[Random-bits] Stiglitz on prizes to reward development of new medicines
James Love
james.love@cptech.org
Tue Sep 26 07:17:02 2006
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* Patents are not the only way of stimulating innovation. A prize =20
fund for medical research would be one alternative. Paid for by =20
industrialised nations, it would provide large prizes for cures and =20
vaccines for diseases such as AIDS and malaria that affect millions =20
of people. Me-too drugs that do no better than existing ones would =20
get a small prize at best. The medicines could then be provided at cost.
* In any system, someone has to pay for research. In the current =20
system, those unfortunate enough to have the disease are forced to =20
pay the price, whether they are rich or poor. And that means the very =20=
poor in the developing world are condemned to death.
* The alternative of awarding prizes would be more efficient and more =20=
equitable. It would provide strong incentives for research but =20
without the inefficiencies associated with monopolisation. This is =20
not a new idea - in the UK, for instance, the Royal Society of Arts =20
has long advocated the use of prizes. It is, perhaps, an idea whose =20
time has come.
http://www.newscientist.com/channel/opinion/mg19125695.700-innovation-=20=
a-better-way-than-patents.html;jsessionid=3DIMIGCOOIHINI
Innovation: A better way than patents
16 September 2006
=46rom New Scientist Print Edition.
Joseph Stiglitz
Innovation is at the heart of the success of a modern economy. The =20
question is how best to promote it. The developed world has carefully =20=
crafted laws which give innovators an exclusive right to their =20
innovations and the profits that flow from them.
But at what price? There is a growing sentiment that something is =20
wrong with the system governing intellectual property (IP). The fear =20
is that a focus on profits for rich corporations amounts to a death =20
sentence for the very poor in the developing world. So are there =20
better ways of promoting innovation?
Intellectual property is different from other property rights, which =20
are designed to promote the efficient use of economic resources. =20
Patents give the grantee exclusive rights to an innovation - a =20
monopoly - and the profits this generates provide an incentive to =20
innovate. Recent years have seen a strengthening of IP rights: for =20
instance, the scope of what can be patented has been expanded, and =20
developing countries have been forced to enact and enforce IP laws. =20
The changes have been promoted especially by the pharmaceutical and =20
entertainment industries, and by some in the software industry who =20
argue that the changes will enhance innovation.
Monopolies can lead to higher prices and lower output, and the costs =20
can be especially high when monopoly power is abused, as courts =20
around the world have found in the case of Microsoft. What's more, =20
the hoped-for benefit of enhanced innovation does not always =20
materialise.
Why is this? First, the most important input into research is =20
knowledge, and IP sometimes makes this less accessible. This is =20
especially true when patents take what was previously in the public =20
domain and "privatise" it - what IP lawyers have called the new =20
"enclosure movement". The patents granted on Basmati rice (which =20
Indians had thought they had known about for hundreds of years) and =20
on the healing properties of turmeric are good examples.
Second, conflicting patent claims make profitable innovation more =20
difficult. Indeed, a century ago, a conflict over patents between the =20=
Wright brothers and rival aviation pioneer Glenn Curtis so stifled =20
the development of the airplane that the US government had to step in =20=
to resolve the issue.
The developing world has other complaints against the IP system =20
imposed as part of an international deal that has become known as the =20=
1994 Uruguay Round trade agreement. Developing countries are poorer =20
not only because they have fewer resources, but because there is a =20
gap in knowledge. That is why access to knowledge is so important. =20
But by strengthening the developed world's stranglehold over =20
intellectual property, the IP provisions (called TRIPS) of the =20
Uruguay agreement reduced access to knowledge for developing =20
countries. TRIPS imposed a system that was not optimally designed for =20=
an advanced industrial country, but was even more poorly suited to a =20
poor country. I was on President Clinton's Council of Economic =20
Advisers at the time the Uruguay Round was completed. We and the =20
Office of Science and Technology Policy opposed TRIPS. We thought it =20
was bad for American science, bad for world science, bad for the =20
developing countries.
In the case of pharmaceuticals, the costs of our IP system go beyond =20
money. The global intellectual property regime denies access to =20
affordable lifesaving drugs, even as the AIDS epidemic lays waste to =20
so much of the developing world. Despite the billions drug companies =20
earn in profits, they spend next to nothing looking for cures and =20
vaccines for the diseases of the poor. They spend far more on =20
advertising than on research and far more on researching lifestyle =20
drugs than on lifesaving ones. The reason is obvious: the poor cannot =20=
afford to pay much for drugs. For those concerned about health in =20
developing countries, the intellectual property regime has not worked.
