La Saggia Decisione Indiana sui Brevetti

Apr 8, 2013 Joseph E. Stiglitz , Arjun Jayadev

NEW YORK – Il rifiuto della Corte Suprema indiana di difendere il brevetto sul Gleevec, il famoso farmaco contro il cancro sviluppato dal gigante farmaceutico svizzero Novartis, è una buona notizia per molti di coloro che soffrono di cancro in India. Se altri paesi in via di sviluppo seguissero l'esempio dell'India, anche in quel caso sarebbe una buona notizia: aumenterebbero le risorse a disposizione per altre esigenze, come la lotta all'AIDS, l'istruzione, o per investimenti di supporto alla crescita e di riduzione della povertà.

La decisione indiana implica anche meno soldi per le grandi multinazionali farmaceutiche. Non sorprende che la loro risposta e quella dei loro lobbisti siano state molto agitate: la sentenza, essi sostengono, distrugge l'incentivo a innovare, e di conseguenza infliggerà un duro colpo alla sanità pubblica a livello mondiale.

Queste affermazioni sono assolutamente esagerate. Sia in termini di politica economica che sociale, la decisione del tribunale indiano è ragionevole. Inoltre, è solo uno sforzo localizzato per riequilibrare un regime di proprietà intellettuale (IP) che è fortemente sbilanciato a livello globale in favore degli interessi delle case farmaceutiche a scapito del benessere sociale. In effetti, vi è un crescente consenso tra gli economisti sul fatto che il regime attuale sulla proprietà intellettuale soffoca l'innovazione.

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Joseph E. Stiglitz

Writing for PS since 2001
281 Commentaries

Joseph E. Stiglitz, a Nobel laureate in economics and University Professor at Columbia University, is Chief Economist at the Roosevelt Institute and a former senior vice president and chief economist of the World Bank. His most recent book is People, Power, and Profits: Progressive Capitalism for an Age of Discontent.

Arjun Jayadev

Writing for PS since 2013
4 Commentaries

Arjun Jayadev is Professor of Economics at Azim Premji University and Senior Economist at the Institute for New Economic Thinking.

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G. A. Pakela Apr 18, 2013

Why would investors or "big pharma" project managers spend the tens of millions of dollars over many years to develop, test and seek FDA approval for block buster drugs if any generic manufacturer can develop a generic version of that drug and sell it at its marginal cost of production. There would be no hope for that capital recovery. Now it is the case that drug manufactures can game the rules by seeking patent extensions for trivial improvements, but that is not what the professor is arguing here.

This essay would be brutally dispatched in almost any graduate level economics seminar.
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Roy Zwahlen Apr 12, 2013

I would respectfully like to see your citations for the "growing consensus among economists that the current IP regime actually stifles innovation." Economic literature surveys I have seen are either neutral or tilt the other way. I recognize its not easy to import citations into articles like this but it seems like a statement that should be substantiated.

I am also curious as development economists what your take is on the fact that the Indian government spent an appalling 1.19% of their GDP in 2010 on healthcare according to World Bank data. Botswana (6%), Angola (2.39%), Congo (3.35%), Gambia (2.89%), and Burkina Faso (3.4%) governments spent more than double on healthcare.

Considering that that almost 70% of the population lives on less than $2 a day, I wonder if strong or weak IP is of any consequence as the vast majority of the population can't afford generics (most drugs are paid out of pocket in India even if you have insurance) nor can they afford the trip to the hospital in the first instance as 65% of Indian's do not have access to modern healthcare facilities at all.

I would appreciate your thoughts on how these numbers square with the sentiments in your article especially when the data suggests that only about 100 million people in India (who have equal or greater wealth than the West) are the only ones who benefit from IP cancellations. Should they really be the ones paying prices meant for Burkina Faso?
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Leo Arouet Apr 12, 2013

Bello artículo. En la India, África y en muchos otras partes mucha gente muere debido a las enfermedades y esto debido a que están excluidos y se les niega el acceso a las medicinas necesarias, que son muy costosas e inasequibles.
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Leo Arouet Apr 12, 2013

Es verdad sobre los recursos que se puedan destinar a otras enfermedades... Me da mucho gusto escuchar esto.
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Ritesh Kumar Singh Apr 9, 2013

Intellectual Property Rights should promote innovation but TRIPS plus provisions seem to promote the interest of large pharma corporations and make access to life saving medicines away from the reach of common people.

