Category Archives: Pharmaceutical industry IP Senate hearing Baucus Grassl

Senate Finance Committee Testimony of Stanford Law Professor John H. Barton, Yesterday, on Pharma IP. . . .

John H. Barton, the George E. Osborne Professor of Law, Emeritus, Stanford Law School, testified before Congress on a broad array of global intellectual property (or “IP“, for short) issues, yesterday. [Ed. Note: for a far more detailed look at the issues he discussed yesterday, do also read this 2005 JAMA article he authored.]

I found his remarks on global pharma IP to be quite enlightening — as he set the very-legitimate question of protecting property rights into the broader framework of whether there is a moral — if not legal — duty to provide life-saving medical developments across economic, and continental divides — at something other than the highest possible price — especially in the case of HIV meds — where it is literally the choice between a death-sentence, or life-saving “commutation“, if you will, hanging in the balance. I’ll leave you with the most intriguing of his, below, but do go read it all — quoting the professor’s testimony (PDF File), then [emphasis supplied]:

. . . .The area of current political tension is in the middle income nations. These nations are the growth pharmaceutical markets of the future, so that patent protection is of great importance to the future of the pharmaceutical industry’s business model. At the same time, these nations still have many poor people and thus view themselves as reasonably benefiting from the Doha Declaration. South Asia, for example, has more very poor people than Sub-Sahara Africa. Moreover, several, including Brazil and Thailand, have undertaken public programs to supply antiretrovirals to their HIV-affected populations, an expensive task whose overall cost depends heavily on the price of the drugs.

I believe that we must attempt new approaches in dealing with these nations. It is in our national interest to facilitate their growth in health. That may call for low, i.e., generic prices for at least some drugs for some people. This might be an exception for a limited time. In another approach, GSK is developing mechanisms for differential pricing within poorer countries based on charging a generic price to certain public or nonprofit distribution channels while charging a higher research-reimbursing price to others. Might the approach be extended?

But there will need to be reforms beyond prices. For example, in a number of nations, including China, much medical care is effectively financed through pharmaceutical sales by doctors and hospitals -– a process that certainly creates terrible incentives toward price markup to patients and toward overprescription. In India, the poor are not effectively served by the medical system. And some of these nations are pharmaceutical exporters at the same time that they have many needy citizens. Compromise seems reasonable; it will necessarily be more complex than a pure IP arrangement.

In approaching such a compromise, it is worth noting that price controls are likely to be the key topic for future international negotiations with developed nations in the pharmaceutical area. The importance of such controls is exemplified by the current European disputes over Roche’s anticancer drug, Avastin, as well as by the inclusion of price-related provisions in the 2004 U.S.-Australia Free Trade Agreement and the great attention paid to the issue in the 2008 USTR Special 301 Report. Moreover, at some point, price controls will almost certainly be an issue in our own country -– health care reform may increase the role of the government in purchasing pharmaceuticals, and it is hard to envision continued significant government purchasing of pharmaceuticals without pressure toward price controls. Unless the price controls are applied thoughtfully, the result will be to decrease incentives for research. Such harm may already have occurred in the U.S. childhood vaccine industry. In approaching health care reform and international trade both, we will need to define effective decision-making standards and procedures to maintain optimal incentives for research in medical technology. These various trends suggest to me that it is important to moderate our IP focus and to recognize that IP is only part of a broader package of pharmaceutical trade goals.

All nations want greater access to health care; all want to contain the cost of that health care; all want more advanced technologies. These are goals that have to be balanced; and the details of the balance may reasonably be different for nations at different income levels. . . .

Indeed. Hopefully the folks in Kenilworth are watching CSPAN.org.

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