Edwards Clarification

WIth the benefit of follow-up reporting from Ezra Klein, John Edwards' plan to establish prizes for pharmaceutical research turns out to be less awesomely radical than it at first appeared:

This was muddled in their fact sheet and much of the initial reporting, but this program is not, in any way, a replacement for the current system of patents. It does not, in any way, change the way patents are awarded, or how long they last, or who can apply for them. Rather, it creates a separate and parallel track, a pilot program of sorts, wherein a committee would identify diseases and conditions that would benefit from alternative incentives for innovation, and offer prize money as the reward.

This revised plan is wildly less ambitious than it had appeared. What's not clear to me is whether companies who invent drugs under this "prize track" would need to forgo a patent in exchange for the prize. If not, this is a mildly useful way to encourage the development of drugs whose market potential isn't so hot (malaria treatment, say). If the answer is yes, by contrast, then this turns into a neat pilot program that, if successful, could come to supplant the current development model.

UPDATE: Factsheet (PDF) kind of buries the lede in my view (everyone's for this other stuff that comes before it in the document) but makes it clear that the answer is yes. There's also stuff in there about efforts to combat "everygreening" and other abusing patent practices. All in all, very strong, and readers know how I love intellectual property reform.

Photo by Flickr user Janet Calcaterra used under a Creative Commons license

Comments

"If not, this is a mildly useful way to encourage the development of drugs whose market potential isn't so hot (malaria treatment, say). If the answer is yes, by contrast, then this turns into a neat pilot program that, if successful, could come to supplant the current development model."

Given the words on Ezra's blog, it seems the answer is pretty obviously "yes".

Posted by Petey | June 15, 2007 7:40 AM

Were John Edwards to have suggested ending the patent system for drugs, his candidacy for president would have been over. The reporting and commentary was absurd and harmful, but I do not understand whether this is partly or much the fault of the Edwards campaign. Edwards media coverage continually makes it seem as though his candidacy is impossibly foolish. What is wrong?

Posted by Jennifer | June 15, 2007 7:54 AM

Possibly I am getting the wrong idea about the clarity of messages, and efficiency and cohesiveness of the organization, and I hope I am wrong, but I am worried about the Edwards campaign.

Posted by Jennifer | June 15, 2007 8:11 AM

Your concern is touching, Jennifer.

Garance Franke-Ruta often has a similar touching way of expressing concern for the Edwards campaign. And I can't imagine her concern isn't sincere.

If, on the other hand, you just don't quite get how these things work, I'd advise not paying too much attention to the campaign until well after Labor Day. Hillary owns the low-information Dems, and very few will be high-information until the weather gets cold.

Edwards, in the meantime, will be outlining actual policy to lay the groundwork for moving the country in a progressive direction in his first four years in office.

If you'd prefer a more media friendly campaign that doesn't get bogged down with those pesky progressive ideas, I'd recommend both the Obama and Clinton campaigns as something you might be more comfortable with.

Posted by Petey | June 15, 2007 8:23 AM

I wonder if Young Ezra read the Q&A with Genentech CEO Arthur D. Levinson, Ph.D. in the WSJ recently. It's no longer available free there, but you can find some excerpts from it and commentary at seeking alpha. The interview addresses the high costs of drugs and the need to provide incentives for developing new drugs.

Posted by Fred | June 15, 2007 9:17 AM

Possibly I am getting the wrong idea about the clarity of messages, and efficiency and cohesiveness of the organization, and I hope I am wrong, but I am worried about the Edwards campaign. - Jennifer

I've been concerned too about Edwards' ability as a manager, but message-wise he's been saying not only the right things, but also saying them in the right way. Either this was the message-wise slip up of the Edwards campaign or he's even more clever than we may think.

Considering that Edwards has become a rich man (as the GOP will soon rake him over the coals for) persuading everday people (jurors) to accept his case, he knows a thing or two as to how to get a message across to everyday Joes and Janes. I think he purposefully did things this way so as to generate the maximum excitement among over-educated moonbats like me about real IP reform (and also to get it into the media so that after a while these radical ideas become considered mainstream) but he made sure the details(TM) of his plan wouldn't be so extreme as to cause big pharma to pour money in to derail his campaign ...

