US Health-Care Market Not Competitive

[Patrick Degan]

To be frank, the level of American fascination with "socialism" is really funny - I think 90% of the people who rant about "socialism in America" every week and create new threads about "socialism" really don't know what socialism is. They also don't know that America will not see anything like socialism in another 100 years due to the prevailing ideology in the society, but still discuss "socialism" and it's "threats" every sunday.

In this country, the definition has become degraded to the point where Joe Sixpack sees it as "socialism = ANYTHING to do with gubbermint". That's maybe a simplistic caricature but one which has been observed as very much in the vein of much blue-collar Republican thinking on the matter. It's starting to get to where increasing numbers of these zeebs see taxation itself as socialism. Try to point out that there has to be some way to organise and finance a functioning civilisation, and that's "socialism" right there. Their minds just shut down on the word itself.

[Darth Wong]

It's a toxic mixture of ignorance, propaganda, and short-sighted self-interest. At the end of the day, it all boils down to their desire to lower their own taxes. They aren't smart enough to see the ramifications of doing so; they just want to stop paying tax and they want to believe that society will still function without a taxation system.

It's been said by many people, but it bears repeating: a man will go to great lengths to convince himself of something that happens to coincide with his short-term self-interest.

[Vendetta]

I think it's deeper than that. I've been in a similar argument recently at another forum, and the twists and contortions of the lolbertarian in the discussion are exactly those you expect from religious apologists and woo-proponents.

They're not just arguing from self interest. They're 100% bona fide True Believers.

[Big Orange]

I knew Plushie was crazy or/and stupid as soon as he wanted America to be in a Depression when it is in one now and that is entirely to do with the dimbulb Libetarian policies espoused by him in the first place. But then they crow on that it was the government's fault for the economy crashing and that Neoliberal policies were never properly enacted, but then I've seen Randroids attempt to discredit the concept of a beneficial government when the Bush Administration gravely mishandled New Orleans getting flooded, when Bush and his cronies were Randroids themselves. They seem to be elitist misanthropes when they assume that people should fend for themselves and are underserving of a functional government, when that is necessary for the continuation of a industrialized country and to stave off a second Dark Age.

On a lighter note I also think we need the Federal Government to step in and kick media companies up the rectum in regards to IP laws, since they've become a serious threat to civil liberties as well as culture.

[18-Till-I-Die]

OK, over Spacebattles.com we've got a heated debate about FHC between the saner board members and resident LOLbetarians. This reply from one of the LOLbetarians is just golden:

snip crazed survivalist rant

Link

Apart from the comment about teacher's unions, the rest of what he says is concentrated lunacy. I'm too tired (and lazy) to break down his reply in detail, but he really wants the basic support to US citizens to be cut off and then plunged into even deeper poverty than they're in now. Misanthropes, why the fuck did they get so powerful?!

That's the most insane shit I've read in fucking years.

It doesn't even follow a coherent message, what is he trying to say? People a long time ago had hard lives so they...had better health care? Is that it? Cause frankly I got confused at the part about how we need another Great Depression to get people off the bench and into the workforce...cause that's how depressions work.

That's not even musanthropy, because most misanthropes want to at least survive themselves, they're just nihilistic short-sighted. This guy, IF and that's a big if I'm reading this right, is suggesting we purposefully plunge the world into a global dark age for a few years to teach yuppies a lesson in responsibility. How the every living fuck would that help "inner city kids" (I presume he means minorities, since that's the new code word it seems) survive because, you know, they're already poor and in an oppressed minority caste so it's not like they'll just surge forward like a phoenix from the ashes of this depression.

I'm confused by that whole thing, and I'm not sure if it's because I just don't get Libertarians or because there was nothing there to get.

To be frank, the level of American fascination with "socialism" is really funny - I think 90% of the people who rant about "socialism in America" every week and create new threads about "socialism" really don't know what socialism is. They also don't know that America will not see anything like socialism in another 100 years due to the prevailing ideology in the society, but still discuss "socialism" and it's "threats" every sunday.

What a bunch of jerks.

