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11/20/2005

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robert

Even granting the questionable success of the legislation, it is wrong, on principle, to have the government incentivize private entites. This is so even if it means that the incentive would lead to the production of orphan drugs.
Note that a patent does not grant a right, it merely uses government power, i.e., the authority of the law courts, to secure a right acquired by a patent holder. In this scenario, the government is reduced to being a dispassionate arbiter that protects rights against force or fraud. This is the only type of government intervention that should exist in a free society.
The government incentive that has been created here exists because the potential market for these drugs is considered not great enough to make a profit. However, the business decision not to produce such drugs because the market is too small is one that need not be "remedied" by government intervention. Instead, a truly free market would allocate R&D resources for those drugs that can make the largest possible profit, i.e., those with the biggest potential market. As for orphan drugs, the appropriate free market response would be to allow drug manufacturers--who have earned the aforementioned large profits in the marketplace--to voluntarily consider whether to apply some of those profits to R&D for these drugs (this would be similar to the way that large law firms have associates that work on 'pro bono' or reduced fee cases). If so, then the problem is dealt with privately, and the unique goodwill that such a venture would produce is a further incentive for this response. If not, then at least the most pressing medical problems that can be ameliorated/cured by drugs, i.e., those diseases that strike the largest segment of the population thereby creating the largest possible market, will offer a natural incentive for drug manufacturers. Resultingly, the greatest number of individuals will then profit from the availability of these drugs.

Michael Martin

Although the ultimate question of whether there is a net social benefit to the Orphan Drug Act is murky, it's existence could prove useful to economists interested in optimizing patent term length. In particular, if seven years of perfect exclusivity is enough to encourage a significant amount of new investment in _rare_ disease treatment, one wonders whether seventeen years is far too long. Even the compromises struck by the Hatch-Waxman Act look excessively favorable to drug companies.

David Welker

Posner makes a very interesting point with respect for the potential to for resources committed to orphan drugs to be used for other more socially valuable investments -- for example, investments into drugs that treat more common diseases.

Of course, the analysis is tricky, and I am sure that Posner is aware that he has only barely scratched the surface.

The first thing that Posner's analysis assumes is that there is some sort of competition for limited resources -- that resources not invested in orphan drugs would be available for something else. This sounds right, but it needs some careful thought.

First, what other things would funds not invested in orphan drugs be invested in? If instead of orphan drugs, those funds were used to finance, say, pornography or luxury yaughts, then the new allocation from changing the law would make society worse off. Drugs, even those which merely alleviate symptoms and delay the inevitable, might provide extreme utility to the recipients. The utility provided by such drugs may very well exceed even the monopoly inflated prices - but the user may be unable to pay without insurance. Of course, one's utility from consuming a product is not limited by mere ability to pay - and one cannot plausible say that, say Bill Gates enjoys more utility from consuming a luxury yaught than someone suffering from a disease suffers gains from having horrible symptoms alleviated. That being said, I am not necessarily defending increased allocations for orphan drugs, only noting that this is an important question. It could be that funds, instead of being diverted from pornography or luxury yaughts, are instead being diverted from research and development in other drugs. This would be the strongest argument against orphan drugs, rather than the suggestion that the funds would be better invested in the market in general. In any case, the key question is this: what exactly will funds not invested in orphan drugs be invested in? Only with that question answered are we really able to begin to ponder the costs and benefits, many of which are not susceptible to reduction to mere monetary values.

Second. Instead of diverting resources from other drugs, developing markets for orphan drugs might result in network effects that benefit drug development generally. It seems quite likely that many researchers and other professionals will not devote the entirety of their professional career to researching only orphan drugs. Instead, it is likely that researchers will shift their focus as both their skill sets shift and promising developments in other areas induce them to enter different drug development markets. What Posner is suggesting is that the presence of orphan drugs will cause existing resources to shift to their development towards orphan drugs a little more than is justified by their merits. However, this point only looks at the situation statically. It could be that the increased revenue to the drug industry from orphan drug production allows the hiring of a bigger pool of researchers, incentivizes research universities to create more programs with people trained in drug research, and in the process leads to productive collaboration beneficial to both general drug development as well as orphan drug development.

