If our rulers wanted to reduce medical costs…

…there are two things they would do.

First, they’d eliminate taxation on income earned by persons who are providers or consumers of medical services. No income tax, no payroll tax, no tax on buildings, no sales tax, nothing (pdf).  Huge drop in medical costs, along with an increased income available to pay them.  Of course this change would increase land rents, as all enterprises would suddenly be much more productive.  These rents, or the analogous land values, would be taxed instead, to provide whatever governmental revenue is needed.

Second thing they would do is to reduce patent protection on medical drugs and appliances.  I don’t know that it needs to be eliminated, but probably the 20-year term should be shortened to, say 10 years. Preferably this should apply to existing patents, but at a minimum future patents would be restricted.  This would reduce drug and equipment prices, as more generics could become available. Many analysts believe patents are more of an obstacle than an encouragement to innovation.  Even if that is incorrect,  it seems that most new drugs are hardly essential, and are profitable only because so many consumers have no choice about paying for them.  Is there one person who would have died if some new expensive patented drug didn’t exist?  Of course, but there are many people who die because they can’t afford adequate medical services.

Of course, even if the above two actions reduce medical costs 90%, there will still be someone with a rare and serious illness, costing $2 million to treat.  Reducing the cost to $200,000 is great progress, but not everyone has $200,000.  So, once taxes on productive activity are abolished and patents are reformed, I  have no problem with government using some of the revenue from collecting the land rent to fund treatment which if privately paid would lead to financial catastrophe.

Why are drug costs so high?

Apparently the cost of research and development isn’t the cause.

Large drug companies simply can’t afford to keep spending as much as they are now, when about 10% to 20% of revenue goes to R&D

That’s 10-20% of drug company revenue, not including the markup your pharmacy and “health insurance” company add.  I wonder how much of the remaining 80-90% is spent, directly or indirectly, on lobbying and enhancing their privileges.

patents + taxes = insanity squared

Yes, over sixty patents have been issued for “tax planning methods.”  You discover (or contrive?) a loophole, then patent its use. Subsequent taxpayers (or tax avoiders) who might happen on the same idea are obligated to contact you and arrange to license your innovation.  This is not what the Framers had in mind when they empowered Congress

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries

Cong. Rick Boucher introduced a bill a couple of years ago to limit the benefits patent holders could obtain for such patents (summarized here(doc) with full text here(pdf)).   A message today from Vaughn Henry implies that this has been reintroduced.

Privatizing Federal patents

NASA has engaged a Chicago company, Ocean Tomo, to auction off “a suite of 25 patents.” This is considered to be transferring technology to the private sector.   I guess an auction is better than sleazy private deals.  The main point to remember is that a patent is not the right to use an invention, it is only the right to prevent others from doing so.  (via slashdot)

Open source approach to reducing CO2

  • First, you heat limestone to a very high temperature, until it breaks down into lime and carbon dioxide.
  • Then you put the lime into the sea, where it reacts with carbon dioxide dissolved in the seawater.
  • The second step absorbs twice as much CO2 as the first releases,  the released CO2 has industrial uses, and the heating can be done with “free” energy.

So says Cquestrate founder Tim Kruger. He says it works in theory,  but needs to be demonstrated as practical. Most intriguing, he’s doing it as open source, so it will be free of patents and anyone can try it.

According to the site, Kruger is a management consultant, so it’s not hard to see how he could benefit from this innovation even without IP “rights.”

Thanks to the Undercover Economist.

Lava Lamps patent-free too?

A sidebar in today’s Chicago Tribune certainly implies that, like Coca-Cola, lava lamps are manufactured without patent protection, but as a trade secret.  Invented in 1963, the lava lamp’s patent would long since have expired (tho lawyers seem to know ways to effectively extend such things).

btw, the manufacturer says it isn’t officially called a “lava lamp,” but rather a “Lava brand motion lamp.”

Slashdot discussion on IP

The general issue of “Intellectual ‘Property'” was raised today on Slashdot, and the ensuing discussion makes just about all the important points. Most people accept some sort of IP, but length of protection, especially for copyrights, is too long. Some question whether IP is legitimate at all; others point out that patents do require holders to provide details of their inventions, thus preventing long-term trade secrets. And there’s a link to what seems to be a fine book Against Intellectual Property, which can be purchased in hardcopy or downloaded free.

Magicians protect intellectual property without law

Magicians’ secrets really can’t be effectively copyrighted or patented, and trade secret law is of limited use, so how have professional magicians been able to keep most of their best tricks pretty much secret from the public? It’s by a set of strongly-enforced “common norms” among the profession, which allows “sharing” among those in the trade, but prohibits revealing more than trivial secrets. Violators are punished by expulsion from magicians’ organizations, and other techniques which make it difficult to continue working in the field.

From Jacob Loshin’s Secrets Revealed: How Magicians Protect Intellectual Property Without Law (pdf), via boingboing.

"Intellectual Property" vs. Future Archaeologists

There’s already a lot of old digital files that no one can read.  And “Digital Rights Management” limitations will make future archaeologists’ tasks even more difficult.  So says Phil Zimmerman, the inventor of PGP encryption.

“I think intellectual property law has gone a little bit crazy and is counter-productive for society,” says Zimmermann, referring to masses of archives of film that needs to be moved to modern media before it degrades completely. “You need to transfer it but the copyright holder is dead, and no-one knows how to contact the estate.

GAO on "IP" and drug innovation

Speaking here of drugs Congress likes– patented pharmaceuticals– the GAO says:

Intellectual property protections are designed to help encourage innovation by providing financial incentives to engage in research and development efforts.

but, according to some experts interviewed by GAO

intellectual property protections enable companies to earn significant profits while reducing the incentive to develop more innovative drugs.

Nothing really new here. GAO wasn’t asked to provide any recommendations.  Full report is here.