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Posts Tagged ‘IP’
July 2nd, 2024 at 6:30 pm
Record Labels Rightly Sue Abusive AI Music Generators
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However else one opines on the merits or perils of artificial intelligence (AI), everyone of good faith can agree that it mustn’t become a tool for brazen copyright infringement.  Artists who pour their (sometimes literal) blood, sweat and tears into their creative works shouldn’t have those works stolen and exploited by AI bots.

That is particularly true as it relates to AI music generators specifically created for that exploitative purpose.

For that reason, we should all welcome and applaud major record labels for their decisive lawsuit against AI generators Suno and Udio, whom they accuse in their complaints of copyright violation on an “unimaginable scale.”

The complaints make for gripping reading unlike most legal filings, but we’re not talking here about sampling various songs or “fair use” or ambiguous similarities between songs.  We’re talking about wholesale theft, scraping songs for exploitation, which not only punishes artists but America’s entire world-leading music industry.

The complaints can be – and should be – read in their entirety here and here, and we should welcome this effort to enforce creators’ IP rights, regardless of how the broader AI landscape continues to expand.

April 5th, 2024 at 5:09 pm
April Fools’ Day Four Days Late? Google Objects to OpenAI Using YouTube to Train Its Own Generator
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File under “You Can’t Make This Stuff Up.”

Somehow, it actually seems like a farcical April Fools’ Day headline, in fact.  Google, with its deep history of scraping and scanning other sources’ substantive content for its own uses, now objects to OpenAI using YouTube content to train its text-to-video generator:

The use of YouTube videos to train OpenAI’s text-to-video generator would be an infraction of the platform’s terms of service, YouTube Chief Executive Officer Neal Mohan said.”

Optimists might hope that Google is finally recognizing and preparing to correct its wayward course, while realists and cynics will roll their eyes at what they’ll label naivete.  As the old adage goes, however, “every saint has a past, every sinner has a future,” so we’ll maintain hope.

February 8th, 2024 at 12:35 pm
TikTok’s Latest Assault: Ripping Off American Artists and Songwriters
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Americans are by now broadly aware of the threat posed by Chinese-owned TikTok, including its threat to U.S. national security.

In recent days, we’ve witnessed in real time another emerging TikTok threat reaching the headlines:  The threat it poses to intellectual property protections, which undergird America’s status as the most artistically and musically productive and influential nation in human history.

Universal Music Group, however, has decided to stand up and fight back by removing its catalog of songs – including artists like Taylor Swift, Drake and Billie Eilish – from TikTok.

Tone-Deaf TikTok has built its aggressive worldwide empire largely on the backs of music created by American artists, as even its corporate leadership openly admits.  As TikTok’s very own “Year in TikTok 2021 Music Report” states in its opening sentence, “Music is at the heart of the TikTok experience.”

Those are its own words.  Indeed, TikTok content features music to a degree beyond other social media platforms.

As the contractual relationship between Universal and TikTok approached its end on January 31, TikTok decided to play hardball by proposing to compensate songwriters and artists a fraction of what other social media platforms pay, essentially disregarding its reliance on music-based content amid ascending advertising revenues and user base.

In other words, TikTok demands a right to build a music-reliant business without paying fair market value for that music on which it relies.

Songwriters and performing artists invest enormous amounts of time, talent and resources in creating their original works of art.  In so doing, those artists and songwriters obtain intellectual property rights in their creations.  By leveraging its massive and growing worldwide power, TikTok seeks to exploit those creative works for its own benefit without just compensation.  That violates the artists’ intellectual property rights, which have provided the fuel by which America became the world’s leader in music influence.  Artists deserve fair compensation for the use of their creations, and TikTok cannot be allowed to jeopardize America’s system of IP protections.

It also merits emphasis that TikTok’s behavior threatens emerging artists and songwriters most of all.  Whereas established artists often possess other potential revenue sources, emerging artists and songwriters rely more heavily upon royalties and fair compensation for their works.  Consequently, TikTok’s refusal to fairly compensate for use of music in expanding its platform will stifle growth of new musicians and restrict their ability to sustain careers in an already competitive industry.