=93The global intellectual property regime denies poor people access to =20=
lifesaving drugs=94
Patents are not the only way of stimulating innovation. A prize fund =20
for medical research would be one alternative. Paid for by =20
industrialised nations, it would provide large prizes for cures and =20
vaccines for diseases such as AIDS and malaria that affect millions =20
of people. Me-too drugs that do no better than existing ones would =20
get a small prize at best. The medicines could then be provided at cost.
In any system, someone has to pay for research. In the current =20
system, those unfortunate enough to have the disease are forced to =20
pay the price, whether they are rich or poor. And that means the very =20=
poor in the developing world are condemned to death.
The alternative of awarding prizes would be more efficient and more =20
equitable. It would provide strong incentives for research but =20
without the inefficiencies associated with monopolisation. This is =20
not a new idea - in the UK, for instance, the Royal Society of Arts =20
has long advocated the use of prizes. It is, perhaps, an idea whose =20
time has come.
Joseph Stiglitz is at Columbia University in New York. His latest =20
book, Making Globalization Work, is published this month by Allen Lane
=46rom issue 2569 of New Scientist magazine, 16 September 2006, page 20
---------------------------------
James Love, CPTech / www.cptech.org / mailto:james.love@cptech.org / =20
tel. +1.202.332.2670 / mobile +1.202.361.3040
"If everyone thinks the same: No one thinks." Bill Walton
--Apple-Mail-2-573229941
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<HTML><BODY style=3D"word-wrap: break-word; -khtml-nbsp-mode: space; =
-khtml-line-break: after-white-space; "><DIV><DIV style=3D"margin-top: =
0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; =
min-height: 14px; "><BR></DIV> <DIV style=3D"margin-top: 0px; =
margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">* Patents are =
not the only way of stimulating innovation. A prize fund for medical =
research would be one alternative. Paid for by industrialised nations, =
it would provide large prizes for cures and vaccines for diseases such =
as AIDS and malaria that affect millions of people. Me-too drugs that do =
no better than existing ones would get a small prize at best. The =
medicines could then be provided at cost.</DIV><DIV style=3D"margin-top: =
0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; =
min-height: 14px; "><BR></DIV><DIV style=3D"margin-top: 0px; =
margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">* In any =
system, someone has to pay for research. In the current system, those =
unfortunate enough to have the disease are forced to pay the price, =
whether they are rich or poor. And that means the very poor in the =
developing world are condemned to death.</DIV><DIV style=3D"margin-top: =
0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; =
min-height: 14px; "><BR></DIV><DIV style=3D"margin-top: 0px; =
margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">* The =
alternative of awarding prizes would be more efficient and more =
equitable. It would provide strong incentives for research but without =
the inefficiencies associated with monopolisation. This is not a new =
idea - in the UK, for instance, the Royal Society of Arts has long =
advocated the use of prizes. It is, perhaps, an idea whose time has =
come.</DIV><DIV style=3D"margin-top: 0px; margin-right: 0px; =
margin-bottom: 0px; margin-left: 0px; min-height: 14px; "><BR></DIV><DIV =
style=3D"margin-top: 0px; margin-right: 0px; margin-bottom: 0px; =
margin-left: 0px; min-height: 14px; "><BR></DIV><DIV style=3D"margin-top: =
0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; "><A =
href=3D"http://www.newscientist.com/channel/opinion/mg19125695.700-innovat=
ion-a-better-way-than-patents.html;jsessionid=3DIMIGCOOIHINI">http://www.n=
ewscientist.com/channel/opinion/mg19125695.700-innovation-a-better-way-tha=
n-patents.html;jsessionid=3DIMIGCOOIHINI</A></DIV><DIV =
style=3D"margin-top: 0px; margin-right: 0px; margin-bottom: 0px; =
margin-left: 0px; min-height: 14px; "><BR></DIV><DIV style=3D"margin-top: =
0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; =
">Innovation:<SPAN class=3D"Apple-converted-space">=A0 </SPAN>A better =
way than patents</DIV><DIV style=3D"margin-top: 0px; margin-right: 0px; =
margin-bottom: 0px; margin-left: 0px; ">16 September 2006</DIV><DIV =
style=3D"margin-top: 0px; margin-right: 0px; margin-bottom: 0px; =
