Congress Should Amend Patent Laws to End Price Discrimination Charges, Op-Ed Says
Congress should amend U.S. patent law to include "patent protection in rich countries coupled with unrestricted competition by generic drug makers in poor ones," as proposed by Yale economist Jenny Lanjouw, to resolve discrimination issues associated with AIDS drug price differentials, Washington Post editorial staff member Sebastian Mallaby writes in an op-ed in the Post. Lanjouw's model sets a "formula for deciding which drugs should be sold at low prices in which markets, thereby removing this impossible burden from industry's shoulders." In 1982, vaccine makers Merck and Lederle were "beaten up" in Congress for "discriminat[ing] against American children" when they charged far less for vaccines sold to developing nations than those sold in the United States. As a result, the companies stopped discounting drugs to poor nations. But today, Mallaby points out, drug giants are "beaten up for their failure to practice price discrimination," and drug makers are "inching back toward the old policy of tiered pricing." Merck has offered to sell AIDS medicines for no profit in the world's poorest countries, but such discounts are "offered only nervously," as drug companies maintain fears of "anti-American prejudice" accusations. They "want to please the internationalists by announcing" discounts, but they "don't want to charge forward too hastily lest they infuriate America-firsters." The speed of discount provisions creates another concern: if "progress is slow, critics will accuse them of making empty promises," but if "progress is fast, critics will demand that the poor-country discounts be extended to drugs for cancer, heart disease and so on." Lanjouw's model is effective, Mallaby writes, because it removes the decisionmaking from the drug firms. Lanjouw proposes that "drug patents in the rich world -- and hence high prices -- serve as an essential spur to invention." Lanjouw also says that poor countries should offer patents for diseases that affect them exclusively, as "there is no merit in poor-country patents for 'global diseases' such as AIDS or cancer," as the profits made on these drugs in rich countries already "creat[e] incentives for innovation." Mallaby continues, "Extending patent protection to poor countries merely drives up prices there to unaffordable levels." When completing a U.S. Patent and Trademark Office "foreign filing license" to file for drug patents abroad, Mallaby writes that U.S. drug firms should "include a promise not to restrain generic competition in countries below a specified level of income for a specified list of drugs." Mallaby calls the idea "beautifully simple," recommending congressional amendment to the patent law and similar legislation in other countries (Mallaby, Washington Post, 6/18).This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.