TikTok has made many enemies, and its behavior in this instance helps illustrate why that’s the case.  It is inherently unfair and improper for TikTok to use its vast and growing control to exploit songwriters’ and musical artists’ creations to amass even more profits and expand its worldwide reach without offering fair compensation to those creative minds who play such an outsized role in its business model and growth.

Universal Music Group merits applause for standing up to TikTok, which may inspire others in positions of power to follow its lead.

 

December 19th, 2023 at 5:11 pm
Stat of the Day: Prescription Drug Prices Have ACCELERATED Since Biden’s “Inflation Reduction Act”
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Following up on our latest Liberty Update commentary highlighting the deepening disaster that is the Biden Administration healthcare and pharmaceutical policy, The Wall Street Journal notes that prescription drug prices have actually ACCELERATED their price inflation since Biden’s so-called “Inflation Reduction Act”:

Prescription drug prices increased by 2% during the Trump Presidency owing to greater generic competition, yet they’ve increased 5.5% so far under Mr. Biden. In November they rose at an annual rate of nearly 6%. Has the White House considered that the reason Americans don’t believe that the President’s policies have helped them is because they haven’t?”

The Biden Administration needs to correct course for the benefit of Americans, not double down.  But time is running out.

August 25th, 2023 at 11:23 am
Innovation Killer: Biden Administration to Announce Ten Lifesaving Drugs Subject to Destructive “Bidenomics” Price Controls
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CFIF recently marked the ignominious one-year anniversary of the Biden Administration’s misnamed “Inflation Reduction Act” (IRA), whose title even Biden himself admitted was mistaken.

We noted how, as a result of the IRA, drug shortages have already reached record highs, increasing by 30% between 2021 and 2022 alone, according to a report in March from the Senate Committee on Homeland Security and Governmental Affairs.  Another report from the American Cancer Society also sounded the alarm on emerging drug shortages, caused in part by drug price control policies.  Thus, just one year in, drug shortages have reached record levels under the looming threat of drug price controls, weaker intellectual property protections and regulatory browbeating.

This week, as reported by Politico, the same Biden Administration that called inflation “transitory” and insists in the face of public blowback that “Bidenomics” is somehow succeeding announced that it will soon release the first ten prescription drugs selected for its destructive price control scheme:

President Joe Biden has sought to sell health policies like the new Medicare negotiation program as part of a broader ‘Bidenomics’ agenda set to underpin his reelection campaign.  The drug pricing push, he has argued, will help counter inflation and boost the economy by slashing the amount Americans have to shell out each year for critical medicines, although prices negotiated on the first set of drugs won’t take effect until 2026.”

Given Biden’s shoddy record for accuracy and competence so far, Americans will be forgiven for their skepticism.  As we noted, the consequence of price controls will be shortages and less innovation, which we’re already witnessing.  Americans aren’t buying this “Bidenomics” pitch, and will pay a heavy price unless and until these dangerous drug price controls are reversed.

 

August 16th, 2023 at 3:31 pm
One Year Later, Biden’s “Inflation Reduction Act” Having Catastrophic Impact on U.S. Healthcare and Innovation
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“The record of price controls goes as far back as human history.  They were imposed by the Pharaohs of ancient Egypt.  They were decreed by Hammurabi, king of Babylon, in the eighteenth century B.C.  They were tried in ancient Athens.” -Henry Hazlitt

Today marks the one-year anniversary of Joe Biden’s misnamed “Inflation Reduction Act” (IRA), which even he now admits shouldn’t have carried that title.

Beyond Biden’s own regrets, however, Americans deserve to understand its destructive impact on our healthcare system and world-leading pharmaceutical innovation sector.

Namely, our traditional market-based approach has resulted in an unrivaled legacy of pharmaceutical innovation and abundance relative to the rest of the industrialized world.

