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Article review: Stiglitz, Joseph (2012, May 21). Shift from patents regime to prize-based system will revolutionize research and healthcare. The Economic Times.

May 21, 2012 Leave a comment

The Library of Economics and Liberty (2008) acknowledges Joseph Stiglitz as a world-renowned economist and Nobel Laureate from Columbia University, famous for his research about asymmetric information as applied to various economic models (i.e. wages, taxation); which established him as one of the first critics on the efficiency of the free markets and is the foundation for his call for more financial and economic regulations (Joseph Stiglitz section, para 1-4). A paper published by the World Health Organization (WHO) by Maito & Franciosi discusses how Stiglitz ideas in Chapter 4 of his latest book, Making Globalization Work, have been the main proponent to the efforts to break the current intellectual property rights regime that will help address the need to discover and produce cheap life-saving medicines for the poor and to “create a balance between innovation benefits and market monopolization costs.” (A New Incentive, nd, page 5). As Stiglitz (2012) discusses in his article, WHO is currently heading international efforts to apply a prize system where in “innovators are rewarded for new knowledge, but they do not retain monopoly on its use” to ensure that “once the drug is developed, it is made available to the lowest possible price – not an inflated monopoly price.” (para 13).  Recently in the news, Taylor (2012) elaborates how the proposed bill by Sen. Bernie Sanders (I), supported by Joseph Stiglitz, to scrap drug patents and replace monopolies with a prize fund will address the continuing increase in prices of patent medicines in the US (para 9).

The time is ripe to modify how intellectual property rights are applied in the trade industry. Taylor (2012) reports that the HIV/AIDS drug Atripia costs $25,000 per person per year, while a generic version that cannot be sold in the US due to patent rights violation, only cost $200 per person per year (para 6). According to Taylor (2012), US paid $9.7 billion last year for patent drugs – making the $3 billion proposed prize fund in the Prize Fund for HIV/AIDS act cheaper by comparison therefore allowing it to pay for itself (para 8). Stiglitz has been often called as a rebel economist, challenging the invisible hand / Adam Smith fundamentals and supporting the more contemporary Keynesian principles. But recent history is a proof in itself: the internet market bubble, the housing market crash, and the failure of the free market to recover from its last big recession are all devastating examples of the market’s inefficiencies. As Stiglitz (2012) mentions at the beginning of this article, millions are dying from preventable and treatable diseases simply because medicines are expensive. It is about time to rewrite the rules of the game and understand that the profit of the few will have to give way to the survival of the majority.

References:

Maito, Miguel and Eduardo Franciosi. (nd) A New Incentive System for Technological Innovation in Developing Countries. Retrieved May 21, 2012 from the World Wide Web: http://www.who.int/phi/news/phi_12_fondo_innovador_MAM_EF_jun2011_en.pdf 

Stiglitz, Joseph E. (21 May 2012). “ Shift from patents regime to prize-based system will revolutionize research and healthcare.” The Economic Times: Comments and Analysis. Retrieved May 21, 2012 from the World Wide Web: http://economictimes.indiatimes.com/opinion/comments-analysis/shift-from-patents-regime-to-prize-based-system-will-revolutionise-research-and-healthcare/articleshow/13335304.cms

Taylor, Lynne (21 May 2012). “US Senate call to scrap drug patents”. Pharma Times Online. Retrieved May 21, 2012 from the World Wide Web: http://www.pharmatimes.com/Article/12-05-21/US_Senate_call_to_scrap_drug_patents.aspx

“Joseph E. Stiglitz.” The Concise Encyclopedia of Economics. 2008. Library of Economics and Liberty. Retrieved May 21, 2012 from the World Wide Web: http://www.econlib.org/library/Enc/bios/Stiglitz.h

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