The Patent Monopoly

By Author: Steven Johnson
Total Articles: 494
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Many centuries ago, a clever inventor had a great idea. Unfortunately, when all the other clever people saw what he had made, they simply copied the work. Our inventor was disappointed. He had been hoping to earn a few dollars. Over time, governments saw this discouraged inventors. If inventors had spent time and money developing a product, they deserved some protection. So the law of patents was born. The way it works is simple. If you invent something new, you are allowed a monopoly. For a fixed number of years, only you can sell this product. This gives you the freedom to keep the prices high and earn back the money you invested during the research and development phase. On paper, this sounds a great system. Inventors are encouraged to bring new products to the market. We get access to the best of these new products. Everyone is happy.

Except, it doesn't work out so well in practice. What we find is that inventors keep their prices high long after they have recovered their development costs. They just want to make more money and, since no one is allowed to copy their work, we get only one choice: pay or go without. ...
... Indeed, patents have become so important, the laws are extended to other markets through international trade agreements. Now a product's success is not judged by one market, but by how well it sells around the world. This puts great pressure on governments to agree the same system of legal protection in every country. Fortunately, from our point of view as consumers, the rigor of the US laws has not yet been accepted in many countries. This allows other manufacturers to enter the market and offer price competition.

The monopoly in the erectile dysfunction market has just been reinforced. A US court has ordered Teva Pharmaceutical Industries Ltd, a company based in Israel, not to distribute a copy of the erectile dysfunction drugs in the US until 2019. For the three manufacturers with US patents, this is a major victory, but maintaining the high retail prices is a fundamentally unfair result. If you lived in one of the countries with a lower level of protection for manufacturers, you could already buy a generic copy from Teva. If you go to an online pharmacy that also happens to be based in a low protection country, you can have the cheaper drugs shipped to you. But, as a man living in the US, you are forced to pay top dollar if you take a prescription into a brick-and-mortar drugstore.

It's not that anyone wants to deny the US manufacturers their right to recover the R&D costs quickly. We all understand how expensive it is to invent new drugs and have them approved by the FDA. But once they have recovered their costs and made a reasonable profit on the investment, manufacturers should have to compete. As it is, we're being victimized. Levitra and the other two drugs are kept at artificially high prices. Worse the US courts are not protecting our interests as consumers. It's a decision by U.S. Judge Rebecca Beach Smith. Obviously, she's not worried by the prices for a male product.