For example, the United States accounts for approximately two of every three new lifesaving drugs introduced worldwide, meaning that we alone create twice as many new drugs as the entire world combined.  As another illustration, American consumers enjoy a substantially higher availability of critical drugs compared to people in other advanced economies.  Of 270 new medicines introduced domestically since 2011, only 52% of them were available to our neighbors just across our northern border in Canada, 41% in Australia, 48 % in Japan, 53% in France, 64% in Britain and 67% in Germany.

Destructive drug price controls, however, maintained an illogical appeal for the Biden Administration and the political left.

They can’t say that they couldn’t have foreseen the downsides of the IRA.  Amid debate over broad drug price controls back in 2021, a University of Chicago study warned of their potential negative impact on future drug innovation and availability:

The United States has far fewer restrictions on price than other countries, but the Biden Administration has announced their goal to lower drug prices through greater price regulation. …  [N]ew drug approvals will fall by 32 to 65 approvals from 2021 to 2029 and 135 to 277 approvals from 2030 to 2039.  These significant drops in new drug approvals will lead to delays in needed drug therapies, resulting in worse health outcomes for patients.  

Several years earlier, even the United Nations World Health Organization (WHO) similarly warned about the consequences of government price controls and intellectual property violations:

[P]rice controls, combined with the threat of market lockout or intellectual property infringement, prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing those policies.  

Disregarding those warnings and textbook economic logic, the Biden Administration and Pelosi-Schumer Congress plowed ahead with the IRA, whose drug price control provisions President Biden bizarrely trumpets as a 2024 reelection theme.  From branded drugs to off-patent older generics, the Biden Administration accelerated government efforts to artificially target drug prices, oblivious to the foreseeable consequences.

We’re now suffering the consequences of that agenda.

Drug shortages have already reached record highs, increasing by 30% between 2021 and 2022 alone, according to a report earlier this summer from the Senate Committee on Homeland Security and Governmental Affairs:

Shortages of critical medications continue to rise – including drugs used in hospital emergency rooms and to treat cancer, prescription medications, and even common over-the-counter treatments like children’s cold and flu medicine.  The number of active drug shortages in the U.S. reached a peak of 295 at the end of 2022. …  Between 2021 and 2022, new drug shortages increased by nearly 30 percent.  At the end of 2022, drug shortages experienced a record five-year high of 295 active drug shortages.  

Separately, a new report from the American Cancer Society warns of emerging drug shortages, caused in part by drug pricing policies:

Chemotherapy drugs used to treat cancer are increasingly in short supply and have returned to the list of top-five drug classes affected by shortage.  Expanded demand, supply shortages, limited manufacturing capacity, and low profit margins for generic therapies are among the factors resulting in the current nationwide shortage.  …  A number of the drugs included in the shortage don’t have an effective alternative.  As first-time treatments for a number of cancers, including triple-negative breast cancer, ovarian cancer and leukemia often experienced by pediatric cancer patients, the shortage could lead to delays in treatment that could result in worse outcomes.  

Accordingly, drug shortages have reached record levels under the looming threat of drug price controls, weaker intellectual property protections and regulatory browbeating.

Instead of perpetuating the IRA’s spiral of price control insanity, elected leaders should return to the more market-oriented approach that brought unrivaled innovation before more Americans pay the needless cost.

April 26th, 2023 at 3:16 pm
CFIF Proudly Celebrates World Intellectual Property (IP) Day
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Today is World Intellectual Property (IP) Day, and CFIF is proud to join a broad coalition of conservative, libertarian and free-market organizations in celebrating a key element that not only drives worldwide innovation and prosperity, but also is the central component explaining American Exceptionalism in worldwide innovation, power and prosperity.

In that latter regard, nothing stands above our enduring legacy of protecting IP – patents, copyrights, trademarks and trade secrets.  America throughout its history has protected IP like no other nation before or since.  Our Founding Fathers deliberately inserted text protecting IP rights into Article I of the Constitution, which reads, “Congress shall have the Power … 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.”  As James Madison explained in the Federalist Papers while advocating ratification of the Constitution, protecting IP respected the natural right of individuals to enjoy the fruits of their labors, while also serving the public good by encouraging innovation.

