That is beautiful, especially with the graphic.

This assertion may well be true, but only because the state insists on a monopoly of healthcare provision.

Clearly if the state takes over a sector of the economy, then the suppliers to that sector will end up dependent on the state.

If we had a National Food Service, you would be able to say the same thing about the Dairy Industry, or the meat trade.

It's hardly a big deal.

This assertion may well be true, but only because the state insists on a monopoly of healthcare provision.

When were all the drug companies nationalised, then?

EG

It's a classic public choice problem. Pfizer spends more on lobbying governments than any other company - and it's lobbying for protectionism.

Better living through chemistry or better living through sophistry?

Isn't it technically a monopsony?

In Australia, for prescription medication, yes. The PBS breast that suckles the general public has soothed them into a state of learned helplessness when it comes to paying their own hard earned cash for proven treatments. Rather, they spend millions (?billions) on snake oil and nostrums. It's very sad.

When were all the drug companies nationalised, then?

Huh?

The drugs industry is generally a good thing. And so is the NHS paying for it. Ask anyone who relies on both institutions to keep them alive.

The way the drugs industry works means it is able to employ thousands of people to carry out research which 99 times out of 100 goes nowhere. What other industry can afford those odds? And the result is the extraordinary advances in medicine over the last few decades.

Of course, the benefits of those advances are mostly limited to us lucky westerners.....

The government of a locality is the largest dealer in force in that locality (definition). It makes sense that the arms industry would rely heavily on tax support, since the tax industry relies heavily on armed support. It may be possible, however, that in some misguided western nations, the formal education industry (school) consumes a larger share of GDP. This doesn't appear as a profit on any balance sheet where schools are State monopolies or are "non-profit" (tax exempt).

When were all the drug companies nationalised, then

Typical EG 'jellyspeak'....

"The way the drugs industry works means it is able to employ thousands of people to carry out research which 99 times out of 100 goes nowhere. What other industry can afford those odds? And the result is the extraordinary advances in medicine over the last few decades."

Actually the research tends to be directly government funded. Once the risky work has been completed, the drug companies pick the safe looking bets and do the development.

Always bemuses me why the drug companies claim to be friends of free markets - they want unfree, heavily regulated markets directly subsidised by taxpayers.

Oh except for advertising - they want to be able to advertise snake oil direct to the public.

"Actually the research tends to be directly government funded. Once the risky work has been completed, the drug companies pick the safe looking bets and do the development

Not an accurate description of how scientific research in general, let alone the narrower confines of pharmaceutical research, is approached. Yes government/charitable funding of projects is generally for the "blue sky thinking" projects. But that is no bad thing, the projects would never get off the ground otherwise. And it's done with the knowledge that others may commercialise the good parts further down the line.

As for the main point, the perceived protectionism of the pharmaceutical industry, I think that the colossal research costs involved are not really being taken into account. If the electorate wants to pay the true unit cost of each pill/course of treatment then that's fine. I'm wholly in favour of the free market.

However, if I've understood the post correctly, if the idea is that pharmaceutical companies should lower their costs the lets inject some realism. Where exactly is the economic incentive to pour billions of dollars down the drain? Because that is what it amounts to. And without the economic incentive do you really think these drugs would have been developed in the first place?

And so is the NHS paying for it.

No, it is other coerced taxpayers who are paying for it.

Currently drug companies in the US practice price discrimination by selling at government mandated prices abroad. Correct me if I'm wrong, but if a company stands to lose a great deal of money from re-importation of a drug, for example, from Canada to the US, wouldn't that company just stop selling to Canada?

Do readers here think that drug patents are a bad thing?

It seems we can have a very straightforward system here:
-Drug companies do research, some funded by the government, to make new drugs.
-Drug companies sell those drugs at the highest price they can get away with (either the market, or price controls)
-The government enforces intellectual property rights, though government funded research results in public domain drugs
-As mentioned above, re-importation will stop itself if the drug companies choose so.

The only kink in the system is generic which probably violate drug patents. Goes back to my question above: Do readers here think that drug patents are a bad thing?

Alex wrote:

Pfizer spends more on lobbying governments than any other company - and it's lobbying for protectionism.

The problem is the government, which pretends to act in the public interest, is happy to do what Pfizer lobbies it to do. Arguably Pfizer is quite rightly acting in its shareholders best interests.

Ivan:

I think you're right that generics are a kink in the system you describe. If a company like Pfizer decides to stop selling some drugs in a particular market, the government would likely respond by removing the patents for all of that company's drugs.

And as for prescription drug reimportation, I suggest we also allow cigarette reimportation. :-)

Rob:

The real problem is that we give the government enormous power to muck up our lives, and then certain people go nuts when businesses (understandably) want to suggest how government use that power.

My experience is that the people who go nuts generally want the government to have even more power to muck up our lives but want certain people barred from having a say in how the government uses that power; if you suggest to them the real problem is that the government has too much power in the first place, they react like you've got three heads.