You think that's hard, try being a Socialist and living here. I've honestly had people ask me why I would join the Nazi Party (yes) when I'm Black...because, you know, the Nazis were the only Socialists in history. Ever. No seriously, ever. Mind you these are the same people who tell me to my face that America is the only democracy in the history world, that America "invented" democracy, that no other nation on Earth allows people to vote for their leaders, and Obama is a "registered muslim" and a Black Panther.

I'm not even half kidding.

[Big Orange]

A wonderful side affect of corporatized health care is excessive patenting put into place that seemingly protects the profitability of treatment techniques above the actual treatment of patients:

As Medical Patents Surge, So Do Lawsuits

Patents cover laser eye surgery, stent procedures; concerns over care

Tresa Baldas
The National Law Journal
July 16, 2007

A surge in patents that protect surgeries and other medical methods has triggered numerous lawsuits in recent years, with inventors fighting more vigorously than ever to protect their intellectual property rights.

Patent lawyers say doctors and scientists are suing to protect everything from laser eye surgery techniques to stent procedures to methods for declawing a cat.

The medical community is weary of the trend, noting that threats of patent infringement litigation could interfere with effective patient care.

Attorney John Dragseth said he has noticed a new trend: doctors getting their own patents, and then asserting them against medical device companies in court.

"Many physicians are constantly coming up with new techniques and devices. They have started to see some of their colleagues strike it big with patents, so they have tried to do the same," said Dragseth of the Minneapolis office of Fish & Richardson.

Dragseth cited the recent case of Dr. Gary Michelson, who in 2005 received a $1.35 billion settlement after suing a medical device company over his patented spinal surgical technique that speeds recovery. Medtronic v. Michelson, No. 01cv2373 (W.D. Tenn.).

Last month, a veterinarian who sued a surgical instrument maker over his patented technique for declawing a cat also won his case when the U.S. Court of Appeals for the Federal Circuit upheld his patent. Young v. Lumenis, No. 06-1455 (S.D. Ohio).

About 100 medical-process patents are issued a month -- double the amount in the 1980s, according to the American Association of Orthopedic Surgeons, the Georgetown Journal of Legal Ethics and other legal and academic journals.

A spokesman for the U.S. Patent and Trademark Office had no exact figures for medical-method patents, confirming only that "because we are seeing an increase in medical/surgical method applications," more hires are being sought.

"My business is booming," said patent lawyer Glen Belvis of Chicago's Brinks Hofer Gilson & Lione, who credits technological advances for driving the medical-patent boom. "As a patent lawyer, I have a ton of great, innovative things that I can now protect."

Currently, Belvis is helping secure a patent for a new laser eye surgery technique. "The way the system works right now appears to be very effective. It has never prevented anyone from practicing a surgical technique, and I don't believe a patient has ever been deprived of a surgical technique because of patents," he said. "They allow for innovation to advance and force people to play by the rules."

Patent attorney Eric Raciti of the Cambridge, Mass., office of Washington's Finnegan, Henderson, Farabow, Garrett & Dunner, said that method patents have become "the bread and butter of patent-getting" in the medical community for a good reason. He said that with most advances, it's the procedure that's novel, not the material that goes into it. For example, he said, a doctor may want to fix a certain type of incision in an organ. It might just be a piece of gauze that does the trick, but the way you apply it is what's truly innovative.

Raciti recently helped secure a patent for a method to seal a hole in a spinal disc. He's now seeking additional patent coverage for the actual patch that seals the hole. Raciti views such patents as essential to both inventors and the medical community.

"What it does is it provides something for other companies to work around. The patent is out there. It's wide open. The whole world looks at it and thinks, 'How do I get around it?' That inspires more creativity and more development," Raciti said.

The medical community is weary. "It's not clear that providing a monopoly over a certain process promotes innovation in the field of patient care delivery," said Aaron Kesselheim, a patent attorney and doctor who conducts health policy research at Brigham and Women's Hospital in Boston.

"The legal concern is that physicians won't do something because they're concerned that somebody will sue them, and if that affects the care that they are trying to provide to the patients, then that's a negative," he said.

