Convergences

Biotech & Data

FierceBiotech says that the Health Care Reform draft includes a 12-year data exclusivity provision for biosimilars, thus following the Senate, and dealing a loss to Henry Waxman.

However, passage of Health Care Reform in the near future seems improbable, so the data exclusivity issue will still be open. The House Health Committee is solidly in favor of the longer period, though.

Also, FB's John Carroll notes:

At some point, rising costs may force lawmakers to actually get tough with drugmakers, and that would have an effect on biotech--the de facto R&D arm of the global drug industry. So far along, the industry has managed to dodge a bullet. But something tells me that the war over drug prices won't be ended by this reform bill.

Bleeding Biotech

At The American, a new article Bleeding Biotech, arguing for better protection of intellectual property in data. I frame the question as

In the end, we will never be able to arrive at agreement on the perfect period for data protection for biological research. There is still no agreement on the proper period for patent protection, and that system has been around for hundreds of years. A 20-year period was picked for patents, and it seems to work well enough, so the failure to achieve perfection is not of great concern.

With regard to biotechnology and data exclusivity, we are and will remain similarly ignorant. So the question is actually quite simple: what are the costs of error in each direction?

The answer is that the costs of too much protection are low, or non-existent; the costs of too little are very high. Which should make the decision easy.

In re Bilski: Business methods, software patents, and beyond.

The deadline for filing amicus briefs in support of the Federal Circuit's attempt to trim back business method patents in Bilski passed on October 2. Many briefs have been filed, and much fuss has been made in the tech community, for business method patents are linked to the problem of software patents. Many software patents, such as Amazon's 1-click order patent, are for business methods.

If the courts ultimately trim back business method patents, will this take some of the software-patent-related pressure off both tech and the patent system? Not as much as many in the tech community or the patent community would hope, for reasons I examine below. Patent reform is now being driven by business constituencies, and these constituencies are not good at all at working on big picture institutional problems. There, in short, is a not-seeing-forest-for trees problem.

Technological protection for copyright: an industry cameo.

On October 1 I attended a panel discussion on the use of technology to restrict the illegal transfer of copyright-protected content online. The panel talked about a new French law requiring ISPs to block users who had "three strikes" against them for illegal transfers, recent developments in watermarking and fingerprinting, and the future of fair use.

Patry on Copyright

Amazon just delivered Moral Panics and the Copyright Wars, by William Patry, who is Senior Copyright Counsel at Google.

The jacket copy says:

William Patry lays bare how we got to where we are: a bloated, punitive legal regime that has strayed far from its modest but important roots. Patry demonstrates how copyright is a utilitarian government program -- not a property or moral right. As a government program, copyright must be regulated and held accountable to ensure it is serving the public purpose.

On Wall Street, this is called "talking your book" -- forecasting events or advocating policies that will enhance the value of your investment portfolio. Google is not big on other people's property rights.

I expect to read it with dyspeptic interest, since I am considerably more on the side of creators, and of property rights generally, and start from a Lockean view rather than one based on the government as the bestower of all things. See Defending Intellectual Property.

Innovation Strategy

On Monday, the Office of Science and Technology Policy released a white paper on A Strategy for Innovation: Driving Towards Sustainable Growth and Quality of Jobs. While some of its thoughts are decent enough, much of it illustrates why "government" and "innovation" are rarely compatible.

Sometimes things work out, usually when a government program such as DARPA is run by dedicated people who manage to stay below the political and interest group radar. But once "innovation" is outed, the results become fit for the Onion. Thus the strategy contains pork for every major interest group -- education, already lavishly funded with steadily worsening results, will get even more. Infrastructure of all kinds is part of the agenda -- roads, bridges, rail. Clean energy. Rural broadband - everyone must have 21st century connections. The government will train entrepreneurs (!!)

Three seems to be regarded as a lucky number. The strategy has three parts; the President wants to invest at least three percent of GNP in R&D; three key science agencies will have their budgets doubled; take three years to double the nation's supply of renewable energy; and so on. If there is any rationale for any of the goals or figures, it goes unstated.

There are no costs, no benefits, no trade-offs, no limits. Nothing about fossil fuels, which must remain the backbone of energy for decades, and of course nothing about nuclear energy! It is a wish list, not a strategy. It would be difficult to dream up a more effective way to stifle national innovation than to commandeer our resources to promote arbitrary plans which must be implemented by multiple bureaucracies.