margin-left: 0px; ">=46rom New Scientist Print Edition.</DIV><DIV =
style=3D"margin-top: 0px; margin-right: 0px; margin-bottom: 0px; =
margin-left: 0px; ">Joseph Stiglitz</DIV><DIV style=3D"margin-top: 0px; =
margin-right: 0px; margin-bottom: 0px; margin-left: 0px; min-height: =
14px; "><BR></DIV><DIV style=3D"margin-top: 0px; margin-right: 0px; =
margin-bottom: 0px; margin-left: 0px; min-height: 14px; "><BR></DIV><DIV =
style=3D"margin-top: 0px; margin-right: 0px; margin-bottom: 0px; =
margin-left: 0px; ">Innovation is at the heart of the success of a =
modern economy. The question is how best to promote it. The developed =
world has carefully crafted laws which give innovators an exclusive =
right to their innovations and the profits that flow from =
them.</DIV><DIV style=3D"margin-top: 0px; margin-right: 0px; =
margin-bottom: 0px; margin-left: 0px; min-height: 14px; "><BR></DIV><DIV =
style=3D"margin-top: 0px; margin-right: 0px; margin-bottom: 0px; =
margin-left: 0px; ">But at what price? There is a growing sentiment that =
something is wrong with the system governing intellectual property (IP). =
The fear is that a focus on profits for rich corporations amounts to a =
death sentence for the very poor in the developing world. So are there =
better ways of promoting innovation?</DIV><DIV style=3D"margin-top: 0px; =
margin-right: 0px; margin-bottom: 0px; margin-left: 0px; min-height: =
14px; "><BR></DIV><DIV style=3D"margin-top: 0px; margin-right: 0px; =
margin-bottom: 0px; margin-left: 0px; ">Intellectual property is =
different from other property rights, which are designed to promote the =
efficient use of economic resources. Patents give the grantee exclusive =
rights to an innovation - a monopoly - and the profits this generates =
provide an incentive to innovate. Recent years have seen a strengthening =
of IP rights: for instance, the scope of what can be patented has been =
expanded, and developing countries have been forced to enact and enforce =
IP laws. The changes have been promoted especially by the pharmaceutical =
and entertainment industries, and by some in the software industry who =
argue that the changes will enhance innovation.</DIV><DIV =
style=3D"margin-top: 0px; margin-right: 0px; margin-bottom: 0px; =
margin-left: 0px; min-height: 14px; "><BR></DIV><DIV style=3D"margin-top: =
0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; =
">Monopolies can lead to higher prices and lower output, and the costs =
can be especially high when monopoly power is abused, as courts around =
the world have found in the case of Microsoft. What's more, the =
hoped-for benefit of enhanced innovation does not always =
materialise.</DIV><DIV style=3D"margin-top: 0px; margin-right: 0px; =
margin-bottom: 0px; margin-left: 0px; min-height: 14px; "><BR></DIV><DIV =
style=3D"margin-top: 0px; margin-right: 0px; margin-bottom: 0px; =
margin-left: 0px; ">Why is this? First, the most important input into =
research is knowledge, and IP sometimes makes this less accessible. This =
is especially true when patents take what was previously in the public =
domain and "privatise" it - what IP lawyers have called the new =
"enclosure movement". The patents granted on Basmati rice (which Indians =
had thought they had known about for hundreds of years) and on the =
healing properties of turmeric are good examples.</DIV><DIV =
style=3D"margin-top: 0px; margin-right: 0px; margin-bottom: 0px; =
margin-left: 0px; min-height: 14px; "><BR></DIV><DIV style=3D"margin-top: =
0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">Second, =
conflicting patent claims make profitable innovation more difficult. =
Indeed, a century ago, a conflict over patents between the Wright =
brothers and rival aviation pioneer Glenn Curtis so stifled the =
development of the airplane that the US government had to step in to =
resolve the issue.</DIV><DIV style=3D"margin-top: 0px; margin-right: =
0px; margin-bottom: 0px; margin-left: 0px; min-height: 14px; =
"><BR></DIV><DIV style=3D"margin-top: 0px; margin-right: 0px; =
margin-bottom: 0px; margin-left: 0px; ">The developing world has other =
complaints against the IP system imposed as part of an international =
deal that has become known as the 1994 Uruguay Round trade agreement. =
Developing countries are poorer not only because they have fewer =
resources, but because there is a gap in knowledge. That is why access =
to knowledge is so important. But by strengthening the developed world's =
stranglehold over intellectual property, the IP provisions (called =