Kesselheim noted that a 1996 federal law prohibits method infringement lawsuits against doctors. But medical device makers can be sued for inducing infringement of a method by a doctor. And universities and companies are increasingly trying to impose restrictions on the use of their intellectual property.

"Over the past five or 10 years, the patent office has been very permissive about allowing these patents to be issued, and that's a problem because the only way of getting them overturned is the legal process -- either by suing the company, or having it invalidated in court," Kesselheim said.

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I heard that the patent system restrict the usage of certain drugs that could treat cancer and Alzheimers since they're made out of different patented materials belonging to seperate pharmaceutical corporations who jealously guard their patents.

[Edi]

The US patent system has been broken for years, just like the rest of the intellectual property legislation. This is very much the same thing as the bullshit around frivolous IT patents, except some of these cases have some merit by strict interpretation, though that does not take into account the patients very much.

[Big Orange]

Intellectual Property protection has been taken way too far and is now seemingly motivated more by ideology rather than corporate pragmatism, since we all know how the entertainment industry has rabidly protected music copyright out of all realistic proportion and created a bigger black market in media material anyway.

But of course it is worse when chemical/pharmaceutical multinationals are jealously holding on to their pantented material, paranoid about its usage by other parties and demanding high fees to do so, when potentially millions of human lives are at stake, instead of just entertainment:

Seen and Unseen Cost of Patents
by Jeffrey A. Tucker

Drugs patents took it on the chin a few years ago, when major drug companies refused to sell cheap AIDS drugs in Africa. Presuming the drugs work, countless lives might have been saved. But the desire to protect the high price on the patented drug – despite the low marginal cost for producing additional units – trumped the humanitarian impulse to save lives. The large drug companies refused to budge, despite protests from all over the world.

Defenders of the drug companies say: well, sure it is cheap to produce mass quantities of drugs after they have been developed. But the costs of getting there are sky high. If companies can't charge high prices, they won't develop the drugs in the first place.

Boldine and Levine, in chapter four, offer an interesting response to this claim but it requires a bit of thought. They point out that the drugs can still be sold profitably at vastly lower prices, in the same way that many other products can be sold profitably at low prices. Items of super high cost – think of passenger airlines or cruise ships – recoup those costs through volume sales over time. It is the same with drugs, or could be.

So why wouldn't the pharmaceutical companies budge in the African case? It is due to the fear of re-importation, that is, that the drugs would make their way back to the US and Canada and be sold at cheap prices, thereby undercutting the monopolistic price.

Why not just price discriminate? It not so easy to price discriminate in a global economy. Rather than take that risk, companies settled for not selling at all. This reflects a general principle articulated by Boldine and Levine: "Intellectual monopolists often fail to price discriminate because doing so would generate competition from their own consumers."

Think about this principle. It helps explain why large software manufacturers routinely degrade their products available to consumers while reserving their better products for the more lucrative corporate market. This is why the versions of operating systems and end-user software are dumbed down on the consumer market. The companies don't want to permit cross-selling between markets, even though the costs of selling better products across markets are virtually identical. Only IP allows them to get away with this sort of behavior.

So, yes, there are some benefits to patents in the same way there are benefits to all monopolists. The Post Office benefits from the prohibition against private delivery on letters. Public schools benefit by regulations on private education and mandatory funding. The electric company benefits from its statutory guarantee against competitive intrusion.

But that is not the same as saying that all groups benefit. Boldrine and Levine examine data from Total Factor Productivity in cross-national studies and show that the astounding increase in patents in the 1990s – rising more than three-fold from a stable rate in previous decades – has had no effect on increase prosperity and innovation.

Meanwhile, there are huge costs, even for those who acquire and own the patents. Oracle software, for example, spends vast resources on what can be called defensive patents. They must get them before someone else does else risk having to pay huge fees to someone else. Cross-licensing is the only way to develop software now, so the patent route has been forced on everyone. The word "thicket" is the one everyone uses. What it really amounts to is a cold war between patent holders – a patent race that is very much like an arms race. This is why Nokia own 12,000 patents and Microsoft is adding 1,000 patents a month to its arsenal. Intel's CEO spoke for many when he said he would be glad to cut patents to a tenth of its current rate provided that others did the same.