OTOH, he also seems like he's making an enemy of big Pharma ... and since (as the GOP has realized since the days of Nixon but the Dems. continually fail to realise) people don't vote for their friends or ideological bedfellows but rather for the enemy of their enemy, if Edwards is perceived as making an enemy of big Pharma, the "enemies" of big Pharma will vote for Edwards -- so it's a balancing act: don't antagonize them so much they'll spend real money to sink you, but antagonize them enough to get everybody disgruntled about paying $10 for a pill they could make with their grandkids' chem. set for $2 or, if they can't figure out how, buy from Canada for $5, to vote for you.

Plus it's so deliciously clever the pundits will start talking about how clever it is which'll impress them and get them more supportive of him than elitist pundits typically would be of a real populist (as opposed to a populist(TM), which the pundits love). So he wins meta-politically as well.

Edwards seems to be a political genius -- of course, as various people have mentioned, he doesn't seem to be the best manager. And after Bush & CO incompetancy (and people seeking not to have Bush & CO discredit conservatism and hence making sure everyone blames the failures of Bush & CO on incompetency and not ideology), people might be looking for competency about all else!

Posted by DAS | June 15, 2007 10:01 AM

If you'd prefer a more media friendly campaign that doesn't get bogged down with those pesky progressive ideas, I'd recommend both the Obama and Clinton campaigns as something you might be more comfortable with.

You are like the worst fucking advocate for Edwards ever. Just shut up. Seriously.

Posted by Steve | June 15, 2007 10:17 AM

I've long since come to terms with the fact that you don't like me, Steve.

Posted by Petey | June 15, 2007 10:36 AM

I think Edwards might be rehashing the existing Orphan Drug Program. I haven't the particulars of Edwards's plan, but it seems like he wants drug firms to produce drugs that would otherwise not be profitable. Here's the Wikipedia entry for Orphan Drug Program:

"The granting of the orphan drug status is designed to encourage the development of drugs which are necessary but would be prohibitively expensive/un-profitable to develop under normal circumstances."

Posted by djLicious | June 15, 2007 10:46 AM

Petey, you are a moron and a disagreeable moron at that. I support Edwards and would vote for John Edwards in a moment, for just the policy definition and show of compassion. Knowing you are for Edwards however makes me wonder whether I should turn elsewhere immediately.

Always the miserable moron, Petey.

Posted by Jennifer | June 15, 2007 10:54 AM

Economist Joe Stiglitz proposed prizes for drugs for diseases which Big Pharma doesn't to invest in because a patent won't return enough to make it attractive. Here is Stiglitz

Prizes not patents for new drugsAdd to Clippings
JOSEPH E STIGLITZ

[ MONDAY, MARCH 26, 2007 12:34:06 AM]
Part of modern medicine's success is built on new drugs, in which pharmaceutical companies invest billions of dollars on research. The companies can recover their expenses, thanks to patents, which give them a temporary monopoly and thus allow them to charge prices well above the cost of producing the drugs. We cannot expect innovation without paying for it.

But are the incentives provided by the patent system appropriate, so that all this money is well spent and contributes to treatments for diseases of the greatest concern? Sadly, the answer is a resounding "no." The fundamental problem with the patent system is simple: it is based on restricting the use of knowledge.

Because there is no extra cost associated with an additional individual enjoying the benefits of any piece of knowledge, restricting knowledge is inefficient. But the patent system not only restricts the use of knowledge; by granting (temporary) monopoly power, it often makes medications unaffordable for people who don't have insurance.

In the Third World, this can be a matter of life and death for people who cannot afford new brand-name drugs but might be able to afford generics. For example, generic drugs for first-line AIDS defences have brought down the cost of treatment by almost 99% since 2000 alone, from $10,000 to $130.

But, despite the high price they pay, developing countries get little in return. Drug companies spend far more money on advertising and marketing than they do on research, far more on research for lifestyle drugs (for conditions like impotence and hair loss) than for life-saving drugs, and almost no money on diseases that afflict hundreds of millions of poor people, such as malaria.

It is a matter of simple economics: companies direct their research where the money is, regardless of the relative value to society. The poor can't pay for drugs, so there is little research on their diseases, no matter what the overall costs.