That assurance that one’s creations will enjoy legal protection in turn promotes creative activity, which is why patent holder Abraham Lincoln noted that America’s IP protections, “added the fuel of interest to the fire of genius in the discovery and production of new and useful things.”

Consequently, no nation spanning the entirety of human history even approaches America’s record of patented invention, from the telephone to the airplane, from lifesaving pharmaceuticals like the polio vaccine to the internet.   No society remotely rivals our copyrighted artistic influence, whether in the form of motion pictures, television programming or popular music.  No nation’s trademarks stand recognized in the way that the Coca-Cola or Apple logos are instantly identified across the world.  A direct relationship exists between our tradition of IP protection and our unrivaled success in innovation and prosperity.

That’s precisely why CFIF is so pleased to join other organizations here in the U.S. and across the globe in celebrating World IP Day, highlighting IP’s critical importance:

On World IP Day, we celebrate the role intellectual property plays in bolstering entrepreneurship, innovation, economic growth and quality job creation…

The U.S IP system drives economic growth, accounting for $7.8 trillion in GDP (41% of total GDP) and more than 47 million jobs.  Direct and indirect employment in IP industries accounts for 44% of U.S. jobs.

IP-intensive industries create high-paying jobs.  Average weekly-wage earnings are 60% higher than earnings in other sectors.  Accelerating the growth rate of women who participate in IP-intensive industries means increasing their earning power and financial well-being.

Unfortunately, some politicians here in America and abroad fail to respect the role of IP in boosting innovation and wellbeing, and actively seek to undermine it with such misguided efforts as surrendering patent rights to Covid vaccines developed in the U.S.

We cannot let that occur, lest Americans and billions across the world suffer.  Accordingly, on this World Intellectual Property Day, we urge national governments, policymakers and other organizations around the world to promote policies that strengthen intellectual property protections and ensure that a healthy innovation environment can thrive.

January 12th, 2023 at 2:09 pm
Elizabeth Warren and Fellow Leftists Demand Government “March-In” on Critical Cancer Drug
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This week, Senator Elizabeth Warren (D – Massachusetts) and a group of fellow liberals submitted a letter to the United States Department of Health and Human Services (HHS) demanding that the federal government employ so-called “march-in” rights under the Bayh-Dole Act of 1980 to disregard private patent rights on the critical cancer drug Xtandi.

Here’s why that’s a terrible and potentially deadly idea that the HHS, other lawmakers and the American public must oppose.

Simply put, disregarding patent protections for pharmaceutical innovators will bring innovation to a halt and deprive Americans of lifesaving drugs.  America currently produces two-thirds of all new drugs worldwide, and that’s because our nation honors and protects patent rights, it doesn’t violate them.

It’s especially outrageous that Senator Warren and her cohorts seek to leverage the Bayh-Dole Act of 1980 to facilitate their scheme.  The Bayh-Dole Act was passed in order to extend patent rights to universities and nonprofit research entities whose research was assisted by federal funds, not weaken them.  Prior to Bayh-Dole, very few innovations partially funded by federal dollars were ever commercially pursued – only 390 in the year prior to its passage.  Four decades later, however, that number approaches 7,500, with over 420,000 inventions and 13,000 new startup enterprises formed.

That explains why The Economist magazine labeled Bayh-Dole the most important bill of the past half-century:

Possibly the most inspired piece of legislation to be enacted in America over the past half-century was the Bayh-Dole Act of 1980.  Together with amendments in 1984 and augmentation in 1986, this unlocked all the inventions and discoveries that had been made in laboratories throughout the United States with taxpayers’ money.”