Third. If one thought that orphan drugs were bad because they shifted resources from more promising drugs rather than increased the capacity of the R&D system as a whole, wouldn't this argument apply even more forcibly to some drugs which go through normal channels, such as Viagra. From a utilitarian perspective, it does not seem that a drug like Viagra is nearly as useful as say, one treating cancer. If Posner is right about orphan drugs, doesn't this imply that perhaps the government should avoid providing protection to drugs like Viagra in the future since they result in a diversion of resources from more socially beneficial drugs, like those treating serious diseases? I suspect that there are network effects -- that drug research is not merely a zero sum game -- and development of drugs like Viagra may in fact be beneficial to the development of more important drugs. However, if network effects are negligible, it would be an argument not only against orphan drugs, but against Viagra as well. (I should note that it would not be necessarily a conclusive argument, since even without network effects, on net, it might incentivize greater investment in the drug industry, which we have reason to believe is more beneficial than investment in the luxury yaught industry, due to the large positive externalities which investors are unable to capture in the orphan drug industry.)

W

As always, Posner has clearly presented an economic analysis with disastrous, provocative results, and expected us to swallow the poison pill. His analysis is lucid, illuminating, and cautious and there is little with which to disagree. And yet the rigorous analysis obfuscates his claim that society as a collective is better off if its weakest members are left slowly to die. This rankles as much does his claim two weeks ago that democracy is analytically separable from constitutionalism, and so the kinds of inequalities that disrupt rule of law (e.g., rigged elections) are not anti-democratic. Technically true, but trivially true, and to many unsavory if not unpalatable.

I take Posner's point that a dollar spent to earn two dollars is a waste when one has the costless opportunity to make three. But I have two responses.

First, passing legislation is not free. Rescinding the Orphan Drug Act to replace it with a more cost-effective alternative will ignite political strife. Some will oppose the change, others will support it, many others will glom on to the issue and submit self-serving proposals for revision. Think of the hell to be raised by trying to reallocate federal funding for breast cancer research. Womens groups would denounce it even though there is a virtual cure for breast cancer, even though what funding is allocated to breast cancer is best spent on prevention, even though other diseases -- even other kinds of cancer -- kill more Americans, receive less funding, and affect both men and women, young and old. To make a long story short, that extra dollar of profit may never be seen because the hidden costs of implementing the change in regulatory regime may consume it.

Second, as I hinted at earlier in this post, what we value as a society encompasses more than pure efficiency. We tend to care about the personal stories of disease-ridden kids; we tend as a nation not to care as much about the fortunes of insurance companies that must pay off astronomical bills. We tend to care about helping the needy, at least in theory; we tend not to care about pure economic theory. In our two party system, one party runs on cutting taxes to the point of bankrupting the government; the other runs on exclusively and perniciously raising taxes on the class of citizens that sustaining nation's economic engine. That said, "letting people die," which is how such a Posnerian reform would be reported upon, would not pass muster with enough Americans to guarantee a politician's support. We have had politicians secure the Presidency by promising to enlarge the size of government and politicanswho secutre the Oval Office by pledging to shrink it to a shrub, but never have we had a President who spoke of making the government more efficient by harming the weakest members of our society. Not only would changing such an act be costly, but finding energized and long-lasting constituents for it, even among its beneficiaries, would be difficult it not impossible. Social Security reform, anyone?

DanT

POSNER: "Partly because different cancers are classified as different diseases, an estimated 25 million Americans have a rare disease as defined by the Act."

I am not familiar with the details of the Orphan Drug Act, but based upon the statement above, there is a huge opportunity for gaming the system. By manipulating the classification of disease, rare diseases can be created where there were none before.

If gaming is possible, I am sure drug company R&D is already being spent on working this angle. Because I would in their shoes.

W

Sylvain,
Contrary to your fiery rhetoric, it is a fact that Posner is saying society would be better off if the woman with Gaucher's disease --let's call her Person X -- did not benefit from the Act because the regime the Act creates drives down total social welfare.

Person X has Gaucher's disease. She and the overwhelming majority of other users of the medicine cannot afford to pay $601,000 per year for the medicine. Without the act, the medicine would not exist.

