Dean Baker Selling Sickness 2010

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Dean Baker Selling Sickness 2010

  1. 1. Redesigning Incentives in the Pharmaceutical Industry Dean Baker, Co-Director Center for Economic and Policy Research
  2. 2. <ul><li>Problems of the Patent System </li></ul><ul><ul><li>Bad Economics </li></ul></ul><ul><ul><li>Bad Medicine </li></ul></ul><ul><li>Publicly Financed Research and Medical Education </li></ul>
  3. 3. Current System: Patent Monopolies Support <ul><li>Research and development </li></ul><ul><li>Medical education </li></ul><ul><li>Marketing </li></ul>
  4. 4. Problems of Patents
  5. 5. Inefficient Consumption/Use <ul><li>Some people can’t use drugs altogether at patent-protected price </li></ul><ul><li>Use of inferior drugs </li></ul><ul><li>Improper dosage </li></ul>
  6. 6. Distortions in Research <ul><li>Copycat drugs – motivated by patent rents </li></ul><ul><li>Focus on patentable cures and treatments </li></ul><ul><li>Results kept secret </li></ul>
  7. 7. Distortions of Education and Marketing <ul><li>Misrepresent effectiveness and safety </li></ul><ul><li>Little attention to generics and non-patentable treatments </li></ul><ul><li>Kickbacks and outright bribes to doctors </li></ul>
  8. 8. Other Waste in Pursuit of Patent Rents <ul><li>Legal harassment of generic producers </li></ul><ul><li>Political interference in the drug approval process or public purchase decisions </li></ul>
  9. 9. Public Funding for R&D and Medical Education <ul><li>Master contracts – renewable long-term (8-12 years), limited number </li></ul><ul><li>Total funding comparable to industry funding -- $30-40 billion in U.S. (National Institutes of Health gets $30 billion) </li></ul><ul><li>Master contractors could either do research in house or subcontract (most research by industry is currently subcontracted) </li></ul><ul><li>All patents produced through publicly funded research are in the public domain (copyleft) </li></ul><ul><li>All results are fully public and posted on the Internet as soon as practical </li></ul><ul><li>Medical education would be carried through by people with no interest in pushing particular drugs </li></ul>
  10. 10. Advantages of Public Funding <ul><li>Price = marginal cost, all drugs are sold as generics </li></ul><ul><li>Most of the incentive to conceal results or misrepresent findings is eliminated </li></ul><ul><li>The incentive to develop copycat drugs is eliminated </li></ul><ul><li>There will be incentive to pursue non-patentable cures and treatments </li></ul><ul><li>Eliminates the incentives for bribing politicians and doctors and legal harassment </li></ul>

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