Abraham Lincoln said that the patent system adds “the fuel of interest to the fire of genius.”
Alas, when it comes to the majority of innovative healthcare technologies, that “fire of genius” rarely comes from Inside the Beltway. And having Senator Bernie Sanders hold forth on pharmaceutical research, development, and manufacturing costs is about as useful and thought-provoking as listening to my 13-year-old Golden Retriever parse the allegorical vicissitudes of Milton’s Paradise Lost.
Senator Sanders, it’s important to remember, doesn’t even believe in patents, but rather in the failed fantasy land of “innovation prizes." Well, in the words of the late Senator Daniel Patrick Moynihan, “Everyone is entitled to his own opinion, but not to his own facts."
In the past, Senator Sanders introduced a bill that would replace our current patent system for pharmaceuticals with a “Medical Innovation Prize Fund. It’s not a new idea. The prize model has been used in the past by the old Soviet Union – and it didn’t work. The Soviet experience was characterized by low levels of monetary compensation and poor innovative performance.
The US experience isn’t much better. The federal government paid Robert Goddard (the father of American rocketry) $1 million as compensation for his basic liquid rocket patents. A fair price? Not when you consider that during the remaining life of those patents, US expenditures on liquid-propelled rockets amounted to around $10 billion. It’s certainly not what Schumpeter had in mind when he wrote about a “spectacular prize thrown to a small minority of winners.” There’s a difference between “Creative destruction” and destroying medical innovation.
As Joe DiMasi (Tufts University) and Henry Grabowski (Duke University) have argued, under a prize program, pharmaceutical innovators would lack the incentive to innovate. To quote DiMasi and Grabowski, “The dynamic benefits created by patents on pharmaceuticals can, and almost surely do, swamp in significance their short-run inefficiencies.”
As DiMasi and Grabowski presciently observed in 2004, “The main beneficiaries in the short-term would-be private insurers and public sector purchaser of pharmaceuticals. Governments and insurers are focused myopically on managing health care costs. They are not likely to be strong advocates for funding new drug development that can increase individual quality of life and productivity."
Let’s take a break from the effervescent political bloviation and look at the facts. It’s time to put the “intellectual” back in “intellectual property. Pursuing misguided policies that siphon funding from the groundbreaking medical research happening in the biopharmaceutical industry will have devastating consequences for patients and society.
When Senator Sanders begins to wonder why GLP-1 agonists can’t be radically reduced in price, it’s because he doesn’t fully understand or appreciate the ecosystem.
Allow me to draw your attention to a recent US Chamber blog post highlighting how the private sector is providing positive and cost-effective solutions for diabetes patients. You can find that blog here: Conquering Diabetes with Cost-Effective Solutions for Patients | U.S. Chamber of Commerce.
Two key points:
* Free enterprise creates competition in the marketplace to keep costs down. Contrary to critics, innovation in diabetes is being pioneered by private sector companies.
* New treatments are possible because of private-sector innovation. America’s life science companies are advancing diabetes care by developing more effective treatments to help people manage their condition.
What’s that? Did you think that medical innovation only comes from the NIH? Consider the facts:
A study in Health Affairs by Bhaven N. Sampat and Frank R. Lichtenberg (“What Are The Respective Roles of the Public and Private Sectors in Pharmaceutical Innovation?”) puts the issue in a data-driven perspective that gives the NIH its due — but in the proper frame of reference.
Per Sampat and Lichtenberg, less than 10 percent of drugs had a public sector patent, and drugs with public-sector patents accounted for 2.5 percent of sales, but the indirect impact was higher for drugs granted priority review by the FDA. (Priority review is “given to drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists.”)
“478 drugs in our sample were associated with $132.7 billion in prescription drug sales in 2006. Drugs with public-sector patents accounted for 2.5 percent of these sales, while drugs whose applications cited federally funded research and development or government publications accounted for 27 percent.”
The NIH plays a vital role in basic research and early discovery, but is robbing Productive Peter to pay Government Paul the best bang for the buck when it comes to advancing public health? The answer is a clear "no."
