Crossposted from Daily Kos
Until recently, the pharmaceutical industry enjoyed the highest profits of any industry in the Fortune 500. In recent years, the industry’s position has declined—to fifth place in 2006, and second place in 2007. These extraordinary profits depend entirely on "intellectual property protections" (IPP). The most fundamental example of such protection is a patent, a form of IPP available to all inventors. For big pharma, however, Congress has created a unique IPP regime, one that gives the industry advantages enjoyed by no other industry.
This regime, developed during the past quarter century, has created perverse incentives for pharmaceutical companies to game the system in order to extend their monopolies in legal, but questionable, ways. It also created a situation in which some kinds of pharmaceuticals have exhausted their period of legal protection, but cannot be manufactured by a competitor. And it created a regime that places the financial burden of research and innovation on people unfortunate enough to get sick in the US.
The industry unleashes 1,100 lobbyists and $182 million per year (2005-06 numbers) to persuade Congress that it operates under unique circumstances that justify this special treatment. The industry also argues that it must retain the financial advantages this regime confers on it if it is to continue to perform the research and development necessary to bring new drugs to market. (I previously refuted this argument.)
These are very complex issues. Few people outside the industry and the relevant committees in Congress even know they exist, let alone their content. To facilitate understanding of this difficult, obscure, but important set of issues, I will post four diaries describing 1) the statute that created the basic regime governing pharmaceutical intellectual property rights in the US; 2) additional statutes that extended pharmaceutical IPP even beyond that granted by the basic regime; 3) the additional problems that emerge when companies exploit "loopholes" in the system, how one of those loopholes work, and current legislative proposals to repair the loophole, and 4) the changes in the healthcare environment that place the continued viability of this regime in question.
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