Feb
20
Every capitalist effort provides an ultimate result, and that result is betterment of Human Life. The capitalist surge in Pharmaceutical industries is one of the examples of this reality.
Some of the main products of Pharmaceutical industries are aspirins, insulin, antibiotics, tranquilizers, anti-depressants, and Blood pressure lowering medications, cholesterol controlling medicines, sugar controlling medicines, medicines reducing spread of breast and prostate cancer, sleeping pills and some other medicines that helps a patient to lead a normal life.
Although not strictly free market, Indian Pharmaceutical market is properly based on approving system of free-market principles, with minimum governmental interference, least taxes involved, and easy procedures for registration of production units.
Yet, international pressures are hurting this free market nature of Indian Pharmaceutical Industry, and the pressure this time is in the shape of ill-defined patent laws.
What is a patent?
Let me be clear about it, patents are actually not an irrational concept and they have their relevance at some level.
Discovering or inventing a drug, a new molecular structure for antibiotics is not as easy as it seems to be. This case is not like a software program development.
The development of a drug is a convoluted procedure, which requires a systematic research, testing on animals to verify the toxicity or ill-affects of the new organic molecule, and then testing on human beings voluntarily agreeing for scientific tests.
Even after testing the drug on some volunteers successfully, it is not possible to say that a drug thus produced and verified will not create any genetic deformity or permanent harm to the variant users in a market, and thus, once a drug is marketed, the drug developers need to keep a keen look on the effects, complains and problems in case they arises, and be ready to remove the drug out of the market, not only that, if in case a drug proves to be faulty and dangerous after being marketed, the drug developer on humanitarian cause holds the responsibility to work for producing and providing an anti-dote for the drug.
Obviously, this all procedure is very convoluted yet necessary, and in case of minute mistakes, a drug can cause extreme degrees of harm and pain as happened in the case of failure of TGN1412 drug tests.[1]
We described a proper method for verifying a drug.[1] In a free market, one cannot dictate any single way to verify a drug, and there always remain a surge to provide a better, cheaper and more efficient way to provide better results.
Yet on scientific, humanitarian and individual rights basis, proper verification and testing of a drug is essential procedure.
After all these tests only, a drug can be freely provided in a market.
Now all these process actually are time consuming and it entitles a huge amount of investment in the process of research, development and testing of drug.
Once a drug is verified, the production of drug becomes extremely cheap, and this huge difference in amount needed to invent, develop and verify a drug as safe for human usage and the amount needed to produce an already verified drug creates an illusion.
When a drug company verifies a developed drug, it invests huge amount on it for doing so, after verification of drug as safe and usable, the production of drug becomes extremely cheap, but the pharmaceutical company have to earn the money it invested on the development and verification of the drug, and that increases the price of drug thus produced.
For earning at least the basic amount a company invested, it demands a patent for production of drugs for a limited period. A patent is a right to produce that drug in a prescribed manner that was developed by the company, which holds the patent.
Once a company hold a patent on a drug production procedure, for a period, no other company can create same drug for that period during that patented period.
The company, which developed the drug, tries to gain back the amount it invested during that period and once the patent period expire; any other company becomes free to use same procedure of production of same medicine and market it. 
Yet, during the patent period, the developing company holds a sort of monopoly on the production of that drug it produced.
On ethical base, the patent and copyrights on an original procedure of production, or IP is righteous and rational, on utilitarian grounds too, patents are rational and beneficiary, as why will a company invest such huge amount of money for developing a drug if it has no way to get the amount it invested on the development of the drug?
Thus, patent for a period provides a profit cause for the companies and investors to invest on a drug developing research. Without this incentive, it will be hard for a drug developing research team to get any investment, as it will not be any business of profits.
In India, Pharmaceutical companies were provided light patents on procedure of producing a drug for short periods of 5 or maximum 7 years.
As a matter of fact, this much period for patents is not only logical but essential too.
Why such short term patents are essential?
