Tomorrow is the 150th anniversary of an
infamous Act. In 1850, Congress passed the
Fugitive Slave
Act, making the federal government responsible for
tracking down escaped slaves in the North and
sending them back to slavery. The Act galvanized
anti-slavery opinion and contributed to the
development of the "Underground Railroad" to
assist passage to safety in Canada. In turn, the
Underground Railroad emboldened the Abolitionist
movement, strengthening the belief that slavery
could be imminently destroyed.
In a "lame duck" session after the November 1994
election, Congress passed legislation creating the
World Trade Organization, including the
controversial "TRIPS" Agreement that extended the
length of U.S. patents to 20 years and made this
an international standard. This made the federal
government responsible for tracking down countries
that promote generic drugs and punishing them.
Just as the Southern slaveholders insisted that
Congress extend their "property rights" to the
North, so
the pharmaceutical companies demanded that the
U.S.
government act to guarantee them monopoly profits
overseas.
In each case Congress acted to strengthen the
legal protection for a "property right." In each
case
the "property right" was one which public opinion
justifiably held to be fundamentally immoral, and
contrary to the fundamental human right to life
and liberty.
Al Gore and George Bush have plans for extending
insurance coverage for prescription drugs. Neither
plan directly addresses the fundamental problem:
the price gouging by pharmaceutical companies
enabled
by our current system of granting long patents -
monopolies - to pharmaceutical companies for life-
saving drugs.
Gore's plan comes much closer, and that's why the
pharmaceutical companies are against it. They fear
that if a prescription drug benefit were added
directly to Medicare, Medicare could use its
bargaining power to force down the prices paid for
prescription drugs.
The Washington Post reports that the Office of
Personnel Management cancelled a project for
providing prescription drugs at discount prices to
federal law enforcement officers after Merck and
Pfizer refused to participate. Merck and Pfizer
say the health plan for law enforcement officers
is
not a federal government agency so they should not
have to give it the same discounts as it gives the
federal government. The OPM notes that
prescription drug costs make up more than 25
percent of the
cost of health care in the Federal Employees
Health
Benefits Program.
Bush says he's against the prescription benefit
for Medicare because it would increase "Big
Government" and people should be "free to choose"
by getting
tax subsidies to help them purchase coverage in
the
market. But what he really opposes is the
government using its market power to drive down
prices for
consumers.
Bush's rhetoric is hollow when one considers how
the federal government is already intervening in
the
market. The federal government pays for the
research that develops many drugs, it gives the
drugs to
pharmaceutical companies, then allows them to
patent the drugs, giving the companies a monopoly
and
protecting them from competition.
So it's fine, according to Bush, if Big Government
intervenes in the market to subsidize
pharmaceutical companies through federally funded
research; it's
fine if Big Government intervenes in the market
again through patents to protect drug companies
from competition from generics, thus driving up
prices
and industry profits, but if the government
intervenes to drive down prices with its
purchasing power it's Big Brother.
In the case of the anti-ovarian cancer drug Taxol,
the U.S. spent millions of dollars on research,
gave exclusive marketing rights to Bristol-Myers
Squibb, and then on behalf of BMS threatened South
Africa
with trade sanctions under the WTO for licensing a
generic competitor to Taxol.
Patent abuse is not only a problem with
prescription drugs. In a case going before the
Supreme Court,
UNOCAL was granted a patent for a "process" which
was basically the writing down of a government
regulation for cleaner gasoline. This absurd
patent has driven up gas prices.
However, because access to essential medicines,
particularly in poor countries in Africa and
elsewhere, is a life-and-death issue, this would
be a good place to start reforming our patent law.
While Congress kowtows to the pharmaceutical
industry, let us consider an "Underground
Railroad" for the international and domestic
distribution of
patented drugs.
Robert Naiman is senior policy analyst at the Center for Economic and Policy Research.
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