Three Years of Hell to Become the Devil: Findlawless.com and Economic Illiteracy

Joanne Mariner brushes off her obviously unused calculator today to bring us a tale of AIDS, America, and numbers:

Here are some numbers to consider: 14 million, 35.9 billion, and one.

The first figure is an estimate of the number of people who will die of AIDS and other treatable diseases over the course of the coming year, most of them in the poor countries of the developing world.

The second figure represents the combined 2002 profits, in dollars, of the ten biggest pharmaceutical companies, according to Fortune magazine's annual analysis of America's largest businesses.

The third figure corresponds to the number of countries that, last Wednesday, November 19, voted against a U.N. resolution on access to drugs in global epidemics such as HIV/AIDS, tuberculosis and malaria. The resolution emphasized that the failure to deliver lifesaving drugs to millions of people who are living with HIV/AIDS constitutes a global health emergency. 167 countries voted in favor of the resolution. The single vote against it was cast by the United States.

Here's a number for Ms. Mariner: zero.

That figure represents the number of her statistics that are remotely relevant to her ensuing argument that the U.S. should weaken its stance on TRIPS and allow generic copies of its drugs to be sold outside America.

Forget what your opinion on the matter is: I withhold mine since I honestly admit I don't have the information to make a decision. Ms. Mariner doesn't give that to you either. Some relevant figures she might look for, though:

Unknown: The number of AIDS/HIV deaths that would have occurred throughout the developing world without effective HIV treatments coming to market. This is important because her other figures don't tell you...
Unresearched: The number of the top ten drugs companies listed by Ms. Mariner who manufacture the anti-HIV drugs in question--after all, why lump in companies not in that line of business?
(And, incidentally, her bottom-line profit number is meaningless anyway without knowing the investment that generates that return, a figure that she might have gotten without much trouble. If that number is a low-to-middling profit margin, well, investors might start moving their money into frozen yogurt franchises. Note that she seems to know this, since the title of her piece mentions profit margins, but nowhere else does.)
Unresearched: The average return on investment made by the top ten (well, I'm using her cutoff, assuming she has a reason) companies pursuing anti-HIV drugs projects to date, including all projects (or investments in third-party companies) that have failed to produce effective results.
166: The number of countries who, because free-market U.S. health care purchases provide a greater percentage of the necessary profit margin to recoup for drug development, benefit from the free-rider problem that thus results, and yet voted for the UN resolution mentioned by Ms. Mariner
Uncountable: The number of people who die in the next epidemic if, at present, the rate of return on the HIV drugs is low or negative and thus discourages drug companies from investing.

I know, I know. You're saying, "Tony, this is just one of your screeds on free-market capitalism, and yes, we know her numbers are irrelevant but you wouldn't support her anyway." Wrong. I'm actually quite open to the idea that perhaps intellectual property protections have to be refit to match the needs of a global marketplace. After all, the same argument I make against the RIAA on file-sharing holds just as well against drug companies. If they're making unjust profits because of government-granted monopolies on intellectual property, then by all means, we should change the rules and spur innovation rather than protect the overfattened pockets of existing corporate structures.

But Ms. Mariner, you can't get there from here on a set of statistics that would be a failed answer to a third-rate LSAT problem. You write for FindLaw, a site which is read by lawyers, law students, and those who would like to be law students. You owe it to them to be better in your use of statistics and logic. At least, that's what they keep telling us it means to 'think like a lawyer' here in law school.

Comments

Look, there is a bit in the WTO arrangements that lets any country break any copyright or IP clause if it needs to do so in the event of a 'national emergency'. So if Swiss based Pharma X has a vaccine for TB+ and an outbreak of TB+ hits Chicago on a 'national emergency' scale then uncle Sam can make the vaccine. Many African countries have massive problems with HIV/Aids easily enough to trigger the national emergency issue. (Just imagine if this was happening in Louisiana) However they don't have the factories, technology or know how to break the patent. This is why firms in India and Brazil have now done it for them which apparently is illegal. Recently a few big pharma firms accepted this to avoid a wholesale rewriting of the rules. Of course what's really bugging you is the insinuation in the article that your government has been bought. It has. M

Posted by: martin | November 25, 2003 5:02 AM

Following up my last bit... I should check the rules (which doesn't mean I will) imagine a bunch of UN scientists and mobile facilities being sent to African nations that need this stuff to bust the clause about having to be made onsite... M

Posted by: martin | November 25, 2003 5:08 AM

No, Martin, sorry, that's not really bothering me. I've never met a government that wasn't bought. Anyway, the national emergency clause you speak of doesn't begin to address the statistical case I made: if such mobile teams as you suggest were to be set up, would it lower drug company's profits to the point they're not made again? You're the one who worries about the U.S. being bought. I just want to make sure the price is right.