There are two separate issues here; drug companies charging what they can get away with in each market, and looking to local governments for protection from their own products being reimported from the cheaper market is wrong, because competition benefits the consumer, whether individuals, health insurers or state healthcare providers. Even if the benefit is not immediate, it is there, in reduced premiums or tax bills. The can of worms here is not US c/w Canadian pricing, but US c/w third world; if we sell drugs cheap to those who cannot afford them, how do we stop them profiting by selling them back to us/if they sell them back to us do they really need cheap drugs?

The same drug companies lobbying for protection of their IP to allow them to recover their development costs is legitimate, as the cost of developing drugs, and testing them to a standard we in the west expect, costs huge amounts and those funding that research and testing should be entitled to some return.

We are not far from a situation where the political pressure to sell certain drugs at lower prices for humanitarian reasons will discourage research in certain areas; what is the point developing a cure for cancer if you can't make a profit from it? At the moment I fear that the predicted pandemic of Avian Flu could result in drugs being rushed to market without adequate testing because of pressure from the politicians who have ramped the scare, and then we'll all be disgusted if there are unpleasant side effects.

For Euan's benefit, the drug companies never had to be nationalised in the UK, bacause you and I cannot buy prescription drugs from them. All prescription remedies have to be authorised by a doctor, and most of us access doctors through the government. I require certain drugs regularly, and would be willing to pay more for the convenience of just walking in the pharmacy and paying but I'm not allowed; I have to see a doctor first.

Doesn't the re-importation problem stem from extortion by foreign governments? For example, the Canadian government tells Pfizer "you can either sell us your drugs at just over the cost of manufacture, or we will buy cheap pirated versions of your drugs from Africa". Isn't the best solution to a problem such as this for the patent-respecting states to step in with a threat of retaliatory force against the offending governments?

This whole Pharmopoly thing seems remarkably socialist, from people who espouse free market ideals. How does it hurt anyone that a company charges a lot of money for a drug it developed? The drug didn't exist before, so it wasn't available at any price. The company has a right to charge what it wants. After cruising around pharmopoly.com a bit I get the idea that drug patents are seen as wrong, but I don't understand why. Is there a clear explanation for this somewhere that I am missing?

It's going to be very difficult to convince me that the creators and producers of life-saving drugs should have no protection for their intellectual property. Waving your hands around and screaming about "windfall profits" is not an argument. I don't care how much they charge. Nor do I care that they spend money on lobbying, we all know that lobbying is not a root cause, but an effect of bad governance, right?

The drugs industry is generally a good thing. And so is the NHS paying for it.

Except the rate paid by the NHS probably are insufficient to fund the research done by the drug companies. Most nationalized drug payment schemes pay at or slightly above the "generic" price, which is insufficient to fund research.

My understanding is that the revenue that is plowed back into research by drug companies comes disproportionately from the (semi-, rather than wholly-, socialized) US market. Most of the socialized medicine is a free rider on research paid for by the remnants of the free market in medicine in the US.

Drug patents, like all patents, are an infringement on our liberty that we accept in exchange for more rapid advances in the useful arts and sciences. You can shorten them up or lengthen them to adjust the social contract and tweak the rate of advancement. Obviously, past a certain point, other factors come into play. A patent period of five days wouldn't be any different than zero and a patent period of a millenium would likely be little different than permanent patents in its economic effects.

So where are drug patents? Are we currently in that portion of the curve where a 1 year move either way would change behavior? What do we want to do? Shall we have more expensive medicines but more new ones or shall we have quicker generics but less new formulas coming out of the labs?

Pharmopoly doesn't seem to have a proper answer for that.

Also, on the same note of timing of patents, other blocks by government can infringe on that time. If a drug takes years to get through FDA approval, or if a gadget takes too long to be approved by the FCC, that shouldn't count towards the time of the patent.

Cafe Hayek has a good post on the uselessness of the FDA. Look here.

Drug patents, like all patents, are an infringement on our liberty that we accept in exchange for more rapid advances in the useful arts and sciences.

Drug patents are a form of property.

Are we proposing, pace Bakunin (I think) that property is theft, that all forms of property are an infringement on liberty. After all, your "No Trespassing" sign infringes on my liberty to walk across your property, as does your refusal to let me drive your car or help myself to the contents of your fridge.

More guns fewer drugs?

Drug patents are a form of property.

Indeed, but the question is not whether they are a form of property but whether they are a form of just property. There are good reasons to suspect that patents are not.

- Josh

Perhaps, WP, but the argument against intellectual property as per se illegitimate is going to have go a lot further than simply reciting the trite claim that other people's property restricts my liberty.

That is true of all property, and indeed most of the arguments against intellectual property (of which patents are a subset) apply equally well against other forms of property as well. In particular, the parallels between real property and patents are stronger than most realize.

Your logo says it all.