Take Away the Patent Protection: The Answer to Uwe Reinhardt's Question

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Friday, 08 June 2012 08:51

In a blogpost in the NYT Uwe Reinhardt asked how much we would be willing to pay to extend a person's life by a year. The examples he refers to in the piece involve drugs that are very expensive, but can be expected to extend life.

This is an unfortunate way to frame the issue. With few exceptions drugs are cheap to produce. The reason they are expensive is because the government gives drug companies patent monopolies. This allows them to charge very high prices for drugs that extend life, since anyone else will be arrested and thrown in jail if they manufacture the drug and offer to sell it at a lower price.

If we adopted a different mechanism for financing drug research, for example expanded government funding for research (we already spend $30 billion a year through the National Institutes of Health) or established a prize fund that would buy out patents, as advocated by Nobel Prize winning economist Joe Stiglitz, then we would not face this situation with drugs. Almost invariably the drug in question would be cheap and making it available to someone who needed it to extend their life would be a no-brainer.

This doesn't remove all the hard questions. There would still be an issue as to how much we are willing to spend to find cures to cancer and other deadly diseases. We also would face situations where life-saving measures actually did involve substantial resources, such as when highly skilled physicians must spend many hours carrying through a complex operation. However, if we had a better system for financing drug research many of the cases that might pose the moral dilemma raised by Reinhardt would disappear.