Category: Science and Other News

Who Patents Genes? The U.S. National Institutes of Health Has More than Twice as Many Patent Applications as the Runner-Up

Gene patents are one of the most controversial areas of intellectual property. “How can they patent genes?” people ask. “It’s like patenting blue eyes.” Even those not deep into the issue have likely heard of the cloud of litigation surrounding Myriad Genetics, a Salt Lake City company that sells a test for diagnosing breast cancer based on a woman’s genetic make-up. (Myriad Genetics has an informative backgrounder explaining what can and what cannot be patented.) The U.S. Supreme Court struck down one Myriad Genetics’ patent-protection in June 2013.

So, I was somewhat surprised to see a new report by the global law firm, Marks Clerk, which reported that the leading patent-filer for sequencing technology, personalized medicine and synthetic biology in the decade to 2013 was not a corporation, but the U.S. National Institutes of Health, with 360 applications of the total 1,752. Indeed, government research facilities, both in the U.S. and other countries, accounted for 617 applications — over one third of the total (and this does not include public universities, like the University of California.)

Households Only Finance 70 Percent of Their Own Consumption, Down From 93 Percent in 1959

The leftish think tank Demos has published a very thorough criticism of how we measure Gross Domestic Product. Scholar Lew Daly argues that we give government too little credit for its spending, because government invests in goods and services that increase total GDP. For example, household incomes increased dramatically in the 20th century. This is due to an increase in “human capital,” much of which is due to education, which is government funded. So, government funding of education is good! Interestingly, Mr. Daly’s evidence relating education to human-capital development and rising incomes is mostly from the 1950s. Needless to say, this is before public-sector-unions or the federal government got involved, and a period in which most people would agree public schools did a better job than today.

Mr. Daly notes with concern that household incomes have been shrinking as a share of GDP for some years now. However, he does not connect this with the fact that households control less of their own consumption than they did in earlier decades. When third parties control so much of what we consume, and we believe those third parties are financed by others, it is unsurprising that those third parties will seize control of a greater share of GDP. Mr. Daly’s Figure 6 shows us that in 1959, households financed 92.8 percent of their own consumption. By 2009, that had fallen to 70.3 percent, with government and employers supplying the balance.


Tax Reform, not Tax Inversions, will Rescue the U.S. Pharma, Bio, and Medical-Device Industries

1Goldman Sachs research note explains the stakes in the current spate of tax-inversion deals by U.S. firms taking over foreign targets. Most of the listed firms in the pharma, bio, and medical-device industries have over half their sales outside the U.S. Because of our horrific corporate tax code, they end up with incredible chunks of cash overseas. Eli Lilly, for example, has 89 percent of its cash overseas. Edwards Lifesciences, Amgen, Merck, Varian, Covance, Baxter, and Abbot all have at least 80 percent of their cash offshore.

Because they cannot bring the cash back home without greedy politicians getting their hands on it, these firms’ ability to invest in the U.S. is limited. The solution, many appear to be discovering, is “tax inversion,” whereby the U.S. firm consolidates with a foreign company, and establishes its head office abroad. Despite the assertion that the U.S. corporate-tax code is so riddled with loopholes that none pay the 35 percent rate, the Goldman Sachs note shows that firms in the healthcare industry suffer quite high effective tax rates. Pfizer, for example, is estimated to have a 27 percent tax rate in 2014. Varian Medical Systems’ is estimated at 28 percent; and Cubist Pharmaceuticals’ at 36 percent.

“Prize-Grants” or Patents for Pharmaceutical Innovation?

Over at the American Enterprise Institute’s online magazine, Arnold Kling has proposed “prize-grants” in favor of patents for pharmaceutical research. Kling dislikes patents:

Patents have always been a problematic way to promote innovation. They raise prices of products far above marginal cost. They impose legal costs involved in obtaining, attacking, and defending patents. They provide an artificially high incentive to develop substitute products that devalue the patented invention. They create an artificial disincentive to develop complementary products, because the high price of the patented product limits its market penetration, adversely affecting would-be product complements.

These drawbacks are well recognized, and a better alternative would certainly be most welcome. The question is: Can there be a better alternative? Kling’s “prize-grant” has the features of both a prize and a patent:

The prize-grant would differ from an ordinary prize in the following ways:

  • The criteria for winning the prize would typically be first suggested by the researchers, with funding institutions then assigning a value for the prize, prior to the research.
  • Prizes often would be for incremental achievements, not just for spectacular accomplishments.
  • Large pharmaceutical companies and other private firms would be just as eligible as nonprofit researchers to receive prize-grants.

