Question

The pharmaceutical industry often comes under fire, especially during times of a pandemic, like the COVID-19 outbreak we are seeing right now. This is because the sector has become a sort of poster child for the patent system – a firm invests a large amount of time and money into developing a drug, which eventually saves lives, but in return it gets to be the monopoly seller of this drug for 20 years. To put some specific figures on it, a typical R&D investment for a new drug can be around $2 billion; the total revenue from sales of a successful drug (after all trials and approvals) can top $20 billion over the life of the patent. An alternative suggestion advanced by some is to scrap the patent system and instead offer a prize. For example, the government promises $20 billion to the first firm to successfully develop and test a treatment for the novel coronavirus, but the formula has to be released for free to anyone in the world to copy/replicate and market. Discuss the issues with the current system, resulting in monopolies in the pharmaceutical industries. Will the prize plan be better? Worse? What are the advantages and disadvantages?

Answer 1

In my opinion, existing patent regulations are bettrer than proposed prize plan. Following are reasons for the same:

i. It is very difficult to determine revenue generated and hence determining 'prize' will be so difficult.

ii.Different countries may value a product differently and then there will be conflicts.

iii. This will also lead to lobbying, favouritism and black marketing of medicines.

iv. Existing patent formula is better as it ensures returns to a company and also promotes research.

v. Existing patent laws can be modified by individual countries to favour local population like compulsory licencing.

vi. Existing laws can be changed for consumer betterment by having proper control over profiteering.