Alarmingly, however, this groups seeks to undermine patent rights for Xtandi by exploiting a “march-in” provision within Bayh-Dole to empower the federal government to commandeer new drugs and license the patents on inventions partially funded by federal dollars to third parties.   According to their flawed logic, the market prices of some drugs render them insufficiently available to the general public, and on that basis they encourage federal bureaucracies to forcibly license those drugs’ patent rights to other third parties for manufacture and sale.  That would constitute a frontal assault against private pharmaceutical innovators, disregarding their patent rights and the enormous investments they’ve made over years and decades to conceive, perfect, produce and distribute those drugs.  It would also contravene the statutory terms of Bayh-Dole itself.

Indeed, Senators Birch Bayh and Bob Dole themselves confirmed that the law bearing their names did not intend or allow cost to become a mechanism for imposition of de facto drug price controls:

Bayh-Dole did not intend that government set prices on resulting products.  The law makes no reference to a reasonable price that should be dictated by the government.  This omission was intentional;  the primary purpose of the act was to entice the private sector to seek public-private research collaboration rather than focusing on its own proprietary research.”

That’s precisely why the National Institutes of Health (NIH) has rejected every one of the “march-in” petitions that it has received during the Bayh-Dole Act’s existence.  It has consistently and correctly ruled that attempts to leverage price allegations to justify march-in would undermine the very goal of the act and ultimately harm American consumers.

People like Sen. Warren and her cohorts nevertheless claim that federal funding toward pharmaceutical research justify government march-in intrusion, falsely asserting that pharmaceutical innovators somehow enjoy a free ride at taxpayer expense.   That’s false.

Private funding for research and development actually dwarfs public funding.  According to the NIH itself, private sector R&D far exceeds NIH funding throughout recent years and decades.  In 2018, as another example, the NIH spent $3 billion on clinical trials involving new or existing drugs, compared to $102 billion in R&D by the U.S. biopharmaceutical industry.  Indeed, the pharmaceutical industry stands as the single largest source of business R&D funding in the U.S., accounting for 17.6% of all U.S. business R&D.  The next-closest counterpart is the software sector at 9.1%, with the automobile industry at 5.9% and the aerospace industry at 4.1%.

Senator Warren and her cosigners also allege that inflation somehow justifies their demand, but the fact is that drug prices significantly trail overall inflation.

Accordingly, the facts show that strong U.S. patent protections and the Bayh-Dole law promote pharmaceutical R&D investment, and there’s simply no legal or logical basis for advocating march-in regarding Xtandi.  Pharmaceutical innovation demands billions of dollars in sunk costs of investment, not to mention potential product liability lawsuits for any errors.  Strong patent protections, which Bayh-Dole codifies, help ensure that those costs and risks will be fairly and sufficiently rewarded.  They provide innovators and investors the incentives to create pharmaceuticals that save millions and even billions of lives worldwide.

The demand by Senators Warren and her cosigners would dangerously jeopardize that.

November 17th, 2022 at 11:48 am
Stat of the Day: Thanksgiving Costs Up a Record 20%, but Prescription Drug Prices Decline
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As we approach Thanksgiving, you may have heard (or personally experienced) that the cost of Thanksgiving dinner this year is up a record 20%.

Meanwhile, guess what’s actually declined in price, according to the federal government itself.  That would be prescription drug prices, which declined 0.1% last month alone.

Perhaps the Biden Administration should focus on helping everyday Americans afford Thanksgiving, rather than artificially imposing innovation-killing government price controls on lifesaving drugs, which are actually declining in price and nowhere near the inflation rate afflicting other consumer costs.

November 4th, 2022 at 11:12 am
USC Healthcare Fellow: Biden’s “Inflation Reduction Act” Already Killing Potential Pharmaceutical Cures
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We at CFIF often warn how attempts at “drug price controls” will only succeed in killing lifesaving drug innovation, in which the U.S. leads the world without a close second.

