KILLING INNOVATION

Biden Plans to Seize Pharmaceutical Patents

We are incredibly fortunate to live in the most innovative country in the world in part for creating life-changing pharmaceuticals.  The rest of the world benefits enormously from this, while failing to pay their fair share for this innovation.  What most people don’t understand is that for every drug that makes it through the multi-year, challenging FDA process of trials and tests (and paperwork), many drugs simply don’t pan out, while costing a great deal simply to discover they aren’t working, or aren’t better than what is already out there.  The ratio is pretty staggering.  So, even while a single successful drug may cost millions to come to market, the far greater number that never make it also cost the companies many more millions, even as they fail.  The drug business is very risky.

If you think I’m just talking out of some right-wing hat, keep in mind, my father was a pharmaceutical chemist for many years at GD Searle.  He went on to work at Cutter/Bayer and retired as head of QA at Schering-Plough.  I read his FDA reports and journals, studied the PDR and heard his stories of the challenges in the industry.  In fact, it’s sort of amazing how many successes there are.  For perspective, none of the innovations Dad worked on were ever brought to market, and yet, some of them might have worked, had we understood more about psychological illnesses; he focused on what were then called “psychic energizers.” 

Some may look at the Covid vaccines and think this is how the market works, but it was an anomaly brought about by fear.  The government doesn’t typically underwrite all of the development costs and then pay the cost to give them out. 

The Cost Story

The newest drugs have higher prices than older ones for several reasons.  Patent life is shorter than you think, because it takes so long to get through the FDA process. Trying to recover their investment in a drug, companies need to charge more early on, so they can get money to invest in the next new drug.  Hoping to get a cure for Alzheimer’s?  That is going to cost a bundle, and the first drugs out there that actually work will be costly. Eventually, the patents expire and generics come out at a much lower cost.  If you don’t cost recover, your company will go bankrupt as all patents expire.

Yes, there are exploiters out there, though they are in the minority.  I need to carry an Epi-pen and the guy who took over the company raised the price to a ridiculous level.  However, over time and with some competition, the price is now lower (and I recommend GoodRx and the like to price-compare).  However, drug companies are not utilities and they must invest to invent.

Biden’s Socialist Plan to Take Over Patents

Using an attempt to modify the Bayh-Dole Act (which allows the government to suspend the patent rights of a company if a. the drugs were developed with federal funding and b. those drugs are not made available to the public) Biden wants to allow the government to seize patents if “they” determine the price is too high.  Then, they would give the licenses to third parties to sell the drugs even as these companies did not incur any development cost.  Biden wants to “update” Bayh-Dole to say that only a. must pertain.

But how much of the funding must be government?  It isn’t clear.  If a university partnership with a company comes up with a new drug and the government supported the university research with a grant, does that count?  What percentage of the price to bring a drug to market is actually government money?  If you like all the new biologics advertised on TV, most of those were a public-private partnership.  It’s not clear that the drug companies aren’t funding the majority of the costs.  All it appears to take is that some governmental money can be tied to a development.  Keep in mind, this means that anything developed using CRISPR technology could be seized. 

The partnerships benefit everyone.  PhRMA, the trade group for the companies, notes that the current law benefits everyone because all innovations, no matter where they come from, can result in cures for patients.  At one time, government research results went nowhere, sitting on a shelf, of no benefit to anyone.  Now, under the original guidelines, $1.9T has been added to the US economy, while creating 6.5 million jobs.

Birch Bayh, D-Ind and Robert Dole, R-Kan, the authors of the bill, did not want the government to set prices.  They also note that the government never develops new advances on its own.  They only wanted to spur the successful partnership that evolved.

My Theory

Semiglutide (Ozempic) and related drugs have had some good success with Type-2 diabetes, especially in lowering A1C.  However, the drug’s success in also causing weight loss got Hollywood to sit up and take notice.  Now, everyone with a weight concern wants to take this, and the price is still high.  The drug companies do offer discounts to people with diabetes, but they are unlikely to do so for weight loss.  My guess is that there is pressure on the White House to make it cheap and easy to get a weight loss drug that actually works.

Why is this a bad idea?  Weight issues cause other major health problems.  The problem is that when you stop taking semiglutide, your weight comes back.  Period.  It isn’t a cure. 

I’d love to see drugs being more affordable but the reality is, we all want new ones to treat the increasing number of conditions that never were an issue when we all died younger.  You can’t have both new drugs and low prices.  If there is really a feeling that the prices are too high because other countries have negotiated lower prices, how about this?  We stop giving countries a break; they pay what we pay.  That might encourage companies to lower prices to some extent.  We also can look at the FDA process.  If we streamline it and give companies longer patent rights (instead of eating up years in the process), perhaps companies wouldn’t need to charge as much to cost-recover.

Downstream Risk

Property rights are critical to a successful society.  It’s one of the foundations of American success and countries in S. America following these rules find out they can turn around their economies.  But once you start finding a way to seize those rights, whatever the justification, we are all at risk.

You have a two-bedroom house, but only one person lives there? Maybe the government would force you to house homeless people there, as you have the room.  You’ve spent 10 years writing an important book, but it’s expensive.  Could the government force you to take less money because we all should read it?  We cannot give the government the right to any form of property, or we will become the socialist society the far-Left dreams of.  And we all know what that looks like.  Russia or China.

It may sound like nothing now, but just read into the future.  Just like every single one of Obama’s (I mean, Biden’s) bad ideas, it will continue to destroy our country.