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Say “No” to IP; Say “Yes” to Generics

September 24, 2009

Jordan, I must disagree: Protecting pharmaceutical companies by granting them patents on their products does not make us better off. It could be argued that repealing patent protections would, in fact, lead to even more innovation and research. In an open and highly-competitive market, companies would have more of an incentive to continue to improve their product and make it more affordable.

By contrast, our present system protects drug companies from competition by allowing them to monopolize the production of the drug in question. Since there is no way for another company to one-up the patent holders, there is no incentive to conduct research, no incentive to continue to make the product increasingly better and more affordable.

Michele Boldrin and David Levine, of Washington U in St. Louis, have done some interesting work in this field. Here is one of their case studies, on James Watt and his patent on the steam engine.

The same principle that applies to markets also applies here: competition benefits the consumer; shielding firms from competition through artificial, legally-privileged monopolies helps to strip consumers of their market power. Allowing generic drugs to compete freely with the big “brand names” will make drugs more accessible to everyone, in both the short run and the long run.

Say “no” to IP; say “no” to drug patents; say “yes” to free markets; say “yes” to drugs!

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