July 05, 2007
Brazil Gets a Better Deal
When I was visiting Brazil in early May, that country was enmeshed in touchy negotiations with Abbott Labs over the price of one of its more important AIDS drugs -- Kaletra. Brazil was threatening to issue a compulsory license that would enable it to begin generic manufacturing unless Abbott lowered the price. The Wall Street Journal went into high dudgeon mode, railing against countries that rip off the intellectual property of U.S.-based multinational drug companies. Given the uproar, I went out of my way to visit with a local economist/politician, who said the threatened compulsory license was nothing more than a negotiating tactic on the part of the Lula da Silva administration.
Today's news confirms his view: Reuters is reporting that Abbott Labs has agreed to lower the price of Kaletra by nearly 30 percent for Brazil. If it works for Brazil, why not Medicare, which was specifically forbidden by the 2003 Medicare Modernization Act from negotiating lower drug prices on behalf of U.S. seniors -- and the taxpayers.
Why shouldn't Medicare threaten compulsory licensing as a pressure tactic to negotiate better prices? Two answers.
The straightforward one is that pressure tactics can be used by cowboys such as Brazil's prez better than by the bureaucrats we have dealing with drug cos. (Now if Chaney were on the side of the Angels. . . but then to ride roughshod, the way he has, ipso facto violates our rules--and he's no Teddy Roosevelt) threats need to be credible and in fact legitimate. To resort to such tactics we need to set a policy that authorizes compulsory licensing. Far, far better that we set a policy that involves government co-ownership of the results of medical research that it co-sponsors, with the rewards for innovation designated up-front--and also have the government, or a truly independent agency, well-funded by taxpayers, perform continuing research and data collection once drugs hit the market. Sigh.
The cynical answer is that our compatriots have been convinced to vote in (admittedly with the help of the supremes) an administration and Congress that put lives after companies. Democracy in action.
The integrative answer is that the money to do things right is unavailable because we have a system that is set up to reward those who buy votes for greed and death-dealing far more commonly than for individual innovation and life-affirmation.
At least there are the odd computer innovators to maintain the sense that, metaphorically, "Every boy can grow up to be President," in terms of invention raising an individual to shine without a n existing megacorp's adoption.
Posted by: davey at July 6, 2007 08:42 AM