Patents and vs Humanitarianism

bonkey

Given that a couple of posts on this notion have come up in one of the "anitglobalisation" threads, I thought Id see if people wanted to discuss it seperately.

Please note this is not a thread for discussing the perceived evils of globalisation. I took this to a seperate topic so that we could discuss it seperately.

Now, my thoughts...

(clears throat)

As most people will recognise, the costs of research are spiralling, mostly due to the notion that "all the easy answers have been found", and we're now looking for the tougher ones.

So, drug companies need to massively invest in R&D. Ergo, when they have a breakthrough, they need to recoup their costs. They recoup these costs by patenting the discovery, and charging what they see as an appropriate price.

Assuming that they are not fleecing the customers and making exorbitant profit (I dont know if they are or not), this seems like a resaonable approach.

Until the humanitarian aspect comes in. The millions of sufferers for disease X who cannot affor to pay for miracle drug Y, as made by company Z. So, some other company Z1 ignores the patent, manufactures the drug cheaply, and sells it at an affordable price. Lives are saved, and the mega-corp is losing its royalties.

Unpalatable, but arguably a good solution, as long as Z1 doesnt also sell to the market which Z is selling in, because were that to happen, then Z would never recoup the cost of "discovering" miracle drug Y. Which means that they wont have the resources (sooner or later) to discover the next miracle drug.

Its a tough one, isnt it. Or is it?

Look at the computer chip manufacturing industry - currently straining at the limits of the current technology, but still managing to come to enough breakthroughs to keep moving forward.

Now, interestingly, one of the next major technologies being researched is too expensive for Intel (or anyone else) to research. It is a variant on X-Ray Lithography, but I cant remember the full details. Anyway, what happens...

Intel, AMD, Motorola, and I believe IBM are all contributing the the research cost. Their relevant inputs in terms of cost determine how soon each of them gets to take out the rewards. In other words, Intel, paying an estimated 70% of the research cost will get somethling like a 6-month headstart with the technology, but it is not being denied to the others.

The research will be patented. Why? because anyone who DIDNT contribute to the development cost will get charged licensing - which helps recoup the cost. It also ensures that the contributing parties cannot simply take the findings before time, as they do not have the rights to them!

In other words, the cost is shared an distributed, which means that each company gets it for less, and needs to charge less as a result.

Second notion...SETI, and the corresponding "cure for cancer" research which is being done via distributed computing.

Personally, given the choice, I would rather search for aliens then reduce the research cost of a drug which is to be patented and restricted like any other. HOWEVER, were that drug to be managed in a similar way to the X-Ray Lithography research....license it to many other companies after an initial period (to give market position), and make it more available and more cost-effective, THEN I would stop looking for Molder's friends, and start looking for magic bullets to cure cancer with my spare clock cycles.

We are living in an age where the benefits of co-operation are rapidly becoming undeniable. Companies keeping research to themselves will soon become untenable, because they wont be able to afford to research alone...even if they could protect the secrets.

I dont have the answers, just some ideas. I'd like to hear other opinions.

jc

C B

I'd just like to cyrstalise the arguement in favour of a patent system.

If company X has ten ongoing R&D projects each costing £10 million pounds and after 3 years decides that only one of these projects is viable. Then invests another £20 million over 2 years bringing that project to commercial viability a total of £120 million pounds will have ben spent. Now producing the microchips/ pills may only cost 1p. If the percieved demand is 12 million units each unit will need to be sold at a price in excess of £100.01 in order for the company to recoup its investment. If the units are not licensed in some way then competitors may steal the idea and sell i a 2p/ unit and still make a profit.

The licencing system is in some way irrelevant as regardless of who produces the units a price of over £100.01 will have to be charged.

Having said that allowing the license to be sold at a royalty of c£130 would result in competition in production and eliminate the rent capture associated with monopolies.

bonkey

<font face="Verdana, Arial" size="2">Originally posted by C B:
I'd just like to cyrstalise the arguement in favour of a patent system.

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</font>

The argument presented here explains why the current system works, and why the abuse of it causes failure. It does not, however, preclude other options from working...but I dont think you were implying that it did anyway.

I also note the interesting point that not all R&D produces viable outcomes. Companies still have to get the money from somewhere to pay for the failed research, which further drives up the cost of the product which comes out of the successful research, as CB has shown. This is something which people overlook...

R&D is expensive. It cannot always be "tightly" managed, because you can spend millions/billions on a design theory, only to stumble at the last block for an unforseeable reason.

I still maintain, however, that patents only make sense in an arena of competition, rather than co-operation. It may not seem practical in the medical industry, but then again, how many people were aware that Intel and AMD were in bed together designing their joint future in chip technology.

Unfortunately, I realised shortly after posting this topic that I'm about to disappear for a fortnight's holidays, so forgie me if I dont respond to anything else posted here for a while

jc