[netcan]

Patent systems are definitely broken. I think that’s the conclusion of most neutral observers starting fresh and that digging past the purely abstract or ideological level. The reason it’s hard to do something about is that patents are property and the legal setup for property is foundational to an economy.

Patents are absolutely fundamental to the way medical research works today, especially the search for new treatments and medicines. That’s a tricky thing to mess around with. There are obvious problems. There are speculations about what fixing them could yield on one hand. In the other hand is a massive industry producing a lot of technology, science and actual treatments for diseases.

What seems (to me) to be missing in these debates is some humility about knowing the answers. While our culture is speeding through “movements” at a higher rate than ever before, we still tend to approach these big political/philosophical/economic issues with an early modern/modernist perspective. Our most popular philosophers for these matters are old dead guys who liked to think of big organic things like society and civilization in terms of how we should set things up if we had snapped into existence today, a clean slate. That’s a fairly pompous perspective.

In any case, I think the patents and intellectual property problem is a very tricky one to solve. Experiment with possible solutions is almost impossible. IP legally mimics regular property in a metaphor-like way. That metaphor is proving increasingly inaccurate. At the same time, we have huge pieces of our economy and whatnot built on it. At the same time our legal systems are showing signs that they might need a reimagining. Many of our legal constructs such as ‘legal entity’ or ‘jurisdiction’ are being pushed to extremes, and metaphors eventually break. Does the concept of a company legally approximating a person hold up when we have impenetrable layers of ownership across jurisdictions? Does the metaphor fray?

[JackFr]

I am not an expert on the economics of pharmaceuticals, however based on work of an expert I have come to believe that patents are not essential to the way medical research works today.

Patents are essential to the current business model of pharmaceutical companies -- they are necessary to guarantee a return on investment, but the portion of the investment devoted to R&D and clinical trials is dwarfed by the marketing.

     If you look at the big companies you can divide their budget into 4 big 
     categories. One is R&D, one is marketing and administration; the 
     other is profits, and the other is just the cost of making the pills and
     putting them in the bottles and distributing them. The smallest of 
     those is R&D. The smallest is Research and development. Profits
     usually are about the same. Marketing and Administration is 
     more than twice as much.

http://www.econtalk.org/archives/2012/11/angell_on_big_p.htm...

[netcan]

That's not an unreasonable perspective. But is the dynamic he describes predictable, is it the only dynamic or at least the dominant one? I assume he is not suggesting that the only effect will be minor adjustments to the way these industries work. If patents disappeared tomorrow, a tornado would run through the pharmaceutical world.

That doesn't mean that there aren't gains to be had from a moderate version of that approach. I just don't think there is a theoretical framework capable of telling us the right answer in economics. Economics is at its best more similar to zoology than physics. Zoology will not accurately predict the way species and populations will react to a reduction in available water sources or the introduction of new species. On the rare occasions that it's feasible, repeating the experiment will rarely yield the same result.

[chimeracoder]

> I have come to believe that patents are not essential to the way medical research works today.

> Patents are essential to the current business model of pharmaceutical companies -- they are necessary to guarantee a return on investment, but the portion of the investment devoted to R&D and clinical trials is dwarfed by the marketing.

Your comment contradicts itself.

If, as you say, patents are "necessary to guarantee a return on investment", then it doesn't matter if the R&D is the largest cost or not, because the company won't produce a profit (and therefore won't produce new drugs) without the patent.

In fact, it's quite reasonable to think that both massive marketing and time-limited protection from competition are necessary to ensure enough of a return to guarantee continued investment into the industry. It doesn't have to be one or the other.

[JackFr]

You're right -- it was not carefully written. My point is that the current pharma business model is not essential to medical research in general (rather than research today).

Patent protection for drugs (and chemicals in general) was weak or non-existent in Europe until the 1970's, and despite that there was research and development of drugs.

I think the system we have today is largely driven by the patent mechanism, and while not terrible, could be made better by tweaking the patent system.

The government sponsored monopoly is supposed to guarantee a return on the R&D, not guarantee the return on Superbowl ads for another erectile dysfunction drug.

[belorn]

> the legal setup for property is foundational to an economy.

I would agree on that had we not recently had a massive change away from products and property and into service and contracts. Citizens do not own cars, coffee machines, or books. They house devices which they have a licensed permission to use, and it is contract law that rules and not property law.

Patents could also easily be redefined as a contract between state and inventor, where inventor provide knowledge in return for privilege and protection. It doesn't change anything for the economy, but it would remove the need to talk about property and it would imply that the contract could be changed in the future.

[dragonwriter]

Contract-derived interests rely on the parties to the contract having underlying property interests that can be exchanged via contact, so, no, contracts don't get you it off dealing with property law, since they depend on it.

[belorn]

Currently, contract law do not dictate if it can be exchanged. E-books might or might not be transferable, and its currently up to the e-book seller to decide if that is the case. Property law, as far as e-books are property, do not come into effect unless e-book is made to be governed by property rules.

Could you explain how property law comes into effect in this case? If it does not, why could patents not be treated in the exact same and equal way.

[dragonwriter]

Property law is what provides the rights that are then sold by contract; in the case of ebooks, the rights specifically originate in copyright law. That's why the eBook seller had the choice of what rights (including whether or not they are transferable) to include in the contracts by which it transfers some rights to consumers.