Posted by: A. Rickey | November 25, 2003 8:41 AM

Hmm, from a man who once told me (at length over many drinks) that special interest donations *could not* buy influence thats interesting. Interestingly evidence from drugs where patents have expired suggests that pharma companies can sustain supernormal profits against generic drugs through superior brand awareness. (I want *real* Paracetamol...). On the other hand there's no point denying that this wouldn't collapse profits. The argument then becomes does this collapse profits to the point where R&D ceases or slows significantly? In theory given the market failure that currently exists this is an ideal point for state intervention... Governments would appropriate some of the savings produced by drugs being cheaper and invest these in R&D. So when the NHS's prescription drug bill falls by $2Bn a year the govt offers a $1Bn a year contract for the development of treatments x,y and z. Merck, Pfizer, Glaxo and co all bid. This results in a clear connection between what Big Pharma claims it needs money for (R&D) and what they get paid for (R&D). Meanwhile drug prices to the end user drop and R&D can be targetted more effectively since govts can co-operate to efficiently use funds rather than see companies 'race' each other to the same goal with 50% of the investment ultimately being lost (there is a name for that inefficiency but I forget it). Alternatively govt keeps the savings and uses them to buy out patents that are developed commercially. More competition, but much greater likelihood of the 'race' inefficiency described above. I've prepared you a reading list on this debate at Monograph if you haven't noticed - more cause I needed to brush up myself than anything else.

Posted by: martin | November 25, 2003 9:19 AM

Saw the list. I'm saving it as a reward for when I'm done with my contracts outline. ;) As for the "special interest donations can't buy politicians"/"all governments are bought" discrepancy: I don't think it's the drugs companies who are doing the buying, at least not through donations. Politicians are in hock to the fact that these are domestic industries, that economically being the center of the worlds drug development is pretty useful, and through the jobs (mmmmm.... white-collar, high-tech jobs) it supports. In the meantime, AIDS victims in Africa just aren't a big constituency. On the other hand, European governments don't have a constituency in either (a) American drug firms whose profits are at stake or (b) AIDS victims in Africa, so they can move with their constituencies, heart-on-sleeve. See? All governments bought, no donations required. ;)

Posted by: A. Rickey | November 25, 2003 1:38 PM

I question how much profit the drugs companies are losing if poor Africans making the equivalent of $1 a month are getting freebies. Besides, it would make some good PR to show drug company CEOs handing out pills in hospitals. In any event free AIDS drugs are not the answer to this problem. Why? Because there is no cure for AIDS. The drugs do prolong life and probably alleviate suffering, however they do not "save" any lives, because the people taking those drugs will still most likely die from AIDS. On the other hand, condoms and sex education do assist in preventing people getting infected in the first place, thus saving lives. Money and effort spent on copying and arguing about generic AIDS drugs would be better spent on education.

Posted by: falconred | November 25, 2003 2:15 PM

"I question how much profit the drugs companies are losing if poor Africans making the equivalent of $1 a month are getting freebies." Are you suggesting that because these people could not pay much, American drug companies could provide the medication for free without losing any profit? It's certainly true that, if the drug companies were going to sell drugs to impoverished African AIDS victims anyway, they would sacrifice very little by providing those drugs for free. But, of course, the drug companies aren't going to sell to $1-a-month wage earners because it wouldn't be enough to recoup the average cost of producing the medication (including R&D). (I exclude the unlikely scenario where the high fixed costs have already been paid but the marginal cost of producing the medication is absurdly low -- consider selling an empty seat on an airplane -- in which the drug company might sell below average cost.)

Posted by: S | November 25, 2003 2:53 PM

One also has to consider that in many cases, the best use that the possessors of the newly created generic drugs will have for them is to sell them on the worldwide market, even if it's a 'grey' area...

Posted by: A. Rickey | November 25, 2003 2:56 PM

Let me also throw in that were the U.S. to eliminate to 1. eliminate the global "gag rule" that results in some health clinics in Africa losing foreign aid because they dare suggest abortion 2. eliminate our absurd agricultural subsidies (and coerce the EU to do the same) the long-term health of Africa might be improved, because, as FalconRed pointed out, AIDS drugs are not long-term solutions.

Posted by: Matt | November 25, 2003 3:57 PM

Tis true, what the world needs is condoms not catholicism (see the Brazilian success story), free trade not aid (although aid is nice) and generic drugs. On the news last night some African state of 1m people, 400 000 are HIV +ve, of which 180 000 are adults. In otherwords atleast half the future generation of this nation will be HIV +ve. For nations like this AIDS drugs are the only way to avoid economic meltdown. Will some of these drugs end up on the grey market - hell yes. In the mean time I question Tony's assertion that all big pharma companies are American, as are all their laboratories, factories and suppliers. (I don't know, it just seems unlikely)

Posted by: martin | November 27, 2003 4:26 AM

Not all--and most of them are pretty global in scope these days anyway. But there's a substantial American edge in that market. And, in a global market, the higher drug prices in the U.S. will still provide a greater percentage of the profits of even foreign producers, at least on a pill-for-pill or project-for-project basis.

Posted by: A. Rickey | November 27, 2003 4:33 AM

In my opinion for nations like this AIDS drugs are the only way to avoid economic meltdown, because event free AIDS drugs are not the answer to this problem, because there is no cure for AIDS. The drugs do prolong life and probably alleviate suffering; however they do not "save" any lives, because the people taking those drugs will still most likely die from AIDS.

Posted by: Susan R | January 10, 2006 7:03 AM

Sadly, every year is closely related. To protect their exorbitant profits, drug companies are fighting the production and distribution of cheap generic versions of patented drugs. Unable to afford the medicines necessary to save their lives, millions of poor people die of treatable illnesses every year.

Posted by: mac | February 8, 2006 5:02 AM

Findlawless.com and Economic Illiteracy

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