I doubt you know very much about Gaucher's disease, but Person X most likely does not have type-2, because type-2 usually kills by age 2. In other words, Gaucher's disease is a life-threatening illness. A swiftly killing one, too.

Type-1, which Person X likely has, is the most common -- and without treatment, the life expectancy of someone with type-1 is drastically lower than that of someone without Gaucher's disease. It is also the case that the symptoms of the disease do in fact make one "weak," as Gaucher's disease essentially destroys your neurological system.

Without the act, Person X would have been left to die slowly, painfully, and sooner than an able-bodied person. She would not have had enough money to commission research to create drugs to treat her illness, and her illness would have claimed her. When someone is powerless to help themselves avoid a preventable death, that sounds like weakness to me.

It is necessarily the case that cutting off the Act strands people like Person X without treatment or cures for lethal illnesses, because the profit motive does not exist to spur R&D for cures or treatments without the Act. Not only is this obvious to anyone with common-sense, it is suggested by Posner's post itself.

Kirk Gregorian Lee

And yet the rigorous analysis obfuscates his claim that society as a collective is better off if its weakest members are left slowly to die.

Well said.

ben

W,

Sylvain's fiery rhetoric is entirely justified in view of your mis-representation of Posner's position and the illogic of your argument.

Posner merely points out the trade-offs and does not come to a conclusion as to the overall benefit of the Act, so your claim that, "Posner is saying... the Act... drives down total social welfare," is wrong.

The question is whether overall net benefit is increased by the Act. Posner's fundamental point is that there are trade-offs in research; researching a cure to one disease may deprive funding to research in more common diseases; if this is true total welfare may be reduced by the Act.

Your argument is that people with Gaucher's disease suffer, and the Act is good because it relieves this suffering. This is quite simply a false argument, because it overlooks the point that for every one Gaucher's patient saved (or made comfortable) by the Act, 5 or 10 or 100 may (or may not) be deprived of relief from other equally serious but more common diseases.

An assessment of the Act's net benefit cannot possibly be made with examining what is foregone, so your argument that Gaucher's patients suffer is simply useless on its own.

ben

Excuse me:

"...cannot possibly be made withOUT examining what is foregone..."

Thomas

Judge Posner,

We are gearing up to watch your interview on Charlie Rose. I've got the popcorn in the microwave as I type.

W

Ben: This is quite simply a false argument, because it overlooks the point that for every one Gaucher's patient saved (or made comfortable) by the Act, 5 or 10 or 100 may (or may not) be deprived of relief from other equally serious but more common diseases.

Nothing in my argument is false. The difference between the persons with Gaucher's disease and the persons who may suffer from other diseases is that the persons with Gaucher's disease receive an actual benefit. We have no idea what will happen to the relevant monies once revoking the Orphan Drug Act is proposed; chances are it will be consumed by the legislative brokering process, as I argue above. So: you have guaranteed losses and no guarantee of any offsetting benefits. That you ignore this renders your argument obfuscatory, much as is Posner's post. (I would also note that an "argument" cannot be false; it can be invalid or valid. One of its propositions could be false, however. If you're going to throw around logical terms, you might as well know what they mean, ben.)

Sylvain: ...nor is it whether it would be in the interest of society for these or others to 'die slowly', a claim you then amusingly and self-contradictorily undermine by arguing that Gaucher is in fact a 'swiftly killing' disease.

I actually do no such thing. What I say is this: "Without the act, Person X would have been left to die slowly, painfully, and sooner than an able-bodied person." The "swift killing" refers to the fact that someone with Gaucher's disease will die sooner than someone without it (e.g., by age 2); the fact that the death is slow refers to the rate of neurological destruction. If you knew anything about Gaucher's disease, you would know that.

ben: Posner's fundamental point is that there are trade-offs in research; researching a cure to one disease may deprive funding to research in more common diseases; if this is true total welfare may be reduced by the Act.

