Re: Patents

Tim Bates (tbates@karri.bhs.mq.edu.au)
Sun, 21 Feb 1999 15:41:07 +1100

John Clark said

>Before a major new drug can come on the market a company
>must shell out close to a billion dollars to pay for the research and
>development.

The enormous bulk of this cost is for regulatory compliance and marketing Dithc the regulations and hte cost is minimal and many more companies will enter the market.

In a non-patent & non-FDA world, without having carried out product safety tests for themselves, any generic rip-offs would expose themselves to product liability. This is not true now as FDA approval for the originator protects the post-patent generics. Get rid of the FDA and the barrier to generics would raise substantially.

>If they didn't have patent protection for at least a few years after that
>they could never recover their investment,
>other companies would crank out dirt cheap generic versions by the ton.

Well, many of us might argue that cheap drugs by the tonne is a good thing.

Critically, you ignore the power of branding. If what you say was correct, Philip Morris would not be the 100 billion dollar company which it is. Nor would Coca Cola. Neither have a patent on their commodity. Plus, the sword cuts both ways, the company can market its competitor's products (after it does its own risk research).

>Only a fool would develop a new drug, as a stockholder I would
>sell my stock in any drug company that was so stupid as to spend any money at
all on
>research.

I don't think you would, anymore than you would sell your shares in Cisco because they do research but never use patents aggressively.

The Cisco chair simply believes that patents are not the way to do business.

cheerio,
tim