I posted this in the discussion about Novo Nordisk’s pathetic response to the concerns over insulin price increases in the US. We argue a lot here in TuD about this, who’s to blame, how to fix it, etc. I thought this idea worth discussing in its own right, so here’s my proposal:
Here’s an idea: Create an international body who’s purpose is to purchase and own patents for particular critical drugs (for example, insulin “yes”, ibuprofen “no”). This organization, perhaps a part of WHO, would purchase the patent rights to the drug at a price tag of the full R&D costs, with an exclusive license to the discoverer for the term of the patent. The company would be then obligated to produce and distribute the drug at unit production cost plus a reasonable profit margin (we’ll say 10% for now for sake of argument).
After the patent expires, the drug is available for anyone to make and sell.
There are all sorts of “what if” problems we can think up with this scheme, and argue about. I’m game – I’m looking for a solution. This is just one I’ve thought of, and offer for your consideration.
What this does is socialize the development costs without interfering with too heavy a hand in the free market, or the business decisions and operations of private innovators. It is the opposite of the approach we usually take – fund research up-front with grants, with government picking the winners.
My approach doesn’t chose the winners… it rewards the winners. This is much more in line with “real life”, and consistently produces better results, more efficiently. The gang at Lilly, Novo Nordisk, Sanofi, etc. know far better what potential drugs to “bet” on than some bureaucrat in Washington.
Force every drug manufacturer to sell their drugs in the US at the lowest price that it sells its drug else where. This is not meant to control the price of the drug it is just meant to level the playing field. No more would a company be able to charge off their R&D cost to the citizens of one nation then turn around and sell to citizens of another nation at a lower cost because they have already recovered R&D cost from the first nation.
My intent is to force a global price scheme, at least for developed nations. I could envision there should be provisions for discounted prices for third world nations, this for humanitarian reasons.
Gary, despite my strong libertarian instincts, I’d probably support such regulation in the US if it weren’t for one big problem: Foreign nations have already threatened in the past to simply violate patents when drug companies have tried to bring US and foreign prices more in harmony.
How would you deal with that, and protect the legitimate interests of the manufacturers?
That is a whole different question. Enforcement of patent laws is a totally separate issue but since it has been mentioned the likelihood that a country would violate I believe is small. International patent laws are secured by treaty with the possibility of strong repercussions if violated.
They may not violate the patents, but they might simply deny coverage. Then patients have to pay out of pocket and in Europe they’re not going to do that. They’ll resort to other drugs that are covered by their insurance.
I have another question: Should patents exist in a free market system? Though I get the argument that companies need to earn back their R&D costs, the idea of granting a company a monopoly, albeit temporary, doesn’t sound really capitalist or libertarian to me.
My endo told me once that high drug prices in the US subsidize low drug prices throughout the world, and he’s probably right. I happen to live and work in Mexico right now and I pay $25 cash for Tresiba. It’s the exact same Tresiba pen in the exact same Tresiba box that they sell in the US. What’s the cash price there? $400? I pay $10 for a Novolog pen. And no, these aren’t cheap knockoffs. These are the real thing. So any attempt to lower drug prices in the US would be felt all over the world as drug companies raise prices in countries like Mexico to make up for lost profits in the US.