Joe Biden’s so-called “Inflation Reduction Act” constitutes a perfect illustration, and in a Wall Street Journal piece entitled “The Inflation Reduction Act Is Already Killing Potential Cures,” USC Schaeffer Center for Health Policy & Economics fellow Joe Grogan shows how “we’re already getting signs of the damage”:

One poorly crafted provision is driving companies away from research into treating rare diseases.  In its Oct. 27 earnings statement, Alnylam announced it is suspending development of a treatment for Stargardt disease, a rare eye disorder, because of the company’s need ‘to evaluate impact of the Inflation Reduction Act.’  Alnylam’s decision turns on a provision in the Democrats’ bill that exempts from price-setting negotiations drugs that treat only one rare disease.  The company’s drug is currently marketed as treating only amyloidosis, and thus is exempt from Medicare’s price setting.  If Alnylam proceeded with research into treating Stargardt, it would lose its exemption.”

And that’s not even the end of it.  Earlier this week, Eli Lilly announced termination of a blood cancer drug because, “In light of the Inflation Reduction Act, this program no longer met our threshold for continued investment.”

Mr. Grogan proceeds to offer a must-read primer on how and why this is happening, then concludes by admonishing the next Congress convening in January to abandon this instant disaster and promote innovation instead of cheap Biden Administration talking point schemes:

The Democrats may have achieved a short-term talking point for the midterm elections, but in the long term this partisan healthcare bill will prevent patients from receiving innovative, lifesaving treatments.  A new Congress would serve Americans well by replacing the Inflation Reduction Act with an approach that recognizes the need for economic incentives to bring new treatments to patients.”

Good advice.

October 28th, 2022 at 3:15 pm
Anti-Patent Group Seeks to Weaken U.S. Pharmaceutical Innovation and Intellectual Property Advantage
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When pondering the origins of American Exceptionalism, and what makes us the most innovative, prosperous nation in human history, look first to our tradition of protecting intellectual property (IP) – patent, copyright, trademark, and trade secret property rights.

After all, other nations match or even exceed the U.S. in free market rankings (24 nations in the latest annual Index of Economic Freedom, in fact).  No nation, however, can match us for sheer innovation.  America accounts for less than 5% of the world’s population, and even with the world’s largest economy we account for under 25% of the global economy.  In contrast, no nation can match our scientific innovation, from flight to space exploration to the internet.  Nor can any nation match our artistic leadership, from the film industry to television to music, or claim as many instantly recognizable trademarks, from Coca-Cola to Apple.

Year after year, that’s why the U.S. leads global rankings of IP protection.

Perhaps most conspicuously, the U.S. accounts for fully two-thirds of all new lifesaving pharmaceuticals introduced to the world each year.  In an era increasingly reliant on pharmaceutical treatments for everything from Covid to cancer to Alzheimer’s, that is a leadership of which we should remain both proud and protective.

Inexplicably, however, some voices seek to undermine that IP leadership position.  A group called I-MAK offers the latest assault, with a “study” entitled “Overpatented, Overpriced,” which attempts to show “how excessive pharmaceutical patenting is extending monopolies and driving up drug prices.”  We employ scare quotes around the term “study” because I-MAK’s work has been previously debunked and exposed by leading IP scholars like George Mason University and Antonin Scalia Law School Professor Adam Mossoff and Senator Thom Tillis (R – North Carolina) for using defective and non-transparent supporting data.

Indeed, we highlighted earlier this year how drug prices have remained far, far below overall inflation.  Efforts like I-MAK’s would only end up suffocating drug innovation, not reducing prices, as we’ve also highlighted:

Of all new cancer drugs developed worldwide between 2011 and 2018, 96% were available to American consumers.  Meanwhile, only 56% of those drugs became available in Canada, 50% in Japan, and just 11% in Greece, as just three examples.  Patients in nations imposing drug price controls simply don’t receive access to new pharmaceuticals as quickly as Americans, if they ever receive them at all.”

Even the World Health Organization (WHO) acknowledges that overseas consumers’ lower access to pharmaceutical innovations stems from their governments’ imposition of price control regimes:

‘Every time one country demands a lower price, it leads to lower price reference used by other countries.  Such price controls, combined with the threat of market lockout or intellectual property infringement, prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing those policies.’”

