Posted on 02/25/2005 7:23:25 AM PST by Sandy
Unless the drug industry starts to negotiate significantly lower prices, it may find itself battling debt-strapped states for control over the manufacture of drugs. States already take land and other property in order to benefit the public by building things such as roads and schools. Now some legislators and officials are saying they should be able to take away a drug company’s intellectual property, its patent. They want to give these patents, which allow a company to manufacture a product, to competitors that agree to sell the drugs to the states at much lower prices.
Patents are the key to huge drug-company profits. The industry will fight vociferously to protect them. In West Virginia, where the issue came up last summer, industry lawyers warned a legislative advisory council away from proposing such action on patents, claiming it would be unconstitutional. With virtually unlimited resources, the drug companies could drag states through courts for years. Still, the specter of states compelling companies to license their patents to other firms terrifies the industry. And even the fight to do this would open the industry to further scrutiny on pricing policy. All of which, some officials hope, could make drug companies more willing to negotiate discounts.
That’s what District of Columbia Councilman David Catania hopes will happen. Catania, a Republican who recently registered as independent after breaking with President Bush over the same-sex-marriage issue, introduced a compulsory license bill February 1. It authorizes Washington, D.C.’s mayor to declare a health emergency and, under eminent domain authority, issue a compulsory license to a generic firm to produce select patented drugs.
Under eminent domain requirements, the patented drug company would be given “just compensation” for the patent. The councilman argues that if drug companies were smart, they would “start talking about price reductions now rather than leave themselves open to a long, drawn-out due process review and hearings to determine just compensation.” Such review and hearings, he warns, would expose “just how pervasive the price gouging and profiteering has been.”
That’s precisely what happened when the Bush administration’s former health and human services secretary, Tommy Thompson, wanted to pressure the Bayer Corporation to give the government better discounts on its antibiotic Cipro during the anthrax scare. Thompson started threatening to have generic companies make Cipro if Bayer wouldn’t offer the government better pricing. Bayer immediately gave the government dramatic price discounts. Thompson acted after the Canadian government said it would override the patent and contracted with a generic company, Apotex Inc., to make Cipro.
Catania, who chairs the District’s health committee, plans hearings March 22 with Washington health-care leaders, AARP, drug-company representatives, and a key legal architect of the bill, West Virginia University law professor Kevin Outterson. Outterson argues that states (the District of Columbia has all the legal powers of a state, notes Catania) derive the legal authority to have a company manufacture a patented product owned by another firm from two sources.
First, states already take property for building roads and government sites under eminent domain powers, and could extend those powers to intellectual property, such as drug patents. Second, in a 1999 U.S. Supreme Court opinion (Florida Prepaid Postsecondary Education Expense Board v. College Savings Bank), the Court said that a state’s infringement of a patent, for a public purpose, is not by itself unconstitutional, so long as the state compensates the patent owner for the loss of the patent. To meet the public purpose clause of the Court’s ruling, Outterson proposes that states only break a patent to make drugs for public employees and Medicaid enrollees.
Outterson explained his ideas in late January at a meeting of the National Legislative Association on Prescription Drug Prices, a group of senior legislative leaders of eight Northeast states, Hawaii, and the District of Columbia. Outterson told them he knows of two states where legislators are drafting bills based on his proposal, and at the meeting Vermont legislators publicly indicated interest in doing so.
Catania says he doesn’t know if this bill “will be the silver bullet that brings sanity to pricing pharmaceuticals in the District,” but he believes states will be watching closely to see what happens with this “very new, fresh approach.” While the idea of a state seizing drug-patent rights and giving them to a generic manufacturer may seem extreme, remember that a growing number of state leaders, both Republican and Democratic, are already advocating illegal action, namely importing drugs from Canada, in a desperate attempt to get lower priced drugs.
States have always been a laboratory for innovative policies. Given the tremendous budgetary and constituent pressure on legislators to do something on drug costs, patent pending may take on new meaning.
Once again government will abuse its power to get what it wants.