I fail to see how that is any different from this formulation: "Posner is saying society would be better off if the woman with Gaucher's disease --let's call her Person X -- did not benefit from the Act because the regime the Act creates drives down total social welfare." I would also note that I was summarizing my earlier argument. You, quite cunningly, quote from the summary in my second post, yet somehow have managed to ignore the first and most definitive post -- which was the subject of the dispute between Sylvain and I. Your critique of my argument on this basis is the equivalent to claiming an opponent's argument is false because of a typo. It should be obvious to anyone with common-sense that I did not write a quick one-sentence paragraph at the head of my second post so as to brush aside everything I had said in the first. I was simply responding to Sylvain.

I'd like to thank you both for increasing the chance that Posner will address my concerns.

W

Sylvain: Claiming that those who express such concerns somehow wish or prefer the death of specific groups is misguided, disingenuous, deceptive and, quite frankly, small-minded.

And yet the AARP has succeeded in tabling Social Security reform doing just that. If you read my original post, you'd get that was the point!

W

In particular, Ben, your claim that my argument is false is incoherent because you overlooked this from my first post:

I take Posner's point that a dollar spent to earn two dollars is a waste when one has the costless opportunity to make three.

W

Oh, and put any "argument is false" in quotations, so as to maximize mockery.

Ta

One question I have about this issue is whether the money being spent on these rare diseases would otherwise be put to equally worthwhile use on other diseases. I would first like to point out that a common disease will always have funding allocated toward treatment and cure. So, the existance of this orphan drug act does not stop research and funding for more common diseases such as aids etc. These common diseases don't need legislation supporting them because companies have a direct profit incentive for finding treatment (which is explained in Posner's post).


However, without the orphan drug act, most of these rare diseases would see no R&D from private companies. Thus, the people would not be receiving modern treatment. Providing these incentives helps makes sure that these people do see treatment and in the meantime, patients of more common diseases are still receiving treatment.


In an industry in which most of the money is spent for the treatment of common diseases (whether this legislation exists or not), some spending on the rare diseases is nessecary and this would only be done with some legislation supporting it. So if you are looking at what is better overall, I think that a large positive difference in the quality of treatment for these rare diseases outweighs the small negative difference in the quality of treatment for common diseases that results.

W

Ta,
I can only conclude, based on my experience, that ben and Sylvain will now commence attacking you.

W

Ta: So if you are looking at what is better overall, I think that a large positive difference in the quality of treatment for these rare diseases outweighs the small negative difference in the quality of treatment for common diseases that results.

I would actually disagree here. We have no idea whether a small negative difference will result in the quality for common diseases. Chances are the funding will remain constant. The funding for the Orphan Drug Act will likely be reallocated toward pork -- I don't think there is any reasonable prospect it would have gone to common diseases at all, so there's no reason to count it as a potential loss. Thus, you have guaranteed losses and no guaranteed offsetting benefits (i.e., from the reallocation).

W

Ta: So, the existance of this orphan drug act does not stop research and funding for more common diseases such as aids etc. These common diseases don't need legislation supporting them because companies have a direct profit incentive for finding treatment (which is explained in Posner's post).

I agree with this, except to the extent that certain diseases have lobbies behind them. It may be true that the disease doesn't need legislation or more funding than the market provides, but politics does not always work! Breast cancer, as I noted above, receives more funding than is efficient. As soon as you seek to revoke the ODA, the bickering for redistribution of its monies will begin.

Sylvain Galineau

The funding for the Orphan Drug Act will likely be reallocated toward pork [...] Thus, you have guaranteed losses and no guaranteed offsetting benefits (i.e., from the reallocation).

Classic red herring. The same circular argument could be used to justify any government program by anyone with a stake or an interest in it : "If we don't spend this on the Patriot Act, it will go to 'pork', not Homeland Security..."

(Tongue in cheek) I mean, if we hadn't spent $200 billion invading Iraq, who knows how many bridges to nowhere we would have built instead so having ourselves a war might not be such a bad deal, right ? Who cares about the actual costs and benefits of the adventure itself ?

Either the Act can stand up on its own or it cannot. Where the money could or should go otherwise is a separate political issue.

ben

Ladies and gentlemen, the answer to the central question in this debate is: "We have no idea what will happen to the relevant monies once revoking the Orphan Drug Act is proposed; chances are it will be consumed by the legislative brokering process"

Thanks W, glad we got that one sorted.

Here's another one: what is the Meaning of Life? 2 sentences or less. Go!

