Introduction
Patented brand drug pricing needs reform. In their journal article titled “Patented Brand Drugs are Essential Facilities and Regulatory Compacts,” researchers Clovia Hamilton and Gerald Stokes address the need for more affordable patented drugs, an issue particularly highlighted during the COVID-19 pandemic. Brand drug companies argue that they must recover their research and development (R&D), marketing, and advertising expenses.
What about the incentive to innovate?
The incentive to innovate should also be preserved.
Here are the key points:
- Intellectual Property and Human Rights Clash:
- Access to patented drugs raises tensions between intellectual property rights and human rights.
- Drug companies deserve a profit and return on investment, similar to utility monopolies.
- Proposed Approaches:
- Hamilton & Stokes proposes several solutions to this dilemma.
- They conclude that patented drugs should be considered a public utility.
- A model based on the public utility approach could set prices for essential drugs transparently, similar to electricity rates.
The COVID-19 health pandemic highlighted the need for more readily affordable patented drugs. Brand drug companies claim they must recover the costs of research and development (R&D), marketing, and advertising. They emphasize the importance of maintaining incentives for innovation. These companies assert their right to earn profits and secure returns on investment, similar to the guarantees provided to utility monopolies. Intellectual property rights often conflict with human rights when it comes to access to patented medications. We propose several strategies to address this conflict and argue that society should treat patented drugs as public utilities.
A public utility model offers a compelling framework for pricing essential drugs and treatments. However, drug companies and insurers should not determine prices through closed-door negotiations. The current system of pricing patented brand-name drugs requires reform. Stakeholders should negotiate prices publicly and transparently, just as they do with electricity rates. Investor-owned utilities demonstrate that essential services can remain profitable while benefiting consumers and delivering steady returns to investors. Drug manufacturers of essential medicines can achieve the same balance.