Drugs are means to safeguard life. As already explained, drug verification can not be trusted alone on animal and human volunteer tests and verification. For declaring a drug successfully usable and beneficial, a verification of a big pool of variant humans is required. During the short term patent periods, when the developing company alone can create and market that drug, the users of that drug provides enough evidences of the result of the newly developed drug. Even in the case, a drug shows signs of failure, because of only one producer and lesser spread, the drug can be pulled out easily from market causing lesser harms, saving innumerable lives.
In absence of patents, any one can copy, produce and market the any newly developed drug, and in that case if a drug prove to be failure later on say after 2 years or 5 years, it will be almost impossible to remove the drug, plus who will take the responsibility of the failure of drug if there is no confirmed developer? That obviously can create problems.
Thus, short term patents are relevant and essential in some cases.
How Governmental Patent laws are proving patents as bane?
Under the pressures of World Bank, Indian government reshaped Indian patent laws in 2008[2] . Earlier, while patents were possible only for short term periods of 2 years or 5 years or maximum 7 years, depending on relative amount invested and risk factor of the drug developed. Now under the international pressure with the amendment of patent laws in 2005 and then in 2008, Patent periods have been increased to 20 years. Furthermore, many things and notions, which were not under the realms of patent previously, are now stretched under patent laws.
The new amendment has removed the distinction between product and procedure of production and hence now food articles and drugs can be patented, that also not for short periods but for long 20 years.
Obviously, it is not healthy for either market or consumers. Monopoly on drugs for such long periods will surely be harmful for the market, as it will reduce any chance of healthy competition, also, such ill-defined patents like TRIP[2] , will deny a suitable drug reach for many poor.
As a libertarian, I recognize the importance of short term patents that can be provided as security on contract base by free market, and I do support short term patents for the specific cause (where each case can be checked and discussed properly to make it sure whether a patent contract is viable or not), but I strongly oppose any draconian state supported patent laws, the patent procedures and patent contract should be made considering each issue and product uniquely on the grounds of amount invested and risk involved.
Second thing is, I realize TRIP[2] is much more influenced by American patent laws that are of the worst and condemnable kinds and are anti-capitalistic anti-liberty and obviously, TRIP seems to be designed against the third world individuals.
Not only TRIP should be abolished, but also the draconian patent laws system of US and other countries should also be re-vitalized to make the issue more beneficial rather than a bane.
Hence, we can say that pre-TRIP patent laws were more beneficiary and actually establishing individual freedom and ethics of free market, but post-TRIP laws are going to establish monopoly and patent regime, which is not a healthy sign for either Indian market, or Indian citizens. If Indian government keep forcing the TRIP standards, the importance and logic behind patents will loose its shine, and even in India, the rationale of Patents will be abused and crucified, and this all will happen not because Patent opinions are irrational, but because the governmental laws are unhealthy, unproductive and against principles of free market.
- Bioethics, Medical experiments and case of TGN1412, Reason for Liberty [↩] [↩]
- Pharmaceutical patents, Legal Services India [↩] [↩] [↩]
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1 viewsNo Responses to “Patent laws: beneficial or bane”
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anarcho-mercantilist Says:
February 21st, 2009 at 3:36 amHello,
I started to read your blog a few months back. I especially liked your defense for the right to blackmail and your arguments against the so-called “privacy” laws.
However, I disagreed with your position on intellectual “property.” For utilitarian arguments against intellectual “property,” read Against Intelluctual Monopoly. It specifically includes examples of how firms have developed drugs without intellectual “property” laws.
I have written an article on my blog suggesting the protection of trade secrets using contracts and other market forces.
anarcho-mercantilist Says:
February 21st, 2009 at 3:38 amSorry for the mistaken link, read my article here.
Unpretentious Diva Says:
February 21st, 2009 at 4:01 amThe pdf files your article suggests to read, well they are not new to me, I have read most of them.
