Posted: Monday, April 30, 2007

ACSH IN THE NEWS
Publication Date: April 30, 2007

An April 30, 2007 item by David E. Williams criticized a Wall Street Journal letter by ACSH's Todd Seavey that defended drug patents:

Todd Seavey from the American Council on Science and Health has himself worked up into a lather about Thailand’s willingness to break drug company patents to cut its spending on AIDS drugs ("Drug Patent Violations, Knock-Offs Harm Us All")...

(Actually, the drug companies have a lot more to fear from today’s Supreme Court decision that will make it harder for them to patent obvious inventions for extended release formulations.)

But let's examine Seavey's arguments for a minute:

* Is breaking a patent like shoplifting? Will it "drive stores out of business"?
* Will moves like Thailand's "shrivel or destroy the pharmaceutical industry"?

Shoplifting hurts stores because they get zero revenue for goods they paid for. It raises their cost of doing business by forcing them to pay for security measures and to raise prices to make up for their losses. I'm not sure what the "stores" are in Seavey's analogy. In general, drug wholesalers and pharmacies are pleased to stock and sell generics, which tend to be as or more profitable than branded products. (Drug stores don't tend to allow shoplifting of generic or brand drugs.)
Thailand isn't going to be stealing pills from Abbott, it's just not going to place any orders.

Thailand's moves aren't going to affect whether companies continue to develop new drugs and certainly won’t destroy the industry. That would only happen if the US, Europe or Japan eliminated patents. Thailand doesn't factor into the go/no-go decision for pharmaceutical development.

 

See also: Seavey's response on HealthBusinessBlog.com.