Baker, Center for Economic and Policy Research Senior Economist, 20

Patent monopolies actually are causing even worse problems than Phillips indicates. For example, he notes that Gilead is likely to charge very high prices for its drug remdesivir, the first drug that shows clear evidence of being an effective treatment for the coronavirus. It turns out that Gilead has developed another drug, GS-441524, that holds equal or better promise as a treatment for the coronavirus, and is easier to manufacture. The reason that Gilead is pursuing tests with remdesivir, and not GS-441524, is that the patent is much newer for remdesivir, and therefore it can expect many more years of a patent monopoly for this drug.

Another problem with patent monopoly supported research is the incentive to lie about results. We may have seen this with the limited test results reported by Moderna, which were the basis for its jumping ahead with the clinical testing of its vaccine. These reports were sufficient to send its stock price soaring, leading to big payouts for top executives, even if they may not provide much evidence of the vaccine’s effectiveness.

Patent monopolies often lead companies to lie about the safety and effectiveness of their drugs. Merck was forced to pay billions over allegations that it withheld evidence that its blockbuster arthritis drug, Vioxx, increased the risk of strokes and heart attacks. More recently, opioid manufacturers are paying out billions to settle suits claiming they lied about the addictiveness of the new generation of opioids they were pushing. The incentive for such harmful lies largely disappears when drugs are selling in a free market without patent protection.

The possibility for misinformation is also hugely reduced when all research is open-sourced, which is another very big part of the picture with responding to the pandemic. Since we are confronting a worldwide problem, ideally we would have all results posted to the web as quickly as possible so that researchers everywhere could benefit from successes and learn from failures. This is happening to some extent, but the continuing pursuit of patent monopolies, especially in the United States, is slowing progress.

The really perverse part of the story with the development of coronavirus treatments and vaccines is that the government is already picking up most of the tab for the research. Patent monopolies are supposed to be a mechanism for providing companies with incentives to do research, but if the government pays for the research upfront, they just obstruct progress and lead to high prices for whatever may be developed. As a condition of funding, the government should be requiring all results be posted as soon as practical (the Bermuda Principles for the Human Genome Project is a good model), with everything in the public domain, so that it can be produced as a generic from day one.

Companies can still make a profit from their research, and manufacturers can still profit from selling drugs, but their profits would be more like the profits made by manufacturers of plastic cups and paper plates. Drugs would be cheap.[2]

Medical equipment is a similar story to prescription drugs. MRIs, kidney dialysis machines, and other types of medical equipment are expensive because we give companies patent monopolies. Without these government-granted monopolies, these items would be a small fraction of their current price. To take one example that has been in the news, a ventilator typically sells for $25,000 to $30,000. A group of researchers developed an open-sourced model that they calculated could be made for $400 to $500. In nearly all cases, if medical equipment was sold in a free market without patent monopolies, it would cost just a small fraction of the current price.