I fail to see how that is any different from this formulation: "Posner is saying society would be better off if the woman with Gaucher's disease --let's call her Person X -- did not benefit from the Act because the regime the Act creates drives down total social welfare."

Posner did not express a view on the sign (positive or negative) of net benefits from the Act. Posner did not say society would be better off without the Act.

Sylvain Galineau


To summarize : you've never claimed what you actually wrote, and Posner said all the things he never wrote, because you say so. It must be true : you can bold words ! If it's bold, it's right ! If Posner's title and entire post are about the Open Drug Act but, as an example, he uses an article on Gaucher, then the whole thing is about Gaucher. If you say so, it must be true.

Hey, it's all about'figurative' language, the new definition of which seems to be 'whatever I claim people to be saying without ever proving how or why'. Crafty, that.

Side note : you brought up the AARP. Not me. I asked what its relevance to this argument was. Still no intelligible or relevant answer except to invent more absurd accusations and conflating more unrelated issues to drown your (dead) fish. Read before you answer. Listen before you speak, you might come across as less of a troll.

By the way, you did make that claim. In bold, in your very first post. That you are now so keen to deny it will be sufficient for now. Thank you.

Oh and you could have saved yourself a lot of time by simply answering my previous question i.e. by admitting you only come here to engage in pseudo-moralistic posturing. Thank you for the generously extensive and hyper-ventilated confirmation. I am flattered by all the attention. (Although me thinks the one-letter pseudonymed person doth protest too much...)

W

Sylvain: By the way, you did make that claim. In bold, in your very first post. That you are now so keen to deny it will be sufficient for now.

This is a lie. I do not even mention the AARP by name in my first post, let alone in bold. I refer to it implicitly while discussing the legislative prospects for Orphan Drug Act reform. I say:

Not only would changing such an act be costly, but finding energized and long-lasting constituents for it, even among its beneficiaries, would be difficult it not impossible. Social Security reform, anyone?

I never say that the AARP is good, or that it is authoritative. Indeed, the first time I mention the word "AARP" it here:

Sylvain: Claiming that those who express such concerns somehow wish or prefer the death of specific groups is misguided, disingenuous, deceptive and, quite frankly, small-minded.

And yet the AARP has succeeded in tabling Social Security reform doing just that. If you read my original post, you'd get that was the point!

In other words, I am agreeing that the AARP is "misguided, disingenuous, deceptive and, quite frankly, small-minded"; where I disagree is that the AARP has been successful. That doesn't mean I'm a supporter. The Nazis were successful in killing 6 million Jews; saying so doesn't mean I'm pro-Nazi.

Sylvain: Oh and you could have saved yourself a lot of time by simply answering my previous question i.e. by admitting you only come here to engage in pseudo-moralistic posturing.

I don't need to call you names. I think the character of the above quote speaks for itself.

Sylvain Galineau


By the way, if Mr Becker has indeed said that the system should be 'considered as a whole' when discussing Social Security and Medicare, could it be because the latter are a wee bigger, more extensive, cost slightly more and touch a few more Americans than the Open Drug Act ? Might they - maybe - also have a somewhat larger economic and social impact on the US than this one Act ?

I don't know, I guess I'm just asking why some piece of legislation should be approached as if its study or amendment was the equivalent of reforming Social Security and other entitlements...Expecting consistency here would seem rather foolish.

Never mind.

Ladies and gentlemen, do enjoy the rest of a lovely Thanksgiving w-e.

W

Sylvain,

I stand by this: And yet the rigorous analysis obfuscates [Posner's] claim that society as a collective is better off if its weakest members are left slowly to die.

The disagreement stems from how you distorted the above into:

Sylvain: Some claim that even considering the question is tantamount to wishing people to 'die slowly' in the 'interest of society', whatever that means.

Where did I say anything about "considering the question being tantamount to wishing"?

Kirk Gregorian Lee

Sylvain: By the way, if Mr Becker has indeed said that the system should be 'considered as a whole' when discussing Social Security and Medicare, could it be because the latter are a wee bigger, more extensive, cost slightly more and touch a few more Americans than the Open Drug Act ?

Isn't that begging the question? LOL

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