The holder of a product patent has exclusive rights over the manufacture and sale of the product until the patent expires. It is a legal monopoly. By definition, when a drug is still under patent price competition is precluded.
A most vociferous opponent of legal monopolies on medicines was Senator Kefauver who advocated 'the long-held moral belief that no one should have the right to withhold from the public products which relieve suffering and may spell the difference between life and death'. Nations differ in the extent to which they permit legal monopolies over medicines. Many countries will not patent medicinal products, but grant the much weaker protection of patents for a particular method of producing a drug (e.g. Argentina, Austria, Cameroon, Central African Empire, Chad, Chile, Colombia, Congo, Dahomey, Denmark, Egypt, Gabon, Ghana, Greece, India, Ivory Coast, Madagascar, the Netherlands, Pakistan, Senegal, Spain, Sweden, Switzerland, Upper Volta, Uruguay, Venezuela, Yugoslavia). A dwindling number of countries grant neither product nor process patents (e.g. Brazil, Iran, Italy,2 Republic of Korea, Turkey). A number of countries which recognise both product and process patents have adopted provisions for compulsory licensing of competing firms to produce the product in the public interest (e.g. Australia, Canada, Federal Republic of Germany, Great Britain (repealed in 1977), Israel). Senator Kefauver once went close in the United States to winning support for a proposal to reduce the period of patent protection for drugs to three years. At the end of that period the discoverer would have to make the product available under licence to all competitors for a royalty fee of up to 8 per cent.
Of course the rationale for patents is that they provide an incentive for innovation. The question that Kefauver was asking, however, is how much incentive is sufficient. In addition to undermining competition there are other ways that the quest for patents can run counter to the public interest. During the Second World War, Dr V. Bush, director of the US Office of Scientific Research, was responsible for getting the drug companies to make the new wonder drug, penicillin, available in quantity for the war effort. In April 1943 Bush reported that the companies had co-operated 'after a fashion'. In a letter to an Army Air Corps consultant, Dr Bush complained: 'They have not made their experimental results and their development of manufacturing processes generally available, however . . . this is the problem' (Mintz, 1967: 366). The problem was that 'the firms were too busy trying to corner patents on various processes in the production of penicillin to produce much of it' (Harris, 1964). The co-ordinator of the War Production Board's special penicillin programme, Albert L. Elder, wrote in a January 1944 memorandum:
The value of penicillin in saving the lives of wounded soldiers has been so thoroughly demonstrated that I cannot with a clear conscience assume the responsibility for coordinating this program any longer while at the same time being handicapped by being unable to make available information which would result in the output of more penicillin and thereby save the lives of our soldiers (Mintz, 1967: 366).
Another way that the patent mechanism rebounds against the public interest is through creating incentives for research effort to be directed at 'me-too' drugs rather than therapeutic advances. In Chapter 3 we saw that the great majority of new products which come on the market are molecular manipulations of products already under patent. They are attempts to get around the legal monopoly by patenting a me-too product which is molecularly distinct but therapeutically identical. Scarce research talent and money are directed at me-too research precisely because of the patent system. Me-too research has occasionally stumbled upon significant therapeutic advances (e.g. prednisone from cortisone; Thorazine from the early antihistamines). Yet how much more of value might these scientists have discovered if their goal had been the maximum advancement of medicine instead of finding a loophole around a patent?
Former Squibb medical director, Dr Dale Console, testified
before a Senate subcommitte that during his tenure at Squibb an estimated 25 per cent of research funds were devoted to 'worthwhile' projects, and 75 per cent to the development of me-too drugs and unimportant combination products. Console testified that 'with many of these products, it is clear while they are on the drawing board that they promise no utility. They promise sales. It is not a question of pursuing them because something may come of it. . .it is pursued simply because there is a profit in it' (Silverman and Lee, 1974: 40). Patent laws also restrict the capacity of industry researchers to consult with outside scientists on the progress of their work. To do so might endanger the secrecy of a patentable innovation. One of America's most eminent pharmacologists, Professor Kenneth L. Melmon, testified before the Senate: 'I know for a fact that the present patent laws have prevented my scientific cooperation with industry' (Subcommittee on Health, 1974, Part 2: 685).