not Detected.
16 weeks in <15 *Not Detected.
Finished 24 weeks treatment 3-17-18
SVR5 <15 Not Detected.
SVR 20 <15 Not Detected.
SVR 44 <15 Not Detected.

Thank you Jesus.
Thank you Dr. James
Last Edit: 4 years 11 months ago by splitdog.
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Patent Laws and Market Failures 4 years 11 months ago #23273

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I agree with you, but how does that contradict the point I am trying to make?
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Patent Laws and Market Failures 4 years 11 months ago #23274

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Because you claimed to be against patent law. I feel intellectual property is worthy of protection. In fact, a healthy society demands it.

"patent laws hinders as a matter of fact innovation depriving markets from all needed stimulus for inventive effort."

It could be said that patent law promotes alternative approaches to otherwise established procedures and invigorates a seemingly standstill idea or innovation to a new level, and possibly arriving at a new idea, or approach in the process.
Before the 7 years or whatever protection is up, people have already implemented new theories designed to completely make obsolete, the present idea being protected. And are already onto the next 'invention' worthy of the next level of protection. Bottom line, the 7 years gets shorter, and shorter.
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Genotype 3
VL 4,100,000
ALT 101 AST 71
Treatment Naive
Started Sof/Dac Jan 12, 2016
VL= <15 4 weeks in. AST/ALT normal.
VL=UNDETECTED 8 weeks in.
SVR4= Virus back. 3,300,000

Started generic Epclusa Sep. 23, 2017

4 weeks in <15 *Detected.
12 weeks in <15 *Not Detected.
16 weeks in <15 *Not Detected.
Finished 24 weeks treatment 3-17-18
SVR5 <15 Not Detected.
SVR 20 <15 Not Detected.
SVR 44 <15 Not Detected.

Thank you Jesus.
Thank you Dr. James
Last Edit: 4 years 11 months ago by splitdog.
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Patent Laws and Market Failures 4 years 11 months ago #23275

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To put it briefly, the social returns from innovative activities are held to be very high, but it does not necessarily follow from this that the private returns are also high. The only way patent holders may capitalize on inventions is by suppressing their development, even though these inventions would benefit the public. Moreover, patents lead to waste by inducing others to invent around protected monopoly positions. The marginal cost of using existing information should be zero and therefore the creation of “artificial” property rights is wasteful. This is to say patent laws promotes secrecy and puts up all legal and administrative costs and is arbitrary in that it does incentivize to focus on the sorts of research which are patentable.
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Patent Laws and Market Failures 4 years 11 months ago #23276

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I believe this was played out to a degree in socialist countries of old. The common man was hardly helped in his day-to-day lives by all that inventiveness going on in East Germany and USSR for instance. However, the countries that have intellectual property rights have become world leaders of per capita income, allowing their citizens to live better in the process. That is a 60 year or so patent law market study right there.

What do you propose as an alternative to the system in place now?
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Genotype 3
VL 4,100,000
ALT 101 AST 71
Treatment Naive
Started Sof/Dac Jan 12, 2016
VL= <15 4 weeks in. AST/ALT normal.
VL=UNDETECTED 8 weeks in.
SVR4= Virus back. 3,300,000

Started generic Epclusa Sep. 23, 2017

4 weeks in <15 *Detected.
12 weeks in <15 *Not Detected.
16 weeks in <15 *Not Detected.
Finished 24 weeks treatment 3-17-18
SVR5 <15 Not Detected.
SVR 20 <15 Not Detected.
SVR 44 <15 Not Detected.

Thank you Jesus.
Thank you Dr. James
Last Edit: 4 years 11 months ago by splitdog.
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Patent Laws and Market Failures 4 years 11 months ago #23277

  • jorge soler
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I propose "free market capitalism," the best system there is to promote investment and market competition. Socialism is evil incarnate.
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Patent Laws and Market Failures 4 years 11 months ago #23278

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I am a staunch believer in capitalism, and private property rights, and believe they are necessary for a healthy and productive society. However, in the realm of life-saving medicines, such as the Hep C drugs we here so badly need, there needs to be more of a balance. Something clearly has to be done, so that no one dies or has their lives otherwise diminished while not being able to afford the present day prices of these drugs. While the drug company is entitled to a fair profit for their investment and property rights, there needs to be something else done to ensure the availability to all, regardless of ability to pay. I'm not sure what that is, but it is surely not what Gilead is currently trying to do.

