According to the Guardian there has been a promising development in the area of pharmaceutical patents: GlaxoSmithKline is starting a patent pool for neglected diseases and third world diseases, as well as substantially discounting medicines for the third world. On the one hand the need for a patent pool gives some indication of the R&D gridlock that has been caused by patents. On the other, patent pools have historically(for example in the steel industry) helped break some of the gridlock. (hattip to Ernie Berndt.)

from the Guardian article:

"Drug companies have been repeatedly criticised for failing to drop their prices for HIV drugs while millions died in Africa and Asia. Since then, campaigners have targeted them for defending the patents, which keep their prices high, while attempting to crush competition from generic manufacturers, who undercut them dramatically in countries where patents do not apply...."

Which is the real, profit-motivated reason for drug companies to drop prices. They can't compete with the generics in developing countries if they don't drop prices.

"Witty pledged significant changes to the way the drug giant does business in the developing world.

He said that GSK will:

• Cut its prices for all drugs in the 50 least developed countries to no more than 25% of the levels in the UK and US...and make drugs more affordable in middle-income countries such as Brazil and India."

Again, there's nothing noble about GlaxoSmithKlein's motivation. They're dropping the prices to increase sales in other countries.

"• Reinvest 20% of any profits it makes in the least developed countries in hospitals, clinics and staff."

How about if they "reinvested" 100% of the money spent on TV advertising into research and price reductions?

"• Invite scientists from other companies, NGOs or governments to join the hunt for tropical disease treatments at its dedicated institute at Tres Cantos, Spain...."

So they're inviting "scientists from other companies, NGOs, or governments" to share in the cost of drug research & development while GlaxoSmithKlein reaps the profits. How altruistic of them!

"Campaigners privately say the move is remarkable, although they worry that it may undermine the generics industry which currently supplies the cheapest drugs in poor countries."

In fact, undermining their competition in the generics industry is a prime motivator, which also makes it a profit-generator.

"I think the shareholders understand this and it's my job to make sure I can explain it. I think we can. I think it's absolutely the kind of thing large global companies need to be demonstrating, that they've got a more balanced view of the world than short-term returns."

What nonsense. In fact, its their returns that they're trying to increase. Continuing to charge 1st world prices in 3rd world countries reduces sales, profits, and returns. But selectively dropping prices in 3rd world countries increases sales, and thus increases profits and returns.

There's nothing in GlaxoSmithKlein's proposals that isn't motivated by self-interest. They've simply concocted a spiel to make it sound like these changes are motivated by altruism, rather than their true greed-fueled motivation. If Big Pharma had the slightest bit of altruistic motivation, they'd drop prices in 1st world countries as well, and end their direct-to-consumer television advertising which is designed solely to encourage patients to request unnecessary medications from their doctors.

Economic Populist Forum