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Global Health Policy Blog


The blogosphere is buzzing with the idea that patents held by Roche might prevent widespread access to Tamiflu, a drug which is thought to be likely to be effective against Avian flu.

Dean Baker asks:

So why is the economics profession overwhelmingly silent about drug patents, which are the equivalent of tariffs of 300 percent on average, and affect a product that is much more important to our economy and our health? We recognize that patents are a way to provide incentives for research, but where is the economic research that shows that they are the most efficient way? You won’t find it, because economists have mostly chosen to ignore the issue.

Brad deLong adds:

The answer is that we don't trust the NIH to be able to set up procedures that cover all the bases in drug research. Low-probability but high-payoff projects are likely to be underfunded by the government--but properly funded by private companies willing to roll the dice. However, these ex ante considerations vanish ex post when an epidemic threatens: nationalize Tamiflu now!

Tyler at Marginal Revolution thinks otherwise:.

If we confiscate property rights this time around, there won't be a Tamiflu, or its equivalent, next time. We also need to stop taxing our vaccine-producing infrastructure through liability law.

Owen comments:
Some economists have focused on exactly this issue. The Making Markets for Vaccines proposal is precisely intended to remunerate companies for their R&D, while ensuring access to essential medicines.

The idea of "nationalising" essential medicines is very short sighted. It may get us through this crisis; but little by little we whittle down the number of companies willing to take risks and develop new medicines that we will need in the future.

It is striking that so many of us only become concerned about the impact of patents on access to essential medicines when it is ourselves and our own children whose lives are at risk. We are outraged that at the thought that intellectual property rights might be a reason to restrice access to life saving medicines. But that is exactly what is happening in developing countries every day of every year.

Advance Market Commitments are an elegant solution which creates effective economic incentives for private firms to develop new vaccines and to produce existing medicines and it ensures that, if and when they are developed, people who need them have access to them. They protect the system of patents which has been an important engine for innovation in the twentieth century, while removing the main disadvantage of patents, which is that they inefficienly limit access to essential medicines.

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CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.