As an interesting aside, a hybrid system of government may be the best. The roads and their associated real property and the infrastructure necessary for them to operate cannot be by a private enterprise. That would constitute a monopoly and wouldn't work long term. And maybe the supply of electricity could be better operated by a non profit like the government. (except that the government ruins everything they touch). Modern medicine is currently undergoing these considerations. So far, no system has been satisfactory.
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Genotype 3
VL 4,100,000
ALT 101 AST 71
Treatment Naive
Started Sof/Dac Jan 12, 2016
VL= <15 4 weeks in. AST/ALT normal.
VL=UNDETECTED 8 weeks in.
SVR4= Virus back. 3,300,000

Started generic Epclusa Sep. 23, 2017

4 weeks in <15 *Detected.
12 weeks in <15 *Not Detected.
16 weeks in <15 *Not Detected.
Finished 24 weeks treatment 3-17-18
SVR5 <15 Not Detected.
SVR 20 <15 Not Detected.
SVR 44 <15 Not Detected.

Thank you Jesus.
Thank you Dr. James
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Patent Laws and Market Failures 4 years 11 months ago #23284

  • jorge soler
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I don't want any government interference whether in the health industry, pharma companies, roads or any other sector. If you advocate for free market capitalism like I do you want your government out of your life. You mention the roads, which is the most hackneyed argument against privatization (who will build the roads if everything was private?), but as it all stands now it is a monopoly held by government. I don't want to go deep into why I think we'd be better off in a private roads scenario as my case is for deregulating the big pharma companies, nor this is the right forum to present my case, but if you want to delve into this issue, just to mention that professor Walter Block has already argued his case for it in this wonderful book The Privatization of Roads and Highways you can download for free at Mises Institute.

PS. This is worth reading too Pharmaceutical Prices, Patents, and the FDA
Last Edit: 4 years 11 months ago by jorge soler.
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Patent Laws and Market Failures 4 years 11 months ago #23289

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Actually, ALL roads in the USA are built by private companies with contracts. The government doesn't have any roadbuilding equipment. But I say that with regard to the real property the roads are on. With a multitude of property owners, there would be a host of problems traveling reliably.
Also, the military should remain a government entity. But yes, I am for as little government as possible myself.
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Genotype 3
VL 4,100,000
ALT 101 AST 71
Treatment Naive
Started Sof/Dac Jan 12, 2016
VL= <15 4 weeks in. AST/ALT normal.
VL=UNDETECTED 8 weeks in.
SVR4= Virus back. 3,300,000

Started generic Epclusa Sep. 23, 2017

4 weeks in <15 *Detected.
12 weeks in <15 *Not Detected.
16 weeks in <15 *Not Detected.
Finished 24 weeks treatment 3-17-18
SVR5 <15 Not Detected.
SVR 20 <15 Not Detected.
SVR 44 <15 Not Detected.

Thank you Jesus.
Thank you Dr. James
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The following user(s) said Thank You: fitz

Patent Laws and Market Failures 4 years 11 months ago #23290

  • Greedfighter
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You're both right. The Patent laws are necessary, however there have to be limits (regulation) as to the profit margin that is acceptable.

For instance, Gilead bought the rights to Sofosbuvir from Pharmassett. Pharmassett was going to charge about $30K, Gilead charge 90K. The only reason they stopped there is that was what they felt the market would tolerate. You have to have regulations to stop greedy immorality. Just like 'free trade" is going to end in the people of USA living in utter poverty. Do you really think the people 50 years ago, who instituted tariffs were morons? No, they were looking out for society. Free trade is what we got after our politicians were paid off to allow it. You can't compete against people making $1 hr.
Gt 1a, F0, VL 6.5 million, AST 59, ALT 62
Started Twinvir 1/15/16
6 wk. labs VL UND, AST 27, ALT 20
EOT labs VL UND, AST 23, ALT 19
SVR 16, VL UND, AST 28, ALT 17
SVR 24 , VL UND, 10/8/16
SVR 125, VL UND, 9/22/18
SVR 230, VL UND, 10/3/20
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Patent Laws and Market Failures 4 years 11 months ago #23295

  • fitz
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You know it's interesting. I just saw my GP who complained about the lack of innovation in pharmaceuticals because Big Pharma is busy buying up patents for existing drugs so they can mark them up and maximize returns through acquisitions, rather than from innovation.

I don't have a lot of time to write tonight, but I want to say this. There is a huge difference between something like a copyright on an artistic work, or a patent for a microchip, and a patent on a life-saving medication without which hundreds of millions of people will eventually die.

The answer I think has to be a provision for Eminent Domain, which places public health and welfare first and foremost ahead of narrower interests.