A "me-too" drug, for example, which nets its manufacturer some portion of the income that otherwise accrues only to the company that dominates a niche, may be highly profitable, even if its value to society is quite limited. Similarly, companies raced to beat the human genome project in order to patent genes such as that associated with breast cancer.

The value of these efforts was minimal: the knowledge was produced just a little sooner than it would have been otherwise. But the cost to society was enormous: the high price that Myriad, the patent holder, places on genetic tests (between $3,000 and $4,000) may well mean that thousands of women who would otherwise have been tested, discovered that they were at risk, and taken appropriate remediation, will die instead.

There is an alternative way of financing and incentivising research that, at least in some instances, could do a far better job than patents, both in directing innovation and ensuring that the benefits of that knowledge are enjoyed as widely as possible: a medical prize fund that would reward those who discover cures and vaccines. Since governments already pay the cost of much drug research directly or indirectly, through prescription benefits, they could finance the prize fund, which would award the biggest prizes for developers of treatments or preventions for costly diseases affecting hundreds of millions of people.

Especially when it comes to diseases in developing countries, it would make sense for some of the prize money to come from foreign assistance budgets, as few contributions could do more to improve the quality of life, and even productivity, than attacking the debilitating diseases that are so prevalent in many developing countries.

A scientific panel could establish a set of priorities by assessing the number of people affected and the impact on mortality, morbidity, and productivity. Once the discovery is made, it would be licensed.

Of course, the patent system is itself a prize system, albeit a peculiar one: the prize is temporary monopoly power, implying high prices and restricted access to the benefits that can be derived from the new knowledge. By contrast, the type of prize system I have in mind would rely on competitive markets to lower prices and make the fruits of the knowledge available as widely as possible. With better-directed incentives (more research dollars spent on more important diseases, less money spent on wasteful and distorted marketing), we could have better health at lower cost.

That said, the prize fund would not replace patents. It would be part of the portfolio of methods for encouraging and supporting research. A prize fund would work well in areas in which needs are well known — the case for many diseases afflicting the poor — allowing clear goals to be set in advance. For innovations that solve problems or meet needs that have not previously been widely recognised, the patent system would still play a role.

The market economy and the profit motive have led to extremely high living standards in many places. But the healthcare market is not an ordinary market. Most people do not pay for what they consume; they rely on others to judge what they should consume, and prices do not influence these judgments as they do with conventional commodities. The market is thus rife with distortions. It is, accordingly, not surprising that in the area of health, the patent system, with all of its distortions, has failed in so many ways. A medical prize fund would not provide a panacea, but it would be a step in the right direction, redirecting our scarce research resources toward more efficient uses and ensuring that the benefits of that research reach the many people who are currently denied them.

(The author is a Nobel laureate in economics)

http://economictimes.indiatimes.com/Opinion/Editorial/Todays_Features/Prizes_not_patents_for_new_drugs/articleshow/1806902.cms

http://tinyurl.com/3baher

Posted by John | June 15, 2007 10:56 AM

Economist Joe Stiglitz proposed prizes for drugs for diseases which Big Pharma doesn't to invest in because a patent won't return enough to make it attractive. Here is Stiglitz

Prizes not patents for new drugsAdd to Clippings
JOSEPH E STIGLITZ

[ MONDAY, MARCH 26, 2007 12:34:06 AM]
Part of modern medicine's success is built on new drugs, in which pharmaceutical companies invest billions of dollars on research. The companies can recover their expenses, thanks to patents, which give them a temporary monopoly and thus allow them to charge prices well above the cost of producing the drugs. We cannot expect innovation without paying for it.

But are the incentives provided by the patent system appropriate, so that all this money is well spent and contributes to treatments for diseases of the greatest concern? Sadly, the answer is a resounding "no." The fundamental problem with the patent system is simple: it is based on restricting the use of knowledge.

Because there is no extra cost associated with an additional individual enjoying the benefits of any piece of knowledge, restricting knowledge is inefficient. But the patent system not only restricts the use of knowledge; by granting (temporary) monopoly power, it often makes medications unaffordable for people who don't have insurance.

