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China goes generic!

from Dean Baker

The New York Times had a piece about a new law in China that reduced penalties for importing drugs that have not been approved by China’s regulatory agency. While it is not clear from the piece how far-reaching this change in the law will be in practice, the potential impact for both China and the world is enormous.

India has continued to be a massive supplier of generic drugs, both to its own people, but also to the rest of the world. Many drugs that are subject to patent protection in the United States are available at free market prices in India. The gap in prices is often more than 100 to 1. (India’s generics vary in quality, but their largest manufacturers are comparable in quality to U.S. manufacturers.)

The United States has been pushing for years to force India to narrow the scope of its generic industry, making its patent system closer to the U.S. system. While there is support for such a change in India, there is also massive opposition to a move that would hugely raise domestic drug prices and cripple one of its leading industries.

If China were to become a large-scale buyer of India’s generic drugs it would provide a large boost to the country’s industry and make it less likely it would give in to U.S. demands. This matters not only for the Chinese and Indian markets, but it raises the prospect where most of the world might be paying a few hundred dollars for drugs for which Pfizer and Merck are charging people in the United States and Europe hundreds of thousands of dollars.

That might not prove tenable in the long-run.

  1. August 29, 2019 at 2:02 pm

    The money made from copyright over drugs is somewhat criminal as it narrows the band of people who can access them. It’s not like there are no cheaper alternatives that reward the drug companies but without the financial largesse. The federal government can act as insurer so the drug companies can do their research without the risks they seek to cover for today. The federal government is as readers here all know accessible to limitless finance at no cost to taxpayers. The government would be doing the nation a service and the economy would not be burdened by unnecessary costs resulting from a] the drug cost excesses and b] the better health in the population, mental and physical. A win-win.

  2. August 31, 2019 at 8:49 pm

    Would anyone care to comment on China’s approach — most common with technologies — to supersede intellectual property rights with sharing, plus rapid innovation, to be or stay a sales leader? This approach requires always staying a step ahead of competition to sell, because of no patent protection.

  3. Ken Zimmerman
    September 1, 2019 at 2:15 am

    Let’s question one of the basic assumptions of today’s pharmaceutical industry, competition. Lots of time, talent, and money is wasted by companies competing to create the first, fastest, most effective drug or treatment for whatever. At least in it’s textbooks science is cooperative, not competitive. While not always completely true today, with competitive culture and practices now infiltrating into scientific work, the scientific model is still a better option for creating the drugs, techniques, and equipment for providing health care. Competition doesn’t even work for football matches anymore. Why would it make sense to believe it would work for protecting peoples’ health and welfare?

  4. rddulin
    September 1, 2019 at 7:02 am

    All money behaves the same as a patented good.
    Payments must flow to the monetary sovereign and their agents in any economy.
    Access to use of money is limited to increase the price.
    Limited access to money to quantify value of things is the proximate cause of most poverty.
    Everyone can work and produce something, but not everyone can get paid because they simply can not afford to use de-facto patented money.

    • Ken Zimmerman
      September 1, 2019 at 12:33 pm

      And all this goes back over 200 years in America, rddulin. The capitalist transformation of the United States took place largely because thousands of Americans decided to participate in the marketplace. It also occurred, in part, because political leaders created interlocked financial and political structures that facilitated and guided the growth of interstate trade as well as the development of a national market economy. This was happening in 1800. Two paths were created, both of which are still seen today. The Federalists put their faith in the ability of a powerful central government to direct the evolution of American society into something grander than ordinary citizens could imagine or desire. They tended to see themselves as a disinterested gentry who were better qualified to lead the United States to the status of imperial Rome or Augustan England than the average rowdy, self-interested
      American. The Jeffersonians, who seized national power from the Federalists in the election of 1800, on the other hand, generally thought that the United States would be better off if it had no overall, national direction. Ultimately, the Jeffersonian rhetoric of laissez-faire and local sovereignty played well in a nation whose citizens did not know, let alone trust, each other and whose economic development was occurring in different ways in different places. But Jeffersonians did little to change the emerging dominance of capitalist markets, other than reduce some federal taxes and downsize the military.

      Expanding the postal system facilitated exchange of information crucial to the success of a market economy. National land policy provided for the sale of federal lands in small sections and at reasonable terms. Federal and state courts established the legal foundations of capitalism by insisting that the rights of private property and contractual agreements took precedence over traditional community customs. Meanwhile, states such as New York began to construct the roads and canals that would form the backbone of a national transportation network. Without these essential political actions, the capitalist transformation could not have proceeded at the pace or in the manner that it did. As far-reaching as these economic and political developments were, they were neither all-encompassing nor universally welcomed. The household remained the center of economic production in many parts of the United States. Also, the South generally epitomized the sometimes ambiguous or haphazard impact of the market. No other region of the nation was more tied into the international economy than the South, and yet no region more successfully resisted its transforming power. The Civil War settled both these questions. After the War, the household economy was destroyed by rapid industrialization and the South was in no position to resist market reorganization (though it would require nearly 100 years to complete the change). From a national perspective, in sum, the spread of the market was haphazard, imprecise, and idiosyncratic. It did not transform the United States overnight into a consensual bastion of capitalism. Rather, the desires of hundreds of thousands of people to improve the material conditions of themselves and their families produced a startling expansion of commercial capitalism that transformed the social relationships of different groups of Americans in different places to differing degrees. In this sense, the uneven nature of the capitalist transformation (which is still present with Americans today) reinforced, indeed, heightened-the already deep-seated regionalism of the United States and accentuated the differences among people. As the market brought them together, it made them more aware of how much they did not have in common.

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