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Home Publications Blogs Beat the Press Patents Cause Corruption #45,631

Patents Cause Corruption #45,631

Thursday, 09 January 2014 05:03

It's Novartis and Japan today. The NYT reports on allegations that the company altered test results to exaggerate the effectiveness of Diovan, a drug for treating high blood pressure and heart disease. This is the sort of corruption that economic theory predicts would result from government granted patent monopolies. By raising the price of drugs by several thousand percent above their free market price, patents provide an enormous incentive for drug companies to misrepresent the safety and effectiveness of their drugs.

Comments (6)Add Comment
written by liberal, January 09, 2014 8:26
My favorite new example is dimethyl fumarate/Tecfidera.
written by AlanInAZ, January 09, 2014 8:41

Can you link to the issue around Tecfidera. I Googled it and found no issues other than FDA and European approval.
written by rrose, January 09, 2014 7:57
Strange. The patent for Diovan ran out in 2012. Yet, one still cannot get the generic (Valsartan) in the US. Diovan costs $160 for 30 pills, or, more than $5/pill. Valsartan obtained overseas costs less than $2/pill.
written by liberal, January 10, 2014 8:23

There's no specific issue. Rather, my recollection is that the cost of a year's dose will be something like $55K. At the same time, dimethyl fumarate is a chemical already produced in large (perhaps industrial) quantities. As for the pharma co contributing to general knowledge, my recollection is that it was already sometimes used to treat psoriasis, which I assume is an autoimmune disorder just like MS. So it's questionable how much of a scientific/intellectual contribution the pharma co really made.

My joke is that you could have a "good" version of Walter White from "Breaking Bad". You wouldn't even need to produce the stuff, just secretly obtain it from chemical companies (which is a tiny fraction of $55K) and then perhaps further remove any impurities.
Speaking of pharmaceutical companies
written by Oarboar, January 10, 2014 1:39
The third-to-last paragraph in this story made me think about your speaking out against patent monopolies: http://www.bbc.co.uk/news/health-25654112

"He (Professor Jeremy Farrar, head of Britain's biggest medical research charity) said there are just four pharmaceutical companies working on antibiotics now compared to 18 companies 20 years ago."

The public interest and the interests of pharmaceutical companies do not always line up neatly.
Performance Engineer
written by Jesse Brogan, January 11, 2014 7:48
The challenge is not the patent protection itself, but granting that protection without responsibility. The performance cure is to empower the people who buy the product to put effective responsibility upon the patent holder for any misguidance or malfeasance accomplished to the detriment of consumers - even in the patent process.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.