The editorial defending Al Gore's efforts to force South Africa to pay patented prices for AIDS drugs [June 24] ignored fundamental economics. The most basic principle in economics is that products should sell at their marginal costs. In the case of patented drugs, the patent price is often 20 times higher, or more, than the actual cost of producing the drug. In other words, a regimen of AIDS drugs that can cost $4,000 to $5,000 a year when subject to patent protection might sell for as little as $100 to $200 annually if left to the free market.
In economic terms this creates enormous inefficiency. In moral terms it will be the difference between life and death for tens of millions of people in developing nations.
The Post editorial rightly points out that the pharmaceutical companies would not undertake research if they could not be guaranteed patent protection on their products. This is true, but patent protection isn't the best way to support pharmaceutical research.
Until the beginning of this decade, most pharmaceutical research was supported by agencies such as the National Cancer Institute or private foundations and charities. This research has produced a long list of major medical breakthroughs, such as the discovery of penicillin and the polio vaccine. One would be hard pressed to demonstrate that the pharmaceutical industry has more to show for its research dollars.
"Mr. Gore and the AIDS Drugs" stated: "Companies invest large sums in research that often leads nowhere but sometimes produces valuable new medicines." The protesters referred to in The Post's article would like to see some factual verification of this statement -- that is part of what we're protesting about.
Many AIDS medications were, in fact, researched with taxpayer dollars and then simply auctioned off to industry, which is able to charge whatever markup it wishes. Industry was thus spared the risk of research leading "nowhere." The taxpayer took that risk for it. This scenario also applies to the cancer drug Taxol.