An "Underground Railroad" for Patented Drugs?
18th was the 150th anniversary of an infamous Act. In 1850, Congress passed the
Fugitive Slave Act, making the federal government responsible for tracking down
escaped slaves in the North and sending them back to slavery. The Act galvanized
anti-slavery opinion and contributed to the development of the "Underground
Railroad" to assist passage to safety in Canada. In turn, the Underground
Railroad emboldened the Abolitionist movement, strengthening the belief that
slavery could be imminently destroyed.
a "lame duck" session after the November 1994 election, Congress
passed legislation creating the World Trade Organization, including the
controversial "TRIPS" Agreement that extended the length of U.S.
patents to 20 years and made this an international standard. This made the
federal government responsible for tracking down countries that promote generic
drugs and punishing them. Just as the Southern slaveholders insisted that
Congress extend their "property rights" to the North, so the
pharmaceutical companies demanded that the U.S. government act to guarantee them
monopoly profits overseas.
each case Congress acted to strengthen the legal protection for a "property
right." In each case the "property right" was one which public
opinion justifiably held to be fundamentally immoral, and contrary to the
fundamental human right to life and liberty.
Gore and George Bush have plans for extending insurance coverage for
prescription drugs. Neither plan directly addresses the fundamental problem: the
price gouging by pharmaceutical companies enabled by our current system of
granting long patents - monopolies - to pharmaceutical companies for life-
plan comes much closer, and that's why the pharmaceutical companies are against
it. They fear that if a prescription drug benefit were added directly to
Medicare, Medicare could use its bargaining power to force down the prices paid
for prescription drugs.
Washington Post reports that the Office of Personnel Management cancelled a
project for providing prescription drugs at discount prices to federal law
enforcement officers after Merck and Pfizer refused to participate. Merck and
Pfizer say the health plan for law enforcement officers is not a federal
government agency so they should not have to give it the same discounts as it
gives the federal government. The OPM notes that prescription drug costs make up
more than 25 percent of the cost of health care in the Federal Employees Health
says he's against the prescription benefit for Medicare because it would
increase "Big Government" and people should be "free to
choose" by getting tax subsidies to help them purchase coverage in the
market. But what he really opposes is the government using its market power to
drive down prices for consumers.
rhetoric is hollow when one considers how the federal government is already
intervening in the market. The federal government pays for the research that
develops many drugs, it gives the drugs to pharmaceutical companies, then allows
them to patent the drugs, giving the companies a monopoly and protecting them
it's fine, according to Bush, if Big Government intervenes in the market to
subsidize pharmaceutical companies through federally funded research; it's fine
if Big Government intervenes in the market again through patents to protect drug
companies from competition from generics, thus driving up prices and industry
profits, but if the government intervenes to drive down prices with its
purchasing power it's Big Brother.
the case of the anti-ovarian cancer drug Taxol, the U.S. spent millions of
dollars on research, gave exclusive marketing rights to Bristol-Myers Squibb,
and then on behalf of BMS threatened South Africa with trade sanctions under the
WTO for licensing a generic competitor to Taxol.
abuse is not only a problem with prescription drugs. In a case going before the
Supreme Court, UNOCAL was granted a patent for a "process" which was
basically the writing down of a government regulation for cleaner gasoline. This
absurd patent has driven up gas prices.
because access to essential medicines, particularly in poor countries in Africa
and elsewhere, is a life-and-death issue, this would be a good place to start
reforming our patent law. While Congress kowtows to the pharmaceutical industry,
let us consider an "Underground Railroad" for the international and
domestic distribution of patented drugs.
Robert Naiman Senior Policy Analyst Center for Economic and Policy Research