It also adds to cost of public health programs in developed countries like US or UK- a major cause of their fiscal problems. Thus, India's Supreme Court's decision on Gleevec seems to be just in keeping with India's WTO/TRIPS obligations.

However, there should be a balance between interests of pharma companies which invest huge sums in R&D activities and interests of common people who use the medicines.

In my opinion, WTO TRIPS agreement fairly protects IPR and we don't need TRIPS plus provisions....which are being pushed by large pharma comapnies.

To tight IPR protection can stiffle R& D instead of promoting it.
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jack lasersohn Apr 8, 2013

While it is true that the global IP system for medical innovation needs to be seriously rethought, the Indian patent decision on Gleevec is clearly wrong.
The court basically held that the improvements to an older and unpatented version of the drug were not significant enough to justify a patent on the new version.
In that case why doesn't India simply use the older unpatented drug?
The answer, which demonstrates the venality of the Indian court's decision, is that the older drug does not in fact work well at all and the improvements that Novartis was trying to patent were critical to its efficacy. The Indians, as usual, are simply unwilling to pay Novartis for inventing a drug that actually works.
Beyond Gleevec, the system which supports worldwide medical innovation is failing. The United States has long subsidized virtually all medical innovation in the world by being willing to pay extremely high prices for new drugs and devices. These prices are routinely two to three times higher than prices in the rest of the developed world (set through monopsony purchasing systems) and vastly more than the OUS 'average price' which includes prices near zero in kleptocratic states such as India. The rest of the world free rides on this American subsidy, as the authors clearly know and implicitly endorse.
Unfortunately, the American public can no longer afford this subsidy, and it is obvious that as the subsidy is removed , innovation will decline. American venture capital investment in medical innovation has already declined by 70% in anticipation.
The solution to both providing drugs to poor populations while simultaneously supporting the huge cost of innovation is for the US to force a worldwide drug pricing system that reduces US prices, raises them in the rest of the developed world and allows reasonable (not zero) income adjusted pricing in the third world.
This is likely to emerge as a major fair trade issue in the future.
There is sufficient aggregate demand and income across the world at large to pay for medical innovation if everyone will pay their 'fair share', but not if monopsonists in Europe and kleptocrats in India will not.
- jack lasersohn May 6, 2013
  
  Procyon
  I will try to respond to your note as if you intended it to be a reasonable and useful contribution to the substantive problem of how we actually continue to pay for medical innovation now that the US has decided that it cannot fund it alone.
  The reality is that the VC system in the US funds the vast majority of early stage drug and medical device development. Eleven out of thirteen new breakthrough drugs and all such medical devices approved last year, were funded by the VC system. Those are the facts. Larger companies have 'offshored' their key RD activities to the VC community because it is simply too risky for them and because we do it better. The return on capital in this sector of the VC industry has been low relative to other risky investment, suggesting that the profit levels for drugs and devices are not excessive. This activity must be paid for somehow. Historically it was paid by the US consumer in the form of high prices, with those high prices subsidizing the availability of those drugs to the rest of the world.
  My perfectly reasonable suggestion was that we replace that subsidy, which will soon disappear, with a fairer worldwide cost sharing system that would eliminate 'free riding' by those who can pay (the first world) and set affordable, but not zero, prices for those who cannot pay much. India is somewhere in between, but can surely afford to shoulder some non zero portion of the cost of such innovation. The argument that we should subsidize the profits of the generic drug industry in India, by allowing them to simply steal the drugs does not seem reasonable.
  As the American people and Congress come to understand the extent of the free riding and outright theft that has been occurring, the reaction could be very damaging to trade with the developing world. It is in everybody's interest to find a practical solution to this impending disaster.
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- Procyon Mukherjee Apr 9, 2013
  
