The other day, I posted some of my thoughts on drug price control in the Philippines in my facebook status.
I got several comments after that. The one with the most comments was Francis Bonganay, he’s the editor of the forthcoming paper, “The New Commonwealth Herald.” Francis gave me permission to post his comments in this compilation in my blog. The others – Boying, John, Patrick – did not reply yet to my request-for-permission-to-quote posting, so I won’t give their full name and affiliation. What is important here is the articulation of their comments which other people may possibly share with.
Here’s the compilation of such thread:
With drug price control, if I am a pharma company with a revolutionary and very effective drug against say, cancer, but the drug is expensive, I won't bring that drug to countries that have official drug price control policy. I will be seen there not as a revolutionary innovator but as a blood-thirsty, profit-hungry multinational-capitalist firm. -- Nonoy
Are you saying that price control is crude way to control the price of drugs? or that govt should not ever control the price of drugs (even if the price in its jurisdiction is significantly higher than in other jurisdictions)? -- Boying
Government should not ever control the price of drugs because pricing actually serves a purpose in the economy. It allows the supply of drugs to remain available for when it is needed. This is why medicines in a hospital are usually 3x the price of drugs found at the store. If it wasn't, people would buy from there first and the hospital would have shortages for their patients. Now, to keep pricing down, the government should also not ever enfore copyright laws. -- Francis Bonganay
Price control distorts market signals that direct producers use to direct their business. While favoring consumers (especially the poor), price controls in the end will result in negative outcomes as its stifles competition by removing the incentive to innovate and discouraging new entrants. – John
Thanks John, Francis. Price control is often driven by envy, not rational thinking. For instance, currently there are 200+ different drugs against hypertension, prices range from P3/tablet and up, but people are so fixated with Norvasc (P44/tablet), they don't consider the 200 or so competitor drugs that are priced lower. So price control is on Norvasc. -- Nonoy
If all markets were like that you wouldn't have any money to develop it in the first place! -- Patrick
Not true. If you actually did an audit on pharmaceutical R&D, you'd find that almost 80% goes to administrative overhead, government lobbying (and red tape), and an extremely costly trials system... once more organized by the government. – Francis
Currently all medicines vs. AIDS can only keep the virus at bay, not really kill it. If I am capable of inventing a medicine that can really kill the virus but other companies will say, "your cost of R&D is yours alone but your successful invention is also my invention", then why would I iinvent that drug?
If your figure of 80% of R&D is admin and unproductive costs is correct, then why don’t those tens of thousands of generics manufacturers become innovators too, and make money early instead of just waiting for the drug patent to expire? -- Nonoy
Because the government doesn't like it when there are drugs out there without their holy stamp of approval (like recreational pharmaceuticals). hence the tests and lobbying required. don't forget the whole patents thing if you ever have a similar molecule in your lab.
http://mises.org/article.aspx?Id=641&month=30 – Francis
It's the desire of the innovator company that its invention will be protected from poaching and being claimed as "that igreat invention is mine too" by any company. As long as this protection can be assured, by govt. or NGOs or private contracts, no problem, provided the innovator should be encouraged, and protected, not discouraged. Otherwise, societies will be full of copycatters only, very little or few innovators. -- Nonoy
Yeah, its the "common sense" idea that everyone has. Omigod! No protection? Who will want to do stuff if everyone is gonna copy myself. That's why its real hard to sell the idea that "No, with all that protection and patents gone there will be MORE INNOVATION." -- Francis
Most inventors and authors are more than willing that their intellectual output will be shared immediately to everyone for free. I write an original article based on a book that I have read or a conference that I have attended, I post my article in my blog, everyone else can read and see it for free. Fine. There is very little cost for me to bother asking people to "pay" for my article. The cost of enforcement is million times higher than whatever projected benefit.
But for those whose costs are very high and they are not willing to share their invention for free, then they should be respected. -- Nonoy
I think the big contention is not property rights, but enforcement of intellectual property. -- Francis
Private property ownership is important under capitalism. Absence of private property, through forced collective property ownership, means society is under socialism. If people want enforcement of their IPR -- say a fee for every downloaded article from the author's website, then there is a market for that. People who think the author really makes sense and the fee is affordable, they will pay. For those who think otherwise, they can "boycott" that author.
The same logic for drug invention and patent applies. If people think the drug by the innovator company is too expensive and there are alternative drugs, they will boycott that drug. If they think that drug is too life-saving while other alternative drugs are not so effective, then they will pay.-- Nonoy