When We Keep Giving Money To Rich People, Why Are We Surprised By Inequality?

I know I harp a lot on all the ways we structure the market to redistribute income upward, but that’s because we keep digging in deeper on these policies, and almost no one else talks about it. I get that it’s cool to talk about all sorts of tax and transfer schemes to redistribute some of the money we give to the rich and super-rich. But, I’m one of those old-fashion sorts who thinks it’s simpler just not to give them all the money in the first place. So, now that you have been warned, here again is my short list of ways to not give so much money to rich people.

Sculpture, Art, Breadline, Bronze, Depression, 1930

Image Source: Pixabay

Patent and Copyright Monopolies

The immediate issue that prompts this tirade was a request by President Biden for another $6.5 billion  (0.15 percent of the budget) in 2022 to support research into diseases like cancer, diabetes, and Alzheimer’s. I’m not upset at all that the federal government is spending more money on research in these areas.

In fact, I think more federal funding of research into these and other areas of biomedical research is great. The problem is that we can be all but certain that all the breakthroughs that may be realized as a result of this spending will result in patent monopolies that will be very profitable for the companies that are awarded them.

If this is too abstract for people, then think of Moderna, a company that saw its stock price increase more than 1000 percent since the pandemic began, creating more than $80 billion in stock wealth. Obviously, the main reason for this run-up was its Covid vaccine, which was developed almost entirely on the taxpayer’s dime. We can get angry that so many people became millionaires or billionaires on taxpayer funded research, but when we pay for the research and then give the company a patent monopoly, what else did we think would happen?

The alternative is to pay for the research and have it placed in the public domain. This means both, that all the findings are fully public so that other researchers can learn from them and build on them, and also that all patents are placed in the public domain. That means that anything developed can be produced as a cheap generic from the day it is approved from the FDA.

With respect to the vaccines, it is also worth mentioning that if we had gone the open-source route, we could have required that all the technology involved in the production process would also be freely shared. One of the problems with increasing production of the vaccines is that, even if we removed patent protection, most manufacturers would not have the necessary technical expertise to begin producing the vaccines immediately. However, if a condition of getting public funding was that this technology would be freely shared, then potential producers anywhere in the world be able to get technical assistance in setting up their facilities.[1]

Another huge advantage of going the open-source route came up with the FDA’s decision to approve the Alzheimer’s drug, Aduhelm. In approving this drug, the FDA over-ruled the recommendation of its advisory panel, a step which it rarely takes. The panel argued that the evidence for the drug’s effectiveness was very weak, and there are serious side effects, which means that many patients may be made worse off by taking the drug.

Biogen, the maker of Aduhelm, announced that it would price the drug at $56,000 for a year’s dosage. With over 6 million people suffering from Alzheimer’s, this could mean tens of billions a year in revenue for Biogen, with most of it paid by the federal government through Medicare and Medicaid.

But even beyond the issue of the money, there is also the concern that the FDA’s decision may have been influenced by the lobbying efforts of Biogen. Many researchers get support from Biogen, and it’s hard to believe that their assessment of the drug is not affected by the money they receive. If we took the money out of the equation, and were looking at a situation where Adulhelm was going to be produced as a cheap generic, there would be little reason for researchers not to give their honest assessment of the evidence of the drug’s safety and effectiveness. This is a reason that open-source research is likely to lead to better outcomes.

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