Conventional patent theory says they are necessary for generating revenue to fund research and development, and to inspire innovation. This is supposedly the economically valuable contribution of patents. Then there is the real world. A Carnegie Endowment survey of firms shows that businesses themselves report that this function of patents is mentioned as important only 6% of the time. The main reason businesses say that they want patents is to enforce monopoly – preventing people from developing similar but better and cheaper products – and to prevent lawsuits.

They authors describe the result of patents as not a competitive market for innovation but an oligopolistic market structure around patent-pool mechanisms. This affects every industry, as patent battles hinder economic development. A good example is the ongoing battle over who and what can lay claim to the title "basmati" rice. A Texas company called RiceTec won a patent in 1997, infuriating Indian and Pakistani companies that have been making Basmati for hundreds of years. These companies have been fighting back with their own attempts to register patents on the rice. What this has to do with the consumer and the dinner table and the need for cheap and delicious food being made widely available is the unanswered question.

A peculiar form of patent abuse comes in the form of the submarine patent. This is a patent taken out early while the production of the product itself is delayed as long as possible. When someone else finally goes to market with a product, the patent emerges from the deep as a method of blackmailing the company that has gone to market.

Boldine and Levine explain that this tactic dates to George Seldon's patent on the "road engine" in 1895. It commanded 1.25% on the sale of every car in the US. He sold his patent for $10,000 and 20% of royalties to a syndicate in 1899. As the car actually started to make it to market, the Associated of Licensed Automobile dealers formed a cartel around the patent. The authors comment: "if you were wondering why the U.S. automobile industry developed so quickly into the oligopoly we know and hate, a fair share of the roots lie in bad 'intellectual property' legislation and the intellectual monopoly it created."

Personally, I find that revelation remarkable. More than a hundred years later, we are still paying the price for this car-cartel-creating patent. Something similar happened to airplanes, when the Wright Brothers managed to get a patent on anything resembling an airplane, despite their own meager contribution to the technology. They were so aggressive in blasting all competitors that all serious innovation in airline technology ended up taking place overseas in France.

The authors make a statement that I wish could be made more prominent, since it comports with everything I know about businesspeople and patents. It is the most common thing in the world for a businessperson to use every market-oriented skill to get a product to market: a good product at a good price that becomes the market leader. At this point, and for some odd reason, the businessperson gets confused. He thinks that it his IP that is the key to his success and ends up fighting for it with all his might, even at his own expense.

Here is the statement by Boldrine and Levine: "'Being a monopolist' is, apparently, akin to going on drugs or joining some strange religious sect. It seems to lead to a complete loss of any sense of what profitable opportunities are and of how free markets function. Monopolists, apparently, can conceive of only one way of making money, that is bullying consumers and competitors to put up or shut up. Furthermore, it also appears to mean that past mistakes have to be repeated at a larger, and ever more egregious, scale."

A clear case in point concerns the Recording Industry Association of America, which managed to make itself appear as the devil incarnate in the eyes of an entire generation of music downloaders. Another example concerns Google Print. This work of genius would have brought all the world's libraries to one central location so that users could search the books and purchase them. Wonderful! But the Authors Guild sued, and the suit has gutted Google Print as a useful tool. The dream of all educated people from the ancient world to the present – a single accessible repository of all the world's wisdom – was stopped for no good reason.

The authors conclude chapter four with a restatement of the theme: the benefits of patents are small and narrow, while the costs are large and broad. The biggest costs are the unseen ones that Bastiat speaks of. These are innovations we don't see, the products that don't come to market, the efficiencies that we never experience, the companies that don't come into existence, and the investment that would have taken place with the resources that are expended on patent acquisition and enforcement. Here are the real costs of patents, and they are incalculable.

Link

Yay Libertarianism and Neoliberalism, may it usher us back into a feudalistic Bronze Age.