TRIPS) of the Uruguay agreement reduced access to knowledge for =
developing countries. TRIPS imposed a system that was not optimally =
designed for an advanced industrial country, but was even more poorly =
suited to a poor country. I was on President Clinton's Council of =
Economic Advisers at the time the Uruguay Round was completed. We and =
the Office of Science and Technology Policy opposed TRIPS. We thought it =
was bad for American science, bad for world science, bad for the =
developing countries.</DIV><DIV style=3D"margin-top: 0px; margin-right: =
0px; margin-bottom: 0px; margin-left: 0px; min-height: 14px; =
"><BR></DIV><DIV style=3D"margin-top: 0px; margin-right: 0px; =
margin-bottom: 0px; margin-left: 0px; ">In the case of pharmaceuticals, =
the costs of our IP system go beyond money. The global intellectual =
property regime denies access to affordable lifesaving drugs, even as =
the AIDS epidemic lays waste to so much of the developing world. Despite =
the billions drug companies earn in profits, they spend next to nothing =
looking for cures and vaccines for the diseases of the poor. They spend =
far more on advertising than on research and far more on researching =
lifestyle drugs than on lifesaving ones. The reason is obvious: the poor =
cannot afford to pay much for drugs. For those concerned about health in =
developing countries, the intellectual property regime has not =
worked.</DIV><DIV style=3D"margin-top: 0px; margin-right: 0px; =
margin-bottom: 0px; margin-left: 0px; ">=93The global intellectual =
property regime denies poor people access to lifesaving drugs=94</DIV><DIV=
style=3D"margin-top: 0px; margin-right: 0px; margin-bottom: 0px; =
margin-left: 0px; min-height: 14px; "><BR></DIV><DIV style=3D"margin-top: =
0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">Patents =
are not the only way of stimulating innovation. A prize fund for medical =
research would be one alternative. Paid for by industrialised nations, =
it would provide large prizes for cures and vaccines for diseases such =
as AIDS and malaria that affect millions of people. Me-too drugs that do =
no better than existing ones would get a small prize at best. The =
medicines could then be provided at cost.</DIV><DIV style=3D"margin-top: =
0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; =
min-height: 14px; "><BR></DIV><DIV style=3D"margin-top: 0px; =
margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">In any =
system, someone has to pay for research. In the current system, those =
unfortunate enough to have the disease are forced to pay the price, =
whether they are rich or poor. And that means the very poor in the =
developing world are condemned to death.</DIV><DIV style=3D"margin-top: =
0px; margin-right: 0px; margin-bottom: 0px; margin-left: 0px; =
min-height: 14px; "><BR></DIV><DIV style=3D"margin-top: 0px; =
margin-right: 0px; margin-bottom: 0px; margin-left: 0px; ">The =
alternative of awarding prizes would be more efficient and more =
equitable. It would provide strong incentives for research but without =
the inefficiencies associated with monopolisation. This is not a new =
idea - in the UK, for instance, the Royal Society of Arts has long =
advocated the use of prizes. It is, perhaps, an idea whose time has =
come.</DIV><DIV style=3D"margin-top: 0px; margin-right: 0px; =
margin-bottom: 0px; margin-left: 0px; min-height: 14px; "><BR></DIV><DIV =
style=3D"margin-top: 0px; margin-right: 0px; margin-bottom: 0px; =
margin-left: 0px; ">Joseph Stiglitz is at Columbia University in New =
York. His latest book, Making Globalization Work, is published this =
month by Allen Lane</DIV><DIV style=3D"margin-top: 0px; margin-right: =
0px; margin-bottom: 0px; margin-left: 0px; ">=46rom issue 2569 of New =
Scientist magazine, 16 September 2006, page 20</DIV><DIV =
style=3D"margin-top: 0px; margin-right: 0px; margin-bottom: 0px; =
margin-left: 0px; min-height: 14px; "><BR></DIV><DIV style=3D"margin-top: =
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"><DIV>---------------------------------</DIV><DIV>James Love, CPTech / =
www.cptech.org / <A =
href=3D"mailto:james.love@cptech.org">mailto:james.love@cptech.org</A> / =
tel. +1.202.332.2670 / mobile +1.202.361.3040</DIV><DIV><BR =
class=3D"khtml-block-placeholder"></DIV><DIV>"If everyone thinks the =
same: No one thinks."=A0 Bill Walton</DIV><BR =
class=3D"Apple-interchange-newline"></SPAN> </DIV><BR></BODY></HTML>=
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