They do it to the little guy all the time.
"debt-strapped states" ???
http://www.cafrman.com/
Who is John Galt?
*laugh* Yeah, right.
They should read that nursery rhyme about "Killing the goose that laid golden eggs".
Not to anybody with half a brain. The long-term consequence is that this outrage will mean the end of virtually all pharmaceutical R&D.
This idiotic and illegal property grab will do for pharmaceuticals what rent control did to housing stock.
What an effing disaster this will be if it stands.
The Constitution clearly states that Congress shall have sole jurisdiction over DC. The DC government is one of Congress' creatures.
Further, Congress passed the law that established patents, and the Constitution says that the federal government is in charge of patents.
You have a city councilman who forgot who he works for talking about a process of which he knows nothing. For DC to "seize" a patent would be like Congress revising patent law.
No doubt that's not going to happen.
There'd probably be more value in getting former Mayor Marian Barry, now a DC City councilman, to discuss different grades of cocaine. At least he's informed on the subject. This guy isn't.
First off, States are prohibitively excluded from legislating in this area since the Constitution preserves this arena solely to Congress. Secondly, even if states could condemn patents via emminent domain, they still have to pay value for such patents, which is quite high. Basically, they would end up paying the drug companies via increasing taxes. Either way, the consumer pays.
Finally, the Founding Father's provided the government the power to "promote the progress of science and the useful arts by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." They did so in order to provide an incentive to advance technology. Take away this exclusivity and there will be far reaching consequences. For example, who would invest large sums of money on the R&D necessary to create new technology of any kind (if drug patents fall, don't fool yourselves, other technology areas will go as well, i.e. the liberals will say next that "big computer companies are depriving school children of computers"), if they could not make their investment back and turn a profit? The answer is, nobody and I mean nobody, would spend R&D money and that means a huge loss in jobs, and a huge loss in the technological edge that makes this country great. In short, the quick, feel good (lower drug costs) liberal fix has unforseen, far reaching, negative consequences for this country (jee, how unusual).
The problem with high drug costs is not the drug companies. It is the fact that the government acts as a participant in this arena and screws up the operation of the free market system. Why should the drug companies produce more and cheaper drugs if their profit is capped by the government? What, blame the government, the party who is actually to blame, nah, lets demagogue the drug companies (Mr. Moore is producing a movie as I write this) and drive them out of business (screw the tens of thousands of people employed by the pharma companies). LETS TREAT THEM LIKE THE TABBACO COMPANIES. Yah, that is the answer, treat companies that improve human life like they are destroying human life.
Once again, we see Socialism rearing its ugly head. In a free society, you can't force companies to stay in a business if they aren't making money. If the drug companies don't exist, who develops the drugs? Either the government will, which means higher taxes, or uhhh, hmmmm, oh, did I say in a "free society" you can't force a company to stay in business, please excuse me, I forgot, socialism doesn't work in a truly free society. It is a requirement to take freedom away to make socialism work, see for example Canada, where nobody wants to be a doctor or doctors are leaving. What is the proposed solution there?
This is one of the worst, most evil ideas I have ever heard in my life.
My guess is that many aren't even aware of this yet. It's the first I've heard of it, anyway.
I'm tired of the U.S and our tax dollars funding Canada's discount drugs. It's time our government protects our companies against Canada. Eventually we will start seeing the bankruptcy of drug companies because of lawsuits and potential patent violations, resulting in fewer drug comapnies and less competition to find new drugs.
Socialist fools. When the drug industry goes down the tubes as a result, they'll blame it on greedy capitalists and continue to lament how the government needs central planning/control to save the world. But at least they'll 'feel' better believing that 'justice' has been done by eliminating some profit.
These fools deserve the hell they create. So do we if we do nothing to stop it.
Well maybe drugs would be cheaper across the board
if all countries paid fair share
Drug companies will develop overseas production capabilities in China and India where labor costs are so low that they can preserve their profits. Government mandated drug prices will drive high tech drug manufacturing jobs overseas.
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