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» Crouch's December report on new academic research that I find interesting from Patently Obvious: Patent Law Blog
Here is a limited set of recent papers that I have found interesting. Bronwyn Hall [Read More]

» Fixing the Drug Industry? from In the Pipeline
I had a post ready to go tonight, but we'll roll that one over to tomorrow. I'd suggest that if you're interested in patents and their place in the drug industry (and hey, who isn't, right? Uh, right?) that you... [Read More]

» On Drugs from Fool's Blog
Without comment of my own, I direct your attention to some thoughts on the pharmaceutical industry (including prices, safety and patents) from Becker and Posner. Enjoy.... [Read More]

» Patents, Pt. 2 from StepAside
Last week I posted a brief rumination on the human and economic scales for weighing patent law. For anyone interested in expert opinion on patent law (although examined primarily on economic grounds), the Becker-Posner Blog for December 12 is a... [Read More]

» Fear. from The First Amendment Run Amok
Oh. My. God. I agree with Posner about something. Hey, Satan ... how's the ice skating down there? [Read More]

» Becker-Posner on Drug Patents from EconLog
A good intro to the economic issues surrounding pharmaceutical patents, from Richard Posner and Gary Becker. Posner writes, Invention is... [Read More]

» New But Noteworthy from what if?
The Becker-Posner blog is in its infancy. [Read More]

» Pharmaceutical Patents -- A Response from Life, Law, Libido
My brother, a Business Analyst at a global pharmaceutical company and former Research Scientist, responds to Becker and Posner's discussion about pharmaceutical patents. [Read More]

The subject de semaine this week at the Becker-Posner blog is pharmaceutical patents. Gary Becker gives us some background on the system in its status quo incarnation: The pharmaceutical industry is under attack once again for its high prices, because... [Read More]

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» How long do pharma patents last? from Samizdata.net
In the comments here, Andrew Duffin asserts that: It's a lucky Pharma company indeed that gets seven years to recover the R&D costs of a successful product. Two or three is more like the real world figure. But Chicago professor Richard Posner writes: .... [Read More]

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Corey is advocating abolish all IP, and that such abolition will not negatively impact innovation. That is what I meant by less efficient. I didn't mean to imply it is perfect or that reform in some form is not justified.


Oh yes, I forgot that the 20th century taught us all that any step towards collectivation is a step towards doom and economic collapse. How misguided of me. I guess I should be building a little shrine to Hayek instead of posting. Oh,
and someone should tell those crazy Chinese that the U of Chicago debunked their system eh?

Lets keep the revisionism to a minimum here, and lets remember why everyone loved the New Deal.
Save that "20th century has proven socialism is bad" ideology for people who aren't collecting any of the bad socialist benefits in this country like social security, welfare, medicaid, Stafford Loans, electricity from the Hoover dam, freeways... Oh, and don't forget the 400 billion dollar a year defense budget without which entire industries would not exist. That's a great example of the machinations of the free market eh?

If you read my post carefully you will see that I am not advocating the loss of incentives. I am pointing out that awarding the CEO of Pfizer enough stock options so that he can buy a 400 foot boat and a second house in Aspen does NOT incent innovation in the drug market. It incents profit taking. As someone who used to work as an engineer and who invented patentable stuff, you would think that the market would have incentivized me after the fact. But NO... I was laid off to make the quarterly revenue prediction so the CEO could keep his job. I guess you could say the market incentivized me to be a neo-marxist.

In your massively efficient market, three times as many real dollars are going to marketing as are going to R&D. How wonderfully efficient. More money goes to executive compensation at many of these companies than to R&D. Oooooh, what a great solution the market has arrived at.

I bow before the god Mahkut! Please oh Mahkut, bless us with a solution for the rising homelessness in our cities! The cost of real goods like gas and milk has risen for 5 years with no corresponding real wage increase! Why hast thou forsaken us oh Mahkut! Can I have a job for Christmas? Please?


"If you read my post carefully you will see that I am not advocating the loss of incentives."

That is EXACTLY what you advocated, because you operate under the mistaken assumption that people's desire to help their fellow man is all the "incentive" anybody needs.

I never took any issue with specific socialistic policies, I took issue that the premise that incentives and markets don't matter. That is your position, Corey. Remember the whole "IP isn't necessary" line?

It's clear I'm dealing with someone with very little regard for reasoned debate. I'm sorry you were imbittered by your experience in private enterprise, and I hope you find comfort in your neo-Marxist delusions.

James Wetterau

Re: "LessBureaucracyNotMore"'s comment:

I am not a fan of our patent system, but if it is likely to be preserved, it seems to me that we should consider how best to reform it. Just because an alternative form might require more bookkeeping doesn't mean it won't have offsetting beneficial economic effects. The problem here is not entirely one of bureaucracy -- it's a problem stemming from monopoly rights and the costs they impose.

Your suggestion that this would cause progress to grind to a halt since anyone could file for "also ran" status is a strawman argument: if that were so, the same problem would apply to prior art with our current system.


"It's clear I'm dealing with someone with very little regard for reasoned debate."

Reasoned debate... is that the kind where one side defines the terms in advance in order to make sure the discussion does not escape the bounds of permissible thought?

I don't know, people here seem to like economics, and my posts have even more numbers in them than Posner's! Of course my numbers aren't hypothetical, maybe that is the problem. Maybe I should have said: "Assume excess profits in the drug industry of 25%." That sounds pretty
econominical eh? Posner forgot to put the "assume" in when he said the drug industry does NOT have excess profits, but he is understandably busy so we will remember to fill it in for him.



Since you asked several times. Here is where Bristol Meyers Squibb's money went for the 2003 according to their annual report readily available on their website.

1. Cost of Product Sold - 7.592 B (46%)
2. Marketing, Selling Admin - 4.660 B (29%)
3. Advertising and Product promotion - 1.416 B (8.7%)
4. R&D 2.279 B (14%)
5. Litigation 0.199 B (1.2%)

Total expenses are 16.2 B (I left out some minor expenses)

Cost of the product and R&D together are about 60% of the expenses, while advertising and promotion was only 8.7%. Litigation was very little. The total revenue for BMS for 2003 was about 20.8 B.

You can check it out yourself here: http://www.bms.com/static/annual/2003ar/annual_report/data/2003bmsar.pdf


Sorry for the complete link after the "2003bms" type "ar.pdf"


The 12% R&D figure I used was off a Pfizer annual report.

What do you think the difference is between "marketing and selling admininistration" and "advertising and product promotion"...
together they add up to 38%, which is pretty much exactly what I said. Except not really, because those are percentages of expenses, not percentages of earnings.

But anyway, with 4.6B in profits, why fight over one or two percent. Lets give them some more corporate welfare, 25% profits is pathetic, those seniors can pay more, they are going to die soon anyway!

Merry Christmas to all.


As for the Federal Circuit being "extraordinarily pro-patent:"

It behooves the Prince indeed to keep the laws by which he himself if empowered.

Perhaps if the Fed. Cir.'s jurisdiction were broadened to less-beholden IP areas (trademarks?), we would see fewer self-interested policies enunciated by that Court. Or, perhaps sister circuits, on the off chance that they receive a patent appeal a la Vornado Air v. Holmes Group, should should fashion anti-patent opinions, if anything for the sake of showing the effect of contrasting policy. The Federal Ciruit isn't the last word on patents because it is infallible; it is infallible because it has been the last word on patents for the last 25 years (notwithstanding tepid attempts by SCOTUS to try to reassert their ability to understand and decide patent policy).




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