Patent Immorality?

Is patent protection for drug companies a moral matter? David Resnik and Kenneth De Ville (2002) say yes, and they call for protection far in excess of what world trade law requires—protection that could consign millions to premature death. Resnik and De Ville correctly observe that U.S. and international legal safeguards for intel- lecual property are built on utilitarian rationale. State- sanctioned monopolies for the products of human invention and high-risk investment foster innovation, the standard story holds. Intellectual property law should seek a social welfare-maximizing balance between promoting future innovation and making the benefits of prior innovation broadly affordable. We agree. But we think nothing is gained and much is risked by making this standard story into a matter of morality. And we believe that the balance Resnik and De Ville strike is dangerously wrong.

Morality talk has force beyond policy talk because we reserve it for special occasions. Moral claims connote right and virtue; policy claims do not. At best, good policy is prudential, pragmatic, even wise. It is not a matter of honor. Killing and stealing are matters of character in a way that public utility rate-setting and the conferring of broadcast licenses are not. The contemporary regulatory state renders myriad judgments about when to constrain market actors' conduct in the interest of productivity, health and safety, or other measures of social welfare. Restricting competition in order to reward technical innovation involves this type of judgment. Presenting such policy making as moral choice makes morality into a Weimar currency, diminished in its power to motivate via honor or shame. Ethicists, like industrial polluters, need to take account of the "tragedy of the commons." They employ a scarce resource, one at risk of exhaustion from overuse.

Not only do Resnik and De Ville overreach by making intellectual property protection into a matter of moral right and wrong; they misrepresent the relevant law and misapply the utilitarian rationale for patent protection. Contrary to what they suggest about the World Trade Organization (WTO) treaty governing intellectual property, this treaty allows governments to override patents absent "national emergency" or "circumstances of extreme urgency." So long as a government first seeks permission from a patent holder "on reasonable commercial terms," it can then act unilaterally to override the patent (Agreement on Trade-Related Aspects of Intellectual Property Rights 1994). Moreover, in "cases of public non-commercial use," a state need not first seek such permission. At the WTO ministerial conference in Doha, Qatar, in November 2001, member states' trade ministers affirmed their commitment to use this and other flexible language to safeguard public health and promote access to medicines (Doha Declaration 2001).

Resnik and De Ville misapply the utilitarian argument for patent protection by treating pharmaceutical companies' financial windfalls as rational expectations. The utilitarian logic of patent law calls for allowing innovators to reap, via state-sanctioned monopolies, the rewards that motivated their research and development investment. Large profits from anticipated uses of "breakthrough" drugs are justifiable by this logic, since anticipated uses motivate the financial risk-taking that produces breakthroughs (Scherer 2000). But uses that are not envisioned when research and development decisions are made play no role in motivating corporate risk taking. It thus makes no economic sense to reward firms, via state-sanctioned monopoly prices, for sales that ensue from uses not contemplated by research-and-development planners. Good regulatory policy, in general, eschews windfalls of this nature. Price controls for commodities in sudden, temporary short supply due to war or international crisis are an example (Breyer 1982). The spike in Cipro demand during the fall 2001 bioterror scare was not imagined by Cipro's developers years earlier when they made their investment decisions. Permitting Cipro's maker to retain its state-sanctioned monopoly through this period, absent price controls or other downward price pressure, would have allowed the company to reap windfall profits that made...