This week, presidential wannabe John Edwards revealed health-care ideas that would blast drug research and development in this country right back to the Stone Age. At the core of Edwards’ plan is a scheme to strip patent protection from breakthrough drugs to get them more widely distributed with lower costs.
That whooshing noise you hear is the sound of all venture capital exiting the industry. Say goodbye to breakthrough drugs, because if Edwards has his way, there won’t be any. Research budgets at pharma giants like Pfizer (NYSE: PFE) and Merck (NYSE: MRK) and at biotech firms like Genzyme (Nasdaq: GENZ) and Millennium Pharmaceuticals (Nasdaq: MLNM) will dry up if this plan goes into effect. Once again, we see that common-sense economic policymaking has no place in presidential politics.
Patents are critical in new drug development. They are the only financial incentive that makes drug research a viable undertaking. This is simple reality. Drug development is wicked expensive and incredibly risky. Companies cannot embark on such ventures without appropriate financial compensation. Patents are a key part of a system where drug companies are paid for the risks they take. This has led to the creation of important new medicines over the past few decades and has made the U.S. drug industry the best in the world.
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