The news today that AstraZeneca failed to meet phase III trials for its stroke drug NXY-059 has prompted Tim Worstall to ask opponents of drug patents
If AstraZeneca is not allowed to make fat profits from those drugs that do work, do get through phase III trials, where is that money going to come from? Without patents, what is the mechanism being proposed for the financing of the development of new drugs?
I’m not really an opponent of patents, but certainly a sceptic, so I’ll give an answer anyway.
Perhaps a competition might work? The Government rewards the winners of a race to produce a particular treatment or drug with a pay-off equal to their costs (which would cover the development of that drug) plus a mark-up covering the failed ventures. This could be more efficient than the current system as companies would compete more vigorously against each other to win the race.
Obvious problems include the risk of cartelisation. If the Government says it wants a drug to treat strokes, then the drug companies may carve up between them who enters that particular race, eliminating the efficiency gains of the race and leading tin infalted costs.
Even worse, more than one company may enter, but agree that only won company ‘gets’ to win. The other companies would presumably get their wasted costs back on the mark-up they received from their own successful drugs. Now we have inflated costs, and inflated mark-ups.
Can these problems be solved by monitoring? Drug research is often carried out by universities, papers are published etc. It should therefore be fairly easy to spot very sloppy or careless effort?
So the only drugs that get developed will be those that the bureaucracy is bright enough to identify?
That’s really being put forward as a solution? Central planning?
Tim
I see the problem differently. Unlike trying to predict what kind of cars people want to buy, there is lots of evidence as to what sort of drugs people want. I don’t find it problematic in supporting a role for GOvt here whilst rejecting it emphatically in many other areas ofl ife.
For example, we know that a) AIDS, Malaria and TB are big big killers and also that b) research into these areas is relatively underfunded compared to, for example, baldness cures and c) that people without Malaria, AIDS and TB lead more productive lives. (Michael Kremer has a paper on this, but I forget the reference).
Thus pharma companies know there’s demand out there but they can’t meet it at an acceptable price, despite the social benefit. The Government has a role in this situation to channel some of the activity of private companies into activities that produce goods of known public benefit.
Of course, you have to accept the public good argument about vaccinations etc. but isn’t that obvious?
I agree with your latter argument. However, I don’t that that should be the only method of drug development.
A few questions from a blog idiot
How do you keep the spammers from eating you alive? i\’ve seen blogs with nothing but spam postings.
How do you keep some left wing extremist from posting racist or defamatory rhetoric? and if you cant stop them, what are you legally liabel when they do?
can viruses be posted to blogs?
Cheap auto loans….
Cheap auto loans….
wife facial images beach images facial wife beach