Socialize Big Pharma Research

I ran across this post at Jacobin called “Socialize Big Pharma.” The basic argument is simple. We need more antibiotic drugs, and pharmaceutical companies aren’t trying to produce them. Therefore we need to eliminate the private pharmaceutical sector altogether, putting a socialized system in its place.

I found the post odd for a number of reasons, but mainly because it seems to totally miss the drug patent system at the center of the dysfunction the author is so concerned about. Drug patents are state-granted monopolies over manufacturing specific drugs. This time-limited monopoly system allows drug companies to generate massive rents for as long as the patents last. The possibility of capturing those massive rents is what is supposed to motivate private companies to undertake drug research.

But, as Dean Baker has famously argued, the drug patent system is a ridiculous way for the state to go about making drug research happen. For $30 to $80 billion per year, the federal government could totally replace the research private drug companies undertake. If it combined this replacement spending with an abolition of the drug patent system, consumers would save $270 billion a year due to the elimination of patent-generated rents. Additionally, the publicly-funded drug research could be directed towards more socially valuable drugs, e.g. the antibiotics that the author of the Jacobin piece is so frantic about.

I was stunned by how badly the author missed the point. The piece is a great testament to the way in which incumbent institutions (in this case drug patents) get so ingrained into our understanding of reality that we barely take notice of them. So here, the author ends up totally overlooking drug patents on the way to reaching the unnecessary conclusion that the entire pharmaceutical industry needs to be socialized. In reality, the author’s complaint should lead him to indict the patent system as a failed way to generate good drug research. This then supports the idea that we should publicly fund drug research, a point many authors have already made. It does not, by itself, say anything about the need to socialize the firms that run the pill-making machines, this being the conclusion the author oddly comes to.