In the Third World, this can be a matter of life and death for people who cannot afford new brand-name drugs but might be able to afford generics. For example, generic drugs for first-line AIDS defences have brought down the cost of treatment by almost 99% since 2000 alone, from $10,000 to $130.

But, despite the high price they pay, developing countries get little in return. Drug companies spend far more money on advertising and marketing than they do on research, far more on research for lifestyle drugs (for conditions like impotence and hair loss) than for life-saving drugs, and almost no money on diseases that afflict hundreds of millions of poor people, such as malaria.

It is a matter of simple economics: companies direct their research where the money is, regardless of the relative value to society. The poor can't pay for drugs, so there is little research on their diseases, no matter what the overall costs.

A "me-too" drug, for example, which nets its manufacturer some portion of the income that otherwise accrues only to the company that dominates a niche, may be highly profitable, even if its value to society is quite limited. Similarly, companies raced to beat the human genome project in order to patent genes such as that associated with breast cancer.

The value of these efforts was minimal: the knowledge was produced just a little sooner than it would have been otherwise. But the cost to society was enormous: the high price that Myriad, the patent holder, places on genetic tests (between $3,000 and $4,000) may well mean that thousands of women who would otherwise have been tested, discovered that they were at risk, and taken appropriate remediation, will die instead.

There is an alternative way of financing and incentivising research that, at least in some instances, could do a far better job than patents, both in directing innovation and ensuring that the benefits of that knowledge are enjoyed as widely as possible: a medical prize fund that would reward those who discover cures and vaccines. Since governments already pay the cost of much drug research directly or indirectly, through prescription benefits, they could finance the prize fund, which would award the biggest prizes for developers of treatments or preventions for costly diseases affecting hundreds of millions of people.

Especially when it comes to diseases in developing countries, it would make sense for some of the prize money to come from foreign assistance budgets, as few contributions could do more to improve the quality of life, and even productivity, than attacking the debilitating diseases that are so prevalent in many developing countries.

A scientific panel could establish a set of priorities by assessing the number of people affected and the impact on mortality, morbidity, and productivity. Once the discovery is made, it would be licensed.

Of course, the patent system is itself a prize system, albeit a peculiar one: the prize is temporary monopoly power, implying high prices and restricted access to the benefits that can be derived from the new knowledge. By contrast, the type of prize system I have in mind would rely on competitive markets to lower prices and make the fruits of the knowledge available as widely as possible. With better-directed incentives (more research dollars spent on more important diseases, less money spent on wasteful and distorted marketing), we could have better health at lower cost.

That said, the prize fund would not replace patents. It would be part of the portfolio of methods for encouraging and supporting research. A prize fund would work well in areas in which needs are well known — the case for many diseases afflicting the poor — allowing clear goals to be set in advance. For innovations that solve problems or meet needs that have not previously been widely recognised, the patent system would still play a role.

The market economy and the profit motive have led to extremely high living standards in many places. But the healthcare market is not an ordinary market. Most people do not pay for what they consume; they rely on others to judge what they should consume, and prices do not influence these judgments as they do with conventional commodities. The market is thus rife with distortions. It is, accordingly, not surprising that in the area of health, the patent system, with all of its distortions, has failed in so many ways. A medical prize fund would not provide a panacea, but it would be a step in the right direction, redirecting our scarce research resources toward more efficient uses and ensuring that the benefits of that research reach the many people who are currently denied them.

(The author is a Nobel laureate in economics)

http://economictimes.indiatimes.com/Opinion/Editorial/Todays_Features/Prizes_not_patents_for_new_drugs/articleshow/1806902.cms

http://tinyurl.com/3baher

Posted by John | June 15, 2007 10:56 AM

"I've been concerned too about Edwards' ability as a manager, but message-wise he's been saying not only the right things, but also saying them in the right way." - DAS

I agree, and my only real hesitation is wanting to be sure Edwards is convinced we need to get totally out of Iraq and fast. I will vote for no one who does not commit to getting us out of Iraq fully and fast. For my friends and myself, that is more important than all else. So far, though, I am pleased with Edwards, and only want to see the campaign grow in strength.

Posted by Jennifer | June 15, 2007 11:02 AM

Steve, thank you.

Posted by Jennifer | June 15, 2007 11:04 AM