My point of supporting IP is not about providing utilitarian viewpoint, I am not utilitarian, I am Individualist, and I do believe in sanctity of contracts and freedom to make a viable contract.
The examples given in your pdf file are not sufficient and they surely doesn’t cover the issue which I am talking about.
I am not saying that patents helps in innovation. I am saying short term patents helps the innovator, and the investors in research and invention R&D to get their invested money back. My issue is not about patients, my issue is about inventors and investors in invention.
Second thing is, I find some thing wrong in that story of james watt. it is true that he started trying to get patents in late 60’s but he actually got patents in 1780’s and most of his patents ended within 10-15 years, that is in 1794.
I have read that book!
Unpretentious Diva Says:
February 21st, 2009 at 4:52 amOk I read your article now, I like the idea, but I cannot say much right now. I will need to think for it to comment anything over it.
And anyways, since I do not find short term patents(as for 2 yrs, 3 yrs, 5 yrs and at maximum 7 yrs depending on the case of the innovation and money/resources/time and energy invested on it, I will further take time to get your idea properly, because your idea or any other idea should be validly better than the system of patents.
anarcho-mercantilist Says:
February 21st, 2009 at 5:01 amSorry that I misinterpreted your writing. I defined the term “patent” as ideas protected by the state. So I assumed that you advocate IP.
Now I recognize that you use the term “patent” to refer to the trade secrets protected by contracts.
I can see what you mean by that.
Arvind Says:
February 21st, 2009 at 5:20 amThe only justifications for patents and copyrights are utilitarian. Even these utilitarian arguments are of a pseudo-scientific nature as they first prevent the situation with which a comparison can be made and then claim that the situation created by the existence of patent laws is beter than the one that no one has experienced due to strong arm tactics. No one who justifies these concepts is a libertarian. Anything that is done for the “common good” including patent and copyright laws is socialism.
Preventing imitation by using violence is unethical and violates the liberty of individuals.
Unpretentious Diva Says:
February 21st, 2009 at 5:30 amAt least in India, there haven’t been any strong arm tactics followed till now, on the other hand, Indian government had provided protection for Indian companies against other countries patent laws.
it is not the issue of patents, copyright IP etc, the issue is a way to provide certain set of security to the innovator/creator/inventor from a sudden collapse.
I strongly feel that if libertarians oppose short term patents, they should provide a way to protect the innovators/creators/inventors interests too, otherwise in absence of that IP do gets a validity, and contract-system provides a certain objectivity to it too.
Arvind Says:
February 22nd, 2009 at 12:07 amAt least in India, there haven’t been any strong arm tactics followed till now, on the other hand, Indian government had provided protection for Indian companies against other countries patent laws.
In India, companies hire goons to beat up competitors. Here are two examples I can give you off the top of my head. In the early 90s, there were a slew of pharmaceutical drugs with similar but not identical names to those marketed by Dr. Reddy’s laboratories. The way drug companies dealt with this was to hire goons to beat up these small-time imitators.
A second example of monopoly rights being sorted out by strong arm tactics is that of cable companies. Again, we go back to the 90s. In the mid-90s, there were multiple cable service operators in any given locality and there was healthy competition between them. Eventually, SitiCable hired goons to intimidate the other players and established monopolies.
I strongly feel that if libertarians oppose short term patents, they should provide a way to protect the innovators/creators/inventors interests too
Why is it my obligation to provide for what is in someone else’s interest? I don’t see why I should accept restricting my freedom (to reverse engineer what I please). “Protecting” (i.e., granting illegitimate monopoly rights) others is not what I am born for. If they want to “protect” their secrets, they should keep it to themselves or they could sign individual non-disclosure contracts with each of their million customers. They could administer the medicines themselves (e.g., like the fish medicine in Hyderabad is a successful model).