  Jack, your treatise is little off-balance driven by the rhetoric that MeDIC (Medical Innovation and Competitiveness Coalition) spreads, which while it espouses a scathing attack on FDI reform process in U.S. is silent on the prices that Americans pay for such innovation. The respondents that MeDIC chooses to further their agenda seem to all point to a shift towards Europe and Asia for development and marketing of products citing FDA reforms as the single most reason. This can be at best a negotiating point with Washington, none else. Prices of drugs, needs to be the more potent issue and how it could be made available to people should be the agenda; not furthering the cause of venture capital, which in all its ascendancy has made such a devastating impact on prices of drugs for almost two decades.
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Zsolt Hermann Apr 8, 2013

This paragraph is the key to the whole global crisis, the whole imminent social, economical and financial catastrophe the world is facing:
"...But the Indian decision also means less money for the big multinational pharmaceutical companies. Not surprisingly, this has led to an overwrought response from them and their lobbyists: the ruling, they allege, destroys the incentive to innovate, and thus will deal a serious blow to public health globally..."
At the moment we are educated, brought up, brainwashed to the notion that the only way to motivate somebody is to give them more profit, money, material profession, dominion, fame.
This leads to exploitation, destructive competition, which has led humanity into the dead end we are in today.
We completely disconnected from and ignore the natural system we evolved from, and in which natural system we still belong.
In a global, integral natural system the primary motivation is to help sustaining the system, since the life, the well being of each cell, organ, creature directly depends on the well being of the whole system.
Since we completely forgot about it what it means to exist in a natural, interconnected and interdependent system, and since we realize through up to date scientific research and the daily events of the crisis that in fact we still exist in such a natural, global, interconnected and interdependent system, we have to re-educate ourselves what it means to be a well adjusted, adapted part in such a system.
In a natural system there is no private property, but on the other hand those who contribute to the system more deserve more from the system reimbursing their necessities and effort.
In an ideal, mutually cooperative and complementing system everybody gives 100% of their ability to the whole and receive 100% of what they need for their optimal state.
This should be humanity's future optimal state and we have to start progressing in that direction today, before our present setup collapses completely.
- Edward Ponderer Apr 10, 2013
  
  Further proof to Mr. Hermann's point is the latest, and shrewdest movement in corporate outsourcing -- both in effectiveness and bottom-line savings. This being "crowdsourcing," where the expertise of the general diversity of the inhabitants of cyberspace is called upon. The question is thrown out to the crowd, and statistically, all sorts of perspectives arise leading rapidly to a slew of solutions from which cream of the crop can be sorted out.
  
  The corporation makes a lot of money on this free service of the general public. But is it free? No, they get paid all right. How? Purely through self-esteem and social acknowledgment. And even though this is totally virtual (the corporation doesn't even have to shell out for an awards dinner or a plaque!), the payment is sufficient to get plenty on the hook.
  
  No, people with plenty of money they don't even use would be happy to buy prestige and acclaim for it. And despite the prize money, very few Nobel laureates struggled years for their breakthroughs for that relative pittance pot of gold which most would only use to further their research anyway (as the prize money is ideally intended for). No, its intellectual achievement, a feeling of contributing to human advancement, and permanent societal acclaim that is there aim.
  
  A strapped-for-cash plumber must be paid in cash, but there are a combination of motivating factors available for the all ready well-to-do entrepreneur. How many won't just retire to the golf course when financially well able to do that because they don't want to give up the thrill of running their empires. Well, why don't we give them an even greater thrill -- becoming heroes of a new mutually responsible society.
  
  I would highly recommend concerning this, reading the recent book, "The Benefits of the New Economy: resolving the global economic crisis through mutual guarantee" (Michael Laitman, ARI (Institute Dept. of Economics), 2012). Specifically see p. 133 ff, "From predators to prosocial - the positive role of tycoons in the new economy."
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