CEO: “Soul-Crushing Regulations” Driving Entrepreneurs Out of Health Information Technology

Jonathan Bush, CEO of athenaHealth (NASDAQ: ATHN), testified to a Congressional committee on the impact the federal government has on entrepreneurship in health IT.

g“You guys have made things that work in every other industry illegal in healthcare,” he said. “You can be drunk and in the wrong country and you can get your bank balance reconciled because the bank that needed the info can pay the other bank $3 to get it. If that happened between a doc and hospital, it’s prison time for that crime of supply-chain partnership.” (Veronica Combs, MEDCIty News)

(It is always a good idea to pay attention to athenaHealth executives when they speak on public policy. They never churn out the “go along to get along” PR-speak generated by too many corporate spokespeople when they are trying to get something out of Uncle Sam.)

Does the EITC Subsidize Tax Cheats?

From the abstract of an article summarizing interviews with 115 recipients of the Earned Income Tax Credit, the largest anti-poverty program in the United States:

Rather than adjust work hours, defer marriage, or have additional children, respondents exhibit a different type of behavioral response to the incentive structure of the EITC: They alter their tax filing status in order to maximize their refunds. They routinely claim zero exemptions and deductions on their W-4s, file their tax returns as head of household rather than as married, and divide children among the tax returns of multiple caregivers. Although some of these behaviors qualify as tax noncompliance, they emerge because the intricacies of the tax code conflict with the complexity and fluidity of finances and family life in low-income households.

In ordinary, non-academic English, “tax noncompliance” by making false statements on federal returns would usually be called cheating. How this “tax noncompliance” is understandable because family life in low-income households is complex with “fluidity of finances” we leave to readers’ comments below.

Is the Middle Class Doing Better in Canada?

A New York Times analysis purportedly showed that the U.S. middle class is declining relative to the middle class in other countries, especially Canadian.

This analysis shares a weakness with other such analyses: It measures cash disposable income, but does not include in-kind benefits. For both Canadians and Americans, healthcare comprises the biggest share of those benefits.

Americans with employer-based health benefits or Medicare receive significantly more “comprehensive” health benefits than Canadians do. On average, a Canadian patient waits 18.2 weeks between referral from a primary-care doctor to treatment by a specialist. This imposes a cost of over $1,000 per person in lost hours. Canadian patients also have significantly worse access to innovative prescription drugs, which imposes a measurable cost in loss of life.

Yes Virginia (and California), Even Well Intended Regulation Increases Costs

Here’s a concrete example from the Coyote blog showing how seemingly innocuous state regulations can combine to discourage hiring.

Over time, California legislators have passed a variety of laws requiring employers to provide various types of paid and unpaid employee leave. The rules have to be given in an employee handbook. The business that compiled the list below had to hire an attorney to create it. It says that the list may be incomplete and that it is “published at the risk of having a California lawyer see it and say “aha! They have forgotten time off for the death of a beloved hamster. Let’s sue him.”

If asked, the author says his business would probably provide informal time off for most of the things listed. But because they are now legal requirements backed by the threat of expensive litigation if the company makes even the smallest mistake, he has to go to the irritation and expense of discovering the rules, tracking the leave, and keeping up with regulatory compliance.

India’s Weak Patent Rights Hurt U.S. Pharma Companies

8685678According to the Global Intellectual Property Center’s IP index, India’s intellectual property environment ranks the lowest of all countries included in the index. India is in constant violation of the Trade-Related Aspects of Intellectual Property (TRIPS) agreement, designed to ensure strong intellectual property rights on patents and copyrights in international trade. One example is their overuse of compulsory licenses, the practice of allowing India’s domestic drug companies to produce patented products without the consent of the companies that own the patents. These licenses were initially only to be used during public health emergencies under the TRIPS agreement.

Meanwhile, Indian pharmaceutical companies greatly profit on American soil. For example, Lupin Ltd. is now the market leader in 24 of the 46 products marketed in the U.S. generic drug market.  Sun Pharmaceuticals, based in Mumbai, have over 57% of sales from markets outside India, primarily in the Unites States. They market over 200 generics in the U.S., with another 150 awaiting approval from the Food and Drug Administration.

Six Remarkable Facts about Mothers

woman-with-child1) Babies begin listening to their mothers’ speech in the womb.

2) A mother’s saliva might be good for a baby’s health.

3) Breast milk confers all sorts of immune system benefits — and may even protect against HIV.

4) For premature babies, skin-to-skin contact with a mother improves health.

5) A mother’s brain may contain cells from her children.

6) The word “mother” might date to the end of the Ice Age.