The irrefutable reality is that U.S. patent protections explain why we produce the overwhelming share of new drugs worldwide, including the Covid vaccines.  Efforts like I-MAK’s latest “study” continue a bizarre ongoing affront to property rights, the rule of law and IP.  If successful, they would only mean fewer future vaccines and treatments, and must be flatly rejected.

 

September 22nd, 2022 at 4:58 pm
New Lung Cancer Breakthrough Illustrates the Potential Peril of Drug Price Controls
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We at CFIF often highlight the clear and present danger that drug price control schemes pose to American consumers, who benefit from our private pharmaceutical sector that leads the world – by far – in innovation.  A new lung cancer treatment breakthrough in the form of Amgen’s Lumakras illustrates that interrelationship.

Simply put, Lumakras reduced the risk of progression by 34% compared to chemotherapy in patents with advanced lung cancer, which is particularly welcome considering lung cancer’s especially low survival rate (18.6% over five years, and just 5% for advanced forms).  The breakthrough required years of research and enormous amounts of investment, however, which The Wall Street Journal notes makes Lumakras the type of innovation put at risk by new drug price controls recently enacted by Congressional Democrats and the Biden Administration:

The drug is by no means a cure, but progress occurs at the margin and some patients who had what amounted to a death sentence now have hope to live.  Lumakras is also much less brutal than chemotherapy.

Yet the drug might not have been developed had the Medicare take-it-or-leave-it negotiations that Democrats recently enacted been in effect earlier.  Their price controls will penalize in particular small-molecule drugs like Lumakras that have the potential to help large numbers of patients.  Within six years, Lumakras could be targeted by bureaucrats for price controls and the payoff on Amgen’s investment could vanish.

The reason for that is simple.  Straightforward economic principles dictate the inevitable negative blowback from government price controls, whether in the form of 1970s gas lines here in the U.S. or food shortages in Venezuela.

Even the United Nations World Health Organization (WHO) warns explicitly about these negative consequences of price controls on drug innovation:

[P]rice controls, combined with the threat of market lockout or intellectual property infringement, prevent drug companies from charging market rates for their products, while delaying the availability of new cures to patients living in countries implementing those policies.  

Closer to home, a recent University of Chicago study quantified the destructive effect of drug price controls on future lifesaving innovations:

The United States has fewer restrictions on price than other countries, but the Biden Administration has announced their goal to lower drug prices through greater price regulation…  [N]ew drug approvals will fall by 32 to 65 approvals from 2021 to 2029 and 135 to 277 approvals from 2030 to 2039.  These significant drops in new drug approvals will lead to delays in needed drug therapies, resulting in worse health outcomes for patients.  

As the University of Chicago points out, the U.S. maintains a more market-oriented approach to pharmaceutical innovation than other developed nations, which benefits American consumers.  Of 270 new medicines introduced here in the U.S. since 2011, for instance, Canadians could only access 52% of them, the Germans 67%, the British 64%, the French 53%, the Japanese 48% and the Australians just 41%.  Moreover, the U.S. accounts for two-thirds of all new drugs introduced to the world.

The real-world numbers speak for themselves.  Americans benefit immensely from our world-leading pharmaceutical sector, and Lumakras offers just the latest welcome example.  The sooner the recent drug price control schemes are repealed or scaled back, the more Americans who suffer from cancer and other ailments stand to benefit.

 

August 31st, 2022 at 6:18 pm
Senate Should Take Up Companion Legislation to the House’s American Music Fairness Act (H.R. 4130)
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Congress doesn’t maintain a spotless record of affixing accurate titles to proposed legislation, but in the case of the American Music Fairness Act (H.R. 4130), the House of Representatives nails it.

Now it’s time for the Senate to take up companion legislation and bring greater fairness to performance rights in the music industry.

