Misusing the power of the patent

In 2010, author William Rosen called it “the most powerful idea in the world.”
In a book which took that quotation as its title, Rosen argued one big concept explains why humanity started inventing so many useful things in the 18th century and hasn’t let up since.
You might think that idea – which has led to everything from steam and electric power, to autos, aircraft, nuclear energy, computers, software and life-saving drugs – would be some fundamental scientific discovery or principle. Or maybe a method of inquiry that has enabled clever minds to understand forces of the natural world and to turn them into wonderful technologies.
But Rosen’s big idea wasn’t anything like that. It was a concept that evolved in British law over the century leading into the industrial revolution. It was the idea that “people had the right to own and profit from their ideas” – what we call intellectual property rights, or IPR.
In Rosen’s view, it was “recognition of a property right in ideas” that created a “protected space” for invention and “democratized” it.
If you could own rights to your invention, you could sell it or raise finance to further develop or market it. You didn’t have to be wealthy to invent. Once there was a clear path for inventive people to benefit from ideas, says Rosen, a flood of them began investing their mental labour “where they saw the greatest potential return.”
But even the most powerful idea is not all-powerful. It has to co-exist with other powerful forces in society. Like the determination of gravely ill people to survive – by accessing patented drugs they need to treat their illnesses.
People aren’t ready to die for the sake of someone’s IPR. So if owners of exclusive patents for vital drugs abuse their power in such matters of life and death, they can expect people to pressure governments to set limits on that monopoly power. And they can expect democratic governments to listen – as they should.
Last week, we saw that contest between the sick and corporate abuse of drug patents play out dramatically in a committee of the U.S. Senate. And, nominally at least, it was the corporate patent-holder who blinked.
J. Michael Pearson, outgoing CEO of Valeant Pharmaceuticals International, was excoriated by senators for the company’s business model of buying patents on older drugs that have a small market and no competition and then aggressively raising prices. A doctor pointed out that some of his 400 patients with the rare Wilson’s disease could die if they can’t get a drug whose price was quadrupled by Valeant.
With his firm under several investigations and its share value down 90 per cent, Mr. Pearson chose to be contrite: “It was a mistake,” he said, “to pursue, and in hindsight I regret pursuing, transactions where a central premise was a planned increase in the prices of medicines.”
That mea culpa and a promise to change pricing strategies is unlikely to be enough for lawmakers. Nor should it be.
Valeant’s pricing had nothing to do with funding invention and progress. It abused Rosen’s most powerful idea. Companies that do this in matters of life and death should be mindful: what law created, law can change, if it isn’t used in the public interest.
An editorial from the Halifax Chronicle-Herald (distributed by The Canadian Press)