Debating whether patents are good without differentiating on industries seems wrong to me. I've been involved in investments in pharmaceutical companies and investments in IT companies. Those are two completely different worlds.
In the pharmaceutical world founders and employees more often have large opportunity costs by starting or joining a new venture. They are usually in their 30s or 40s with huge student loans, mortgage and kids. They forgo high incomes if they join a start-up. The road to the market is much longer (often more than 10 years). Investment in machinery is also at a completely different level. Drug development usually entails million dollar investment in specialized equipment. Perhaps the most costly aspect of drug development is the regulatory obstacles, such as getting approvals.
In contrast, IT companies are cheap. Founders often have little formal education (Microsoft, Facebook, Skype) and the road to market is much shorter. IT start-ups expect customers (or at least users) in a matter of weeks or months. Many IT companies can get to proof of concept with almost no investment in equipment. The founders simply bring their laptops on board). Regulatory concerns, if any, can usually be dealt with by one lawyer in a few days.
I cannot imagine anyone investing hundreds of millions of dollars in drug development over the course of 10 years without some assurance that competitors can't "steal" their idea. Usually that assurance is a patent or a trade secret. But keeping secrets over 10 years with employees coming and going - that's difficult.
tl;dr: Once you have an idea about, say a shopping cart in a web store, it can be implemented in a few man-weeks. Turning an idea about a new drug into a product often takes thousands of man-years. Whereas the institution of patents seems harmful in the world of software development, it may be necessary in the world drug development.
Of course the flip side is that if a drug is not patentable then research stops. More effective drugs are replaced with slightly modified, possibly less effective or more dangerous, and definitely shorter track record drugs just to preserve profit margins. If natural compounds are more effective in treating some condition, today's pharmaceutical industry will do all they can to avoid discovering that.
Sure drugs are expensive to development, but I'm not sure that the twisted system of incentives is beneficial overall. Of course the industry will claim that none of this research would happen without patents, but of course they are set up that way and can't imagine it any other way. I doubt that humanity as a whole would simply stop advanced medical research because the economics changed.
This is nonsense. Even for "natural compounds", phase 3 clinical trials are necessary to prove efficacy. These trials cost hundreds of millions of dollars. Nobody is going to put up that kind of money unless there's profit in it, period.
>Nobody is going to put up that kind of money unless there's profit in it, period.
I don't know what kind of fantasy world you are living in but there are plenty of governments and charities who fund scientific and medical research without the goal of profit.
The research is inexpensive, the development is not. Having the government do the inexpensive part -- the research -- does not eliminate the extremely expensive development. Almost all the cost of new pharmaceuticals is in the development phase. Government funding research is a drop in the bucket after private companies fund the clinical trials.
While government has an okay track record funding research, they have a pretty poor track record funding development, hence why it is left to private companies. This has to do with the way governments legally structure funding combined with the fact that development cycles are much longer than political cycles. In areas where the government does fund development, the development is interrupted by constantly shifting funding priorities and politicians trying to redirect money to their districts or constituents in the middle of development. This tends to make things cost (at least) twice as much and take (at least) twice as long as they would in environments where the development cycle is guaranteed to be uninterrupted and free from the whims of whoever is elected this year.
>A recent GAO study found this to be a worrisome trend, noting that fewer new innovative drugs are being created -- with pharma firms instead focusing on ways to extend the patent protection on existing products by pulling a few tricks (such as "reinventing" Claritan as Clarinex just to get more patent coverage).
In other words, government funded or not, patents are stifling medical innovation.
> I doubt that humanity as a whole would simply stop advanced medical research because the economics changed.
It wouldn't stop but it would definitely decrease significantly. The fact is that many countries are implementing carbon tax/ETS specifically to make the economics more favourable to renewable research and development. So economics matters.
I do not think that the whole patent issue is one of scale. It's one of
principle. Nothing and no one should be allowed to own ideas, formulas,
algorithms, genes or molecular arrangements.
Besides - and I've argued this countless times in the past - most medical
research is already funded by the government. So it's not like innovations in
medicine would suddenly grind to a halt. Maybe we'd see less useless shit like
the newest "Anti-Aging" creme or other complete wastes of money.
Here's another fun fact: only about 15% of the income of the big pharma concerns
actually goes into research. Most of it goes to advertisement. How in all hell
is that a good use of money?
Furthermore, this system incentivices the utterly wrong things, and this remains
my strongest argument against patents especially in pharma. You aren't
encouraged to find cures, things that stop the cause of a sickness. The most
profitable way is to find treatments for symptoms, which bind the patient to
your meds, often for a long time, possibly until death. The best example would
quite likely be AIDS. This is nothing less than completely, totally,
absolutely, irredeemably and unexcusably fucked up.
This sounds ridiculous. Most founders I've seen had degrees.
And for the three companies you listed. Gates and Zuckerberg both went to Harvard but dropped out. And Zennström had an MBA and Masters of Engineering/Computer Science.
Gates and Zuckerberg dropped out of college. Skype's other half, Friis, dropped out of highschool.
The point is that IT founders and employees in average have shorter education than founders of pharmaceutical companies. I think it's a fact that is hard to argue against, whether or not you find it ridiculous.
I am not saying they are less smart, just that they usually have less formal education.
That is because IT is more on the side of 'art' and 'open creativity' than pharmaceuticals which require a lot of background knowledge, far more rigorous testing and standards, and are a much more deadly legal minefield. Both require technical skills in a way, though alot of the pharmaceutical founders barely spend any time in the actual lab. Not to mention the average cost in R&D to launch ONE pharmaceutical product is $500M, meaning you need business skill. (And a patent to earn back your research money!)
In the pharmaceutical world founders and employees more often have large opportunity costs by starting or joining a new venture. They are usually in their 30s or 40s with huge student loans, mortgage and kids. They forgo high incomes if they join a start-up. The road to the market is much longer (often more than 10 years). Investment in machinery is also at a completely different level. Drug development usually entails million dollar investment in specialized equipment. Perhaps the most costly aspect of drug development is the regulatory obstacles, such as getting approvals.
In contrast, IT companies are cheap. Founders often have little formal education (Microsoft, Facebook, Skype) and the road to market is much shorter. IT start-ups expect customers (or at least users) in a matter of weeks or months. Many IT companies can get to proof of concept with almost no investment in equipment. The founders simply bring their laptops on board). Regulatory concerns, if any, can usually be dealt with by one lawyer in a few days.
I cannot imagine anyone investing hundreds of millions of dollars in drug development over the course of 10 years without some assurance that competitors can't "steal" their idea. Usually that assurance is a patent or a trade secret. But keeping secrets over 10 years with employees coming and going - that's difficult.
tl;dr: Once you have an idea about, say a shopping cart in a web store, it can be implemented in a few man-weeks. Turning an idea about a new drug into a product often takes thousands of man-years. Whereas the institution of patents seems harmful in the world of software development, it may be necessary in the world drug development.