Back in the real world: At a health care event a couple of months ago Billy Tauzin, head of Phrma, mentioned to former Majority Leader Dick Gephardt that data must be submitted to the FDA via truckloads of paper rather than in digital form, and that this is both wasteful and slow. Gephardt's response was that Congress is the agency that would have to fix this by allocating the resources, and Congress is very busy and much put upon by people asking for things, so one should really be sympathetic to its problems. He did not seem aware that his answer was ludicrous -- it was in essence that Congress should be allowed to be a bottleneck for everything because it has arrogated to itself control of everything, and that we should all shut up.

Tauzin noted that other nations all love pharmaceutical companies and keep asking "how can we build such as industry?" but even that rather broad hint was not enough to divert Gephardt from his Congress-centrism.

The OSTP strategy document envisions a leading government role in health IT. LOL!  I propose that before being allowed to write a grand strategy on innovation, OSTP should be required to make a list of areas in which the government is acting as a drag on innovation -- and fix them.  It can start with the FDA data issue. Then perhaps it can progress to more ambitious activities.

The funny thing is, the OSTP people are smart; they know all these problems as well as I do. But the dynamic of government has forced them to produce a distinctly weird document that no one of them would ever sign his or her name to as a serious intellectual product.

To repeat myself, we are increasingly government of the special interest, by the special interest, and for the special interest, and it simply cannot continue for much longer.

The Big Blog Candy Mountain

Blogger Barry Ritholtz became the latest to suggest that maybe news really should not be free, and he endorsed a system of micropayments, introduced slowly so the blogger frogs do not object to the water getting hotter:

The problem facing journalism and newspapers is not one of technology—it is one of behavior. People are used to free, they don’t think they need to pay for content. A solution that ignores this simple fact is destined to fail, regardless of technology, software or widgets . . . This requires a behavioral change, from both the newspapers and its readers.

However, Reuters blogger Felix Salmon not only objects, he advocates kicking over the pot.

[READ THE REST AT THE ENTERPRISE BLOG]

Health Care Spending

My "Maybe We Should Spend More on Health Care" argues that the repeated mantra "we spend too much" is both unsupported and dangerous. We don't know how much we should be spending; that depends on value for money, and the system's incentives are so convoluted that the calculation has become impossible. The risk is that pressure for short-term cost cuts will hobble the innovations -- pharamaceuticals; devices; materials; case managment -- that are needed to improve effectiveness and efficiency.

If the government takes over, all problems will become worse. As one of my old U.S. Bureau of the Budget bosses used to say, "every government program consists of a hard core of fat surrounded by bone and muscle." So the operators and advocates make sure any cuts hurt the public and create a reaction. Waste, fraud, and abuse will continue; it is innovation and progress that will be pinched.

Free

My review of Chris Anderson's Free: The Future of a Radical Price appeared recently in National Review Online under the title "The Problem With Zero."

As might be expected from someone who believes that property rights and markets are the roads to freedom and innovation, and are the best ways for communities to cooperate, the tone of the review is dyspeptic:

A line is drawn between those who “get it” and those (over 30) who do not. The focus is on people’s entitlements as consumers, not on their need and desire to be proud producers. An advanced economic machine is assumed, but the conditions necessary to maintain one are no responsibility of the author, or of the reader. Also lacking is any awareness that a working society requires concepts of duty and reciprocity, not just entitlements, that paying for what you get is an important form of morality, or that adapting to the digital age involves questions not resolvable by resorting to Condé Nast’s website-proclaimed mission “to ignite and nourish [readers’] passion.” 

Most of the space is devoted to the point that Anderson and the others in the "information should be free" camp are riffing on the economists' idea that efficiency is achieved when price equals marginal cost, only they fail to understand that this idea is not suitable for home use -- it works only on the blackboard, where capital is completely mobile. Turned loose in the real world, it has done great damage.

In Praise of Google Books

Since I have an interest in that great American epic,the building of the transcontinental railroad, and in the parallels between current public policy debates and earlier railroad controversies, Google Books is wonderful. It provides access to many obscure sources that were formerly available only at major libraries, and difficult to find even then unless one knew exactly what one sought.

Who knew that the 1870 Report of the Commissioner of the U.S. Land Office contains crucial information on railroad construction costs, or that The Political Reformation, a pamphlet put out by the Democrats in 1884, contains cheerfully cynical insights into the venality of the U.S. Congress by Collis P. Huntington, one of the founders of the Central Pacific'?

One benefit of the improved access should be an improvement in knowledge of history. A great problem is that the story of an era gets written a time or two, and then everyone cribs from this work, until, perhaps, a new paradigm is written, and everyone cribs from that. Very few people have access to the sources, and thus the ability to challenge the narrative is limited. The digitization of great libraries is changing this, expanding access and opening up the process to all.