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June 15, 2007
Deck Chairs, Titanic?
One interpretation of name-brand drug companies' aggressive response to countries that issue licenses to produce generic drugs is that the companies are seeking to preserve an economic worldview that no longer exists. The intellectual property regime that allows companies set high prices in order to recoup costs, which works for artists and high-tech companies, can't work for life-saving drugs. High prices are not an acceptable response in the face of AIDS, malaria or even heart disease.
So drug companies' attempts to curtail these licenses that threaten their bottom line is just rearranging deck chairs on a sinking ship. A new report that suggests the current model is not sustainable supports this view. Slipping sales and reliance on the success of a few blockbusters does not help the situation. The report has some suggestions for change, though they do not mention the profit-sharing or research prize ideas popular among many economists.
Posted by Adam Graham-Silverman at June 15, 2007 09:51 PM