By way of background, federal law currently secures royalty payments for songwriters and others when their songs are played on AM-FM terrestrial radio, but not for the performing artists themselves.  Deepening that odd paradox, performance artists receive compensation when their songs play on digital broadcast platforms like the internet, satellite and cable.  Terrestrial radio broadcasters, however, somehow remain exempt under existing law from having to pay that same compensation.  There’s no logical or legal justification for that paradox, which amounts to crony capitalism in the form of a special government carve-out.

Fortunately, the American Music Fairness Act currently before the House would finally secure performance rights for artists whose recordings are played on terrestrial radio (with exceptions maintained for smaller mom-and-pop stations).  In 2021, we at CFIF joined numerous fellow conservative and libertarian organizations in a coalition letter to the House amplifying the need to pass this legislation to protect artists’ natural intellectual property (IP) rights:

The Constitution protects intellectual property rights and specifically delegates to Congress authority to protect creative works.  Artists who produce music therefore have the right to protect their intellectual property, including both the writer and performer of a given recording.  When a given work is transmitted, common sense and basic fairness dictate that the medium of transmission should not affect the existence of these rights.  Yet, under the current regime, a performer does not hold effective or enforceable rights to his or her product when it is distributed through terrestrial radio.”

Opponents of the American Music Fairness Act illogically suggest that it would somehow introduce needless market regulation, but the obvious reality is that the market is already regulated in the discriminatory manner described above.  The American Music Fairness Act would merely level the playing field and respect the value of the artists’ works.

Some opponents of H.R. 4130 also falsely attempt to portray it as creating a “tax.”  As leading anti-tax crusader Grover Norquist of Americans for Tax Reform answers, however, taxes are compulsory payments to government, whereas royalties are voluntary payments to broadcast others’ creations:

[W]hat is proposed is not, in fact, a tax but a royalty.  The definition of a tax is the transfer of wealth from a household or business to the government.  Taxes aren’t voluntary; paying a royalty is.  It is completely within the rights of broadcasters to decide not to pay for the use of a performer’s song by simply not using the song.  This may not be an ideal option, but these songs actually are the property of someone else…  Just as dishonest as calling a tax a fee or fine, so too is it wrong to apply the word ‘tax’ to a royalty payment.  Creating the negative perception that this legislation creates a new tax may be convenient in the short term and assist opponents in gaining political support;  in the long run it is incredibly unhelpful to those who work to reduce the burden of government in our everyday lives.”

By any standard of fairness and logic, performing artists possess a natural right to enjoy the fruits of their labor and creativity, just like any of us do for our work.  After all, artists already receive performance payments from non-terrestrial radio stations, reflecting the value of their work.  The American Music Fairness Act simply corrects an unfair and illogical federal carve-out.

Accordingly, the House should promptly pass this long-overdue legislation, and the Senate should similarly take up companionate legislation.

August 5th, 2022 at 11:25 am
Image of the Day: Prescription Drug Prices Aren’t the Inflationary Problem
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As Senators Joe Manchin (D – West Virginia) and Kyrsten Sinema (D – Arizona) betray their “moderate” charade and join Senate Majority Leader Chuck Schumer’s (D – New York) latest tax-and-spend monstrosity, we’ve highlighted the preposterousness of the claim that imposing drug price controls will in any way address out-of-control inflation.  Price controls will kill innovation, but do nothing to reduce inflation, because prescription drug prices simply aren’t the problem.  Once again, economist Steve Moore offers a handy illustration of that truth:

Prescription Drug Costs Aren't the Problem

Prescription Drug Costs Aren’t the Problem

June 17th, 2022 at 12:18 pm
Inexcusable and Dangerous: Biden Administration Surrenders U.S. Patent Rights to World Trade Organization (WTO)
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For a man who constantly claims to support “Buy American,” Joe Biden demonstrates an inexplicable and almost fetish-like tendency to undercut American industries.

Since day one, the Biden Administration has ceaselessly besieged a domestic energy sector that finally achieved U.S. energy independence after decades of effort.  And