However, since you ask for some short term protection, I have to point out that if the drug is really complicated, there is a short term protection already built in as the imitator will take at least a few weeks to reverse engineer the drug and test it. So a short term protection already exists. IF the imitator cracks it within a day, it would mean the drug was not all that complicated anyway and so not much research must have gone into it. Keep in mind that this argument for short term “protection” is an extra one. The main argument is that I owe nothing to any drug manufacturer.
Unpretentious Diva Says:
February 22nd, 2009 at 1:32 amThey do so.
Now you are talking like goon and a looter. Have you ever bought a book?
The disclaimer and users criteria page clearly mentions whether the writer is selling off rights to publish or is he selling partial rights to read the book and not to copy.
If you deny that written contract on the basis of which the writer and his publisher want to sell the book, you are free to not to buy the book.
if you bought it with the writers claim that the book is NOT sold to be reprinted, recopied, reproduced, and even then you republish it for commercial purpose, than you are breaching the contract and you can be punished.
The writer doesn’t need to go to a governmental office to get a copyright. Only his mention of denial to sell the rights to republish his book is enough.
And it is NOT monopoly, it is individual right, the writer’s right to make a viable contract.
Instead of acting like a looter/robber try talk sense.
neither the manufacturer owes nothing to you.
if he mentions on the packet of the drug in which he sold you that drug, that he is not agreed upon any reverse engineering process on his drug, and if you cannot respect his contract of selling the drug, you are free to NOT to buy it, then obviously you should not buy the drug. if you buy the drug with the manufacturer’s attached contract, that the drug is not be reverse engineered and remade again, you have to keep the sanctity of that contract. Any breach of that contract should be punishable.
One more thing Arvind, it would be better if you stop talking like communist.
I have a house and I want to own monopolistic rights over it. i do not own Monopoly on my own house because government doesn’t allow that.
Freedom is my Monopoly over my property.
So stop trying to demonize monopoly.
And Oh yeah, before you start giving lectures about tangible/intagible property, I am not talking about tangible or intangible property. I am talking of contractual property.
Breach of copyright means breach of CONTRACT. In a libertarian society, breach of contract is punishable.
Unpretentious Diva Says:
February 22nd, 2009 at 1:46 amEthics of Liberty!
Violation of (common law) copyright is an equivalent violation of contract and theft of property. For suppose that Brown builds a better mousetrap and sells it widely, but stamps each mousetrap “copyright Mr. Brown.” What he is then doing is selling not the entire property right in each mousetrap, but the right to do anything with the mousetrap except to sell it or an identical copy to someone else. The right to sell the Brown mousetrap is retained in perpetuity by Brown. Hence, for a mousetrap buyer, Green, to go ahead and sell identical mousetraps is a violation of his contract and of the property right of Brown, and therefore prosecutable as theft. Hence, our theory of property rights includes the inviolability of contractual property.
A common objection runs as follows: all right, it would be criminal for Green to produce and sell the Brown mousetrap; but suppose that someone else, Black, who had not made a contract with Brown, happens to see Green’s mousetrap and then goes ahead and produces and sells the replica? Why should he be prosecuted? The answer is that, as in the case of our critique of negotiable instruments, no one can acquire a greater property title in something than has already been given away or sold. Green did not own the total property right in his mousetrap, in accordance with his contract with Brown—but only all rights except to sell it or a replica. But, therefore Black’s title in the mousetrap, the ownership of the ideas in Black’s head, can be no greater than Green’s, and therefore he too would be a violator of Brown’s property even though he himself had not made the actual contract.
Of course, there may be some difficulties in the actual enforcement of Brown’s property right. Namely, that, as in all cases of alleged theft or other crime, every defendant is innocent until proven guilty. It would be necessary for Brown to prove that Black (Green would not pose a problem) had access to Brown’s mousetrap, and did not invent this kind of mousetrap by himself independently. By the nature of things, some products (e.g., books, paintings) are easier to prove to be unique products of individual minds than others (e.g., mousetraps).1
http://mises.org/rothbard/ethics/sixteen.asp
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