Per the US Chamber report, “Incredible innovative treatments are currently on the market to treat Type 2 diabetes, one of the most serious chronic conditions, which impacts an estimated 35 million Americans. But contrary to what some critics may say, America’s innovative life science companies are advancing diabetes care by developing more effective treatments to help people better manage their condition so that they don’t develop serious complications, including damage to the heart, blood vessels, eyes, kidneys, and nerves.”
Further, “Effective glucose and weight management are key aspects of diabetes care, but only 50% of people with diabetes in the United States achieve their glucose level goals (measured by the HbA1c test). Glucagon-like peptide 1 drugs (GLP-1) have been proven to reduce a person’s A1c by approximately .8 to 1.6%. This is a tremendous innovation for an unpredictable disease that can cause complications like amputations, heart failure, gum disease, and vision loss. “
Diabetes has a major impact on national economies by reducing productivity and life expectancy while increasing disability and health care costs. People with diagnosed diabetes now account for one of every four health care dollars spent in the U.S.
The Economic Report, which is published every five years by the American Diabetes Association, found that the total annual cost of diabetes in 2022 was $412.9 billion, including $306.6 billion in direct medical costs and $106.3 billion in indirect costs.
The Chamber calls it like it is. “Unfortunately, just as millions of Americans are benefiting from these lifesaving and life-altering diabetic treatments, some members of Congress and activist groups are pushing price control policies that will kill future life-science innovation and undermine the ability of patients to access the newest treatments and cures.”
Research from the Chamber shows that in countries with strict price control regimes, patients receive access to fewer cures and have longer wait times than their peers in free market and free enterprise systems like the United States. For the millions of American patients with diabetes, the idea of waiting longer for fewer cures and treatments is simply unacceptable.
The government should get out of the way and let the market drive innovation, to add the fuel of interest to the fire of genius Doing so will not only lead to the newest generation of treatments and cures but will also lead to more options and choices, improving therapeutic outcomes, and lowering costs for patients and taxpayers.
Alas, when it comes to the majority of innovative healthcare technologies, that “fire of genius” rarely comes from Inside the Beltway. And having Senator Bernie Sanders hold forth on pharmaceutical research, development, and manufacturing costs is about as useful and thought-provoking as listening to my 13-year-old Golden Retriever parse the allegorical vicissitudes of Milton’s Paradise Lost.
Senator Sanders, it’s important to remember, doesn’t even believe in patents, but rather in the failed fantasy land of “innovation prizes." Well, in the words of the late Senator Daniel Patrick Moynihan, “Everyone is entitled to his own opinion, but not to his own facts."
In the past, Senator Sanders introduced a bill that would replace our current patent system for pharmaceuticals with a “Medical Innovation Prize Fund. It’s not a new idea. The prize model has been used in the past by the old Soviet Union – and it didn’t work. The Soviet experience was characterized by low levels of monetary compensation and poor innovative performance.
The US experience isn’t much better. The federal government paid Robert Goddard (the father of American rocketry) $1 million as compensation for his basic liquid rocket patents. A fair price? Not when you consider that during the remaining life of those patents, US expenditures on liquid-propelled rockets amounted to around $10 billion. It’s certainly not what Schumpeter had in mind when he wrote about a “spectacular prize thrown to a small minority of winners.” There’s a difference between “Creative destruction” and destroying medical innovation.
As Joe DiMasi (Tufts University) and Henry Grabowski (Duke University) have argued, under a prize program, pharmaceutical innovators would lack the incentive to innovate. To quote DiMasi and Grabowski, “The dynamic benefits created by patents on pharmaceuticals can, and almost surely do, swamp in significance their short-run inefficiencies.”
As DiMasi and Grabowski presciently observed in 2004, “The main beneficiaries in the short-term would-be private insurers and public sector purchaser of pharmaceuticals. Governments and insurers are focused myopically on managing health care costs. They are not likely to be strong advocates for funding new drug development that can increase individual quality of life and productivity."