When a groundbreaking drug like Sofosbuvir is developed, the originator should be well compensated ( e.g. development costs X a fixed multiple), and perhaps additional royalties provided based upon bulk distribution (worldwide).

inherent in a pharmaceutical patent is not only the potential to heal and save lives, but also the potential for abuse and extortion by the patent owners. This is the opposite of anything like a free market. Pharmaceutical price abuse has literally broken our healthcare system (in the US).

To allow an originator or patent holder to abuse a patent for a lifesaving medication without limitation is simply as unacceptable as it is unsustainable.

Like anything else that is abused to extent that pharmaceutical patents are, there must necessarily be limits which preserve and protect the public good.
Failed Interferon 96', G1a, VL = 9 - 5.5 Million, F3/A3, AST 111, ALT 190, Generic DAA treatment Sof/Led (Mylan - India MYHEP LVIR) - 8 June, 2016
2 Week Results 20 June, 2016 AST 19, ALT 32
4 Week Results 06 July, 2016 AST 22, ALT 30, VL = 35
6 Week Results 20, July 2016 VL only = HCV RNA Detected, Non-Quantifiable <15
8 Week Results 04 August 2016, Labs, LFTs Normal, VL = UND
12 Week Results 31 August, 2016 LFTs Normal, VL = UND
EOT + 4 Weeks, LFTs Normal, VL = UND, "SVR4"
SVR12, 21 Nov 2016. CURED!!!
Last Edit: 4 years 11 months ago by fitz.
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Patent Laws and Market Failures 4 years 11 months ago #23296

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I just saw my GP who complained about the lack of innovation in pharmaceuticals because Big Pharma is busy buying up patents for existing drugs so they can mark them up and maximize returns through acquisitions, rather than from innovation.

Yes, this is one of the points that I was trying to make and the reason why I complain about "government failure." How can you promote creativity by hampering creativity?
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Patent Laws and Market Failures 4 years 11 months ago #23297

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Of course. Why didn't you just say so? ;)
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Genotype 3
VL 4,100,000
ALT 101 AST 71
Treatment Naive
Started Sof/Dac Jan 12, 2016
VL= <15 4 weeks in. AST/ALT normal.
VL=UNDETECTED 8 weeks in.
SVR4= Virus back. 3,300,000

Started generic Epclusa Sep. 23, 2017

4 weeks in <15 *Detected.
12 weeks in <15 *Not Detected.
16 weeks in <15 *Not Detected.
Finished 24 weeks treatment 3-17-18
SVR5 <15 Not Detected.
SVR 20 <15 Not Detected.
SVR 44 <15 Not Detected.

Thank you Jesus.
Thank you Dr. James
The administrator has disabled public write access.
The following user(s) said Thank You: jorge soler, fitz

Patent Laws and Market Failures 4 years 10 months ago #23304

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The current system is 90% broken. Or maybe it's 50% broken, but regardless of what number you want to put on it the reality is that Big Pharma is failing to adequately look after the citizen payers that fund it.

It's worth reading my article from Liver International for an overview onlinelibrary.wiley.com/doi/10.1111/liv.13157/full which covers off on a lot of the arguments. Like the 19 x disparity between spending on marketing (25% of gross revenues) and R&D (1.3% of gross revenues)

Profit is a great motivator but as things stand we have a massive lack of innovation because there is more profit to be made at lower risk by minimal modification "me to" drugs and simply ever-greening existing technology through trivial chemical modification. TDF and TAF for HIV are a perfect example of "non innovation" being granted a new patent. The fact that Gilead has pushed the more poisonous TDF onto patients despite developing the lest toxic TAF form of Tenofovir at the same time should be cause for global outrage. It isn't, but it should be.

For those that don't know Tenofovir is an HIV/Hep B treatment. The active bit is Tenofovir. The salt bit is either disoproxil fumarate (TDF) or alafenamide (TAF). TDF causes long term side effects. TAF can be taken at a lower dose and causes less. Both were invented at the same time (no doubt along with many other salts of Tenofovir) but TAF was shelved so it could be rolled out as "New improved Tenofovir" but more importantly with a "new patent". This is bullshit, scamming and ripping off the insurers and taxpayers. It's better than "New Coke" but at least they did not get to patent that. Pushing forward something more toxic (when you have something less toxic) should be a "Do not pass go, go directly to jail" offence. If not that a "Please explain" congressional hearing. And failing that a "Go and stand in the naughty corner".

It took a long time for things to get this broken, and it will take a long time to modify things to favour new innovation, however it is something that has to happen.

The simplest way for "fix" drug pricing is to apply market forces.

Parallel imports from allied markets ie From Canada -> USA would halve US drug prices more or less overnight. I expect this is what will transpire as it is the path of least resistance.
YMMV
Last Edit: 4 years 10 months ago by DrJames.
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