May 03, 2017
I took part in the March for Science a couple of weeks ago. (Okay, economics is not really a science, but I get angry when my government tries to stifle scientists reporting their evidence on global warming.) Anyhow, the rally was filled with speeches about scientific ideals: open, disinterested, reproducible research. Unfortunately, real world science often doesn’t live up to this agenda.
It looks like we are going to get a lesson later this month on how politics interferes with science at the annual meeting of the World Health Assembly (WHA), the decision-making body of the World Health Organization (WHO). The Indian government has proposed a motion, which would have the WHO prepare a report on the research into the efficiency of patents as a financing mechanism for prescription drugs and vaccines compared with alternative financing mechanisms. The latter would include government sponsored prize funds and directly funded research.
The reason why this is an important and interesting question is that the current method of financing research by granting patent monopolies leads to situations where drugs often cost several hundred times their free market price. For example, the Hepatitis C drug Sovaldi has a list price in the United States of $84,000. A high-quality generic version is available in India for $300.
The result of these monopolies is that people struggle to cover the cost of drugs which would be cheap if sold in a free market. Even in cases where governments or insurers are supposed to cover drugs, many balk when the price runs into the tens of thousands or even hundreds of thousands of dollars, as is the case with many new cancer drugs. While the monopoly prices are a serious burden even in rich countries, they are altogether unaffordable in the developing world.
In addition, we get all the corruption and abuses that economics predicts when the government imposes a monopoly that allows for a price far above the free market price. Any economist that passed intro econ can tell you the problems with a 20 percent tariff on steel or shoes. In this case, a patent protected price that is 100 times the free market price is equivalent to a tariff of 10,000 percent.
This incentive leads companies to conceal research results that indicate their drug might be less effective than claimed or even harmful. It leads them to promote drugs for inappropriate uses. It leads them to lobby or even bribe politicians to lengthen and strengthen their monopolies. And, it gives an enormous incentive for secrecy in research.
Given all the known downsides of financing research through patent monopolies, why would we not want a comprehensive report from the WHO outlining the evidence on the relative efficiency of alternative mechanisms? Isn’t that what science demands?
Apparently, some delegations are actively working to torpedo the Indian resolution. Sorry, nothing is here is on the record. The enemies of science operate in secret.
Anyhow, it would be great if we could blame this all on Donald Trump sitting in the White House, but there is little reason to believe he has played any role in this one. The pharmaceutical industry is doing just fine with the current model and is not interested in having questions raised about its relative efficiency.
Unfortunately at the WHA, these governments are going to bat for the pharmaceutical industry, against the interest of their own citizens, the rest of the world, and science.