Let’s take a break from the effervescent political bloviation and look at the facts. It’s time to put the “intellectual” back in “intellectual property. Pursuing misguided policies that siphon funding from the groundbreaking medical research happening in the biopharmaceutical industry will have devastating consequences for patients and society.
When Senator Sanders begins to wonder why GLP-1 agonists can’t be radically reduced in price, it’s because he doesn’t fully understand or appreciate the ecosystem.
Allow me to draw your attention to a recent US Chamber blog post highlighting how the private sector is providing positive and cost-effective solutions for diabetes patients. You can find that blog here: Conquering Diabetes with Cost-Effective Solutions for Patients | U.S. Chamber of Commerce.
Two key points:
* Free enterprise creates competition in the marketplace to keep costs down. Contrary to critics, innovation in diabetes is being pioneered by private sector companies.
* New treatments are possible because of private-sector innovation. America’s life science companies are advancing diabetes care by developing more effective treatments to help people manage their condition.
What’s that? Did you think that medical innovation only comes from the NIH? Consider the facts:
A study in Health Affairs by Bhaven N. Sampat and Frank R. Lichtenberg (“What Are The Respective Roles of the Public and Private Sectors in Pharmaceutical Innovation?”) puts the issue in a data-driven perspective that gives the NIH its due — but in the proper frame of reference.
Per Sampat and Lichtenberg, less than 10 percent of drugs had a public sector patent, and drugs with public-sector patents accounted for 2.5 percent of sales, but the indirect impact was higher for drugs granted priority review by the FDA. (Priority review is “given to drugs that offer major advances in treatment or provide a treatment where no adequate therapy exists.”)
“478 drugs in our sample were associated with $132.7 billion in prescription drug sales in 2006. Drugs with public-sector patents accounted for 2.5 percent of these sales, while drugs whose applications cited federally funded research and development or government publications accounted for 27 percent.”
The NIH plays a vital role in basic research and early discovery, but is robbing Productive Peter to pay Government Paul the best bang for the buck when it comes to advancing public health? The answer is a clear "no."
Per the US Chamber report, “Incredible innovative treatments are currently on the market to treat Type 2 diabetes, one of the most serious chronic conditions, which impacts an estimated 35 million Americans. But contrary to what some critics may say, America’s innovative life science companies are advancing diabetes care by developing more effective treatments to help people better manage their condition so that they don’t develop serious complications, including damage to the heart, blood vessels, eyes, kidneys, and nerves.”
Further, “Effective glucose and weight management are key aspects of diabetes care, but only 50% of people with diabetes in the United States achieve their glucose level goals (measured by the HbA1c test). Glucagon-like peptide 1 drugs (GLP-1) have been proven to reduce a person’s A1c by approximately .8 to 1.6%. This is a tremendous innovation for an unpredictable disease that can cause complications like amputations, heart failure, gum disease, and vision loss. “
Diabetes has a major impact on national economies by reducing productivity and life expectancy while increasing disability and health care costs. People with diagnosed diabetes now account for one of every four health care dollars spent in the U.S.
The Economic Report, which is published every five years by the American Diabetes Association, found that the total annual cost of diabetes in 2022 was $412.9 billion, including $306.6 billion in direct medical costs and $106.3 billion in indirect costs.
The Chamber calls it like it is. “Unfortunately, just as millions of Americans are benefiting from these lifesaving and life-altering diabetic treatments, some members of Congress and activist groups are pushing price control policies that will kill future life-science innovation and undermine the ability of patients to access the newest treatments and cures.”
Research from the Chamber shows that in countries with strict price control regimes, patients receive access to fewer cures and have longer wait times than their peers in free market and free enterprise systems like the United States. For the millions of American patients with diabetes, the idea of waiting longer for fewer cures and treatments is simply unacceptable.
The government should get out of the way and let the market drive innovation, to add the fuel of interest to the fire of genius Doing so will not only lead to the newest generation of treatments and cures but will also lead to more options and choices, improving therapeutic outcomes, and lowering costs for patients and taxpayers.
