Drugs for Africa: A Modest Proposal
The problem is resale. How can the drug company be sure that the drugs it sells at a cheap price in Zambia don't get resold in France or the U.S., reducing the quantity it can sell in those countries at a high price? One possible solution is to control distribution; once the drug is in the patient it cannot be resold. But that may be difficult to do in poor countries, lacking the infrastructure to monitor what happens to the drugs once they get there.
I have another solution. Let charitable donors in rich countries buy out the patent on the second best AIDS drug or combination of drugs and public domain it—let anyone who wants make it. Buying the second best drug should not be that expensive, since it probably is not making much money any more. And even if the same company owns the first best drug, it should not lose too many sales, since most customers who can afford the best drug will keep taking it.
This proposal has one large advantage over the usual alternative of forcing drug companies to make their drugs available at a low price in poor countries, with the threat that if they do not the countries in question will simply refuse to enforce their patents. That proposal makes the development of new drugs less profitable and so buys a short run gain in availability at the long run cost of slowing the development of new drugs. It could be a very large long run cost if the practice spreads from very poor countries up to less poor countries.
My proposal, on the other hand, makes the development of drugs more profitable. You can not only make money on your drug until a competitor brings out something better, you can even get a little more money at that point by selling it to the Gates Foundation or some similar organization.
While on the subject, I have a second suggestion, this one intended to make drugs more available for both rich people and poor people. FDA rules on testing should be designed to encourage drug companies to make not yet approved drugs available abroad in order to use the information so generated to meet the requirements for approval in the U.S. That would bring down the cost of finding out whether new drugs are safe and getting them approved. At the same time it would provide low cost—albeit somewhat risky—drugs for people in poor countries.
My previous post discussed a conflict between good economics and good rhetoric, between an argument that was right and one that was persuasive. These proposals face similar problems. Opponents will argue that it is unjust for rich people to get the best drugs and poor people the second best—even if the realistic alternative is poor people not getting any drugs at all. They will make good demagogic use of the idea that it is wicked to use human beings as guinea pigs for potentially dangerous drugs—despite the fact that using humans as guinea pigs is the only way we have of finding out whether or not drugs are safe.