June 4 2013
Carrie L. Lukas
When lamenting the causes of our economic woes—over-regulation, high taxes, uncertainty about the business climate—most analysts overlook the role of threats to intellectual property rights. Yet the impact is very real.
I write today in U.S. News and World Report about how cyberesponiage is draining money, innovation, and jobs from our country as cyber spies—some of them supported by states, such as China—hack into corporate and government entities and steal proprietary information. Bipartisan legislation is pending that attempts to discourage such state-sponsored theft.
Yet it isn’t just illegal hackers and foreign governments acting surreptitiously who threaten property rights. Some countries simply decide to ignore patents that are in place to protect property internationally. As the Chamber of Commerce’s Mark Elliot reported, on April 1 India’s Supreme Court decided to deny a U.S. based drug company, Novartis AG, a patent for a ground-break cancer medication (Glivec). India made this ruling, in spite of 40 other companies having recognized the patent and Novartis’s right to protect its intellectual property.
Such news may sound like a yawner—an issue that matters only to corporate titans and means little to regular folks like us—but there are huge implications to the failure to recognize and protect such intellectual property which extend far beyond anyone one drug, product, or company. Elliot writes:
In the absence of clear IP rights, innovative companies that require significant up-front costs will have little incentive to invest billions of dollars and decades in time in creating new products. In no sector is this more important than in medicinal research, where bringing a single life-saving treatment to market, and to patients, requires $1.3 billion in investment and 10-15 years of research and development, according to the Pharmaceutical Research and Manufacturers of America. Just think of the countless dead ends and the millions of man-hours scientists and doctors have spent to make even the slightest improvement to our healthcare. Millions of people suffering around the world won’t have access to cures because the capacity to pursue this kind of risky research will be disrupted.
The last is a particularly important point. While many object to the high prices sometimes charged for life-saving drugs, this misses the reality that without those high prices there would be no life-savings drugs at all. The profit motive, which requires the confidence that an entity will be able to own the rights to their creation and bring it to market, is what brings investment to these costly fields and endeavors.
Denying the creators of life-saving treatments the right to sell their products and recoup their investment is the opposite of compassionate. If the concern is that those without enough resources will be unable to access those new treatments, then there are better ways to help them. Subsidies and programs that directly provide treatments to those in need, for example, can increase access, without destroying the incentives to find new treatments and cures.
In fact, as Elliot notes, major drug companies like Novartis actually have programs to offer free or discounted drugs to needy populations. According to Elliot: “In the case of Glivec, 95% of the patients prescribed in India received the dosages free of cost and the remaining 5% were receiving it subsidized.”
Intellectual property rights aren’t an issue that Americans spend much time thinking about, but they should be aware that this has a major impact on our economy and our standard of living. We depend on the continued investment in the creation of new products, treatments, and innovation, so we need to encourage our policymakers to protect the property rights of individuals and companies here and abroad so that life-enhancing innovation continues.