Sun, May 12, 2013 - Page 9 News List

Harsh intellectual property regimes smothering development

By Joseph Stiglitz

The US Supreme Court recently began deliberations in a case that highlights a deeply problematic issue concerning intellectual-property rights. The court must answer the following question: Can human genes — your genes — be patented? Put another way, should someone essentially be permitted to own the right, say, to test whether you have a set of genes that imply a higher than 50 percent probability of developing breast cancer?

To those outside the arcane world of intellectual-property rights, the answer seems obvious: No. You own your genes.

A company might own, at most, the intellectual property underlying its genetic test; and, because the research and development needed to develop the test may have cost a considerable amount, the firm might rightly charge for administering it.

However, a Utah-based company, Myriad Genetics, claims more than that. It claims to own the rights to any test for the presence of the two critical genes associated with breast cancer — and has ruthlessly enforced that right, though their test is inferior to one that Yale University was willing to provide at much lower cost.

The consequences have been tragic: Thorough, affordable testing that identifies high-risk patients saves lives. Blocking such testing costs lives. Myriad is a true example of a US corporation for which profit trumps all other values, including the value of human life itself.

This a particularly poignant case. Normally, economists talk about trade-offs: Weaker intellectual-property rights, it is argued, would undermine incentives to innovate. The irony here is that Myriad’s discovery would have been made in any case, owing to a publicly funded, international effort to decode the entire human genome that was a singular achievement of modern science. The social benefits of Myriad’s slightly earlier discovery have been dwarfed by the costs that its callous pursuit of profit has imposed.

More broadly, there is increasing recognition that the patent system, as currently designed, not only imposes untold social costs, but also fails to maximize innovation — as Myriad’s gene patents demonstrate.

After all, Myriad did not invent the technologies used to analyze the genes.

If these technologies had been patented, Myriad might not have made its discoveries. And its tight control of the use of its patents has inhibited the development by others of better and more accurate tests for the presence of the gene.

The point is a simple one: All research is based on prior research. A poorly designed patent system — like the one we have now — can inhibit follow-on research.

That is why we do not allow patents for basic insights in mathematics. And it is why research shows that patenting genes actually reduces the production of new knowledge about genes: The most important input in the production of new knowledge is prior knowledge, to which patents inhibit access.

Fortunately, what motivates most significant advances in knowledge is not profit, but the pursuit of knowledge itself. This has been true of all of the transformative discoveries and innovations — DNA, transistors, lasers, the Internet and so on.

A separate US legal case has underscored one of the main dangers of patent-driven monopoly power: corruption.

With prices far in excess of the cost of production, there are, for example, huge profits to be gained by persuading pharmacies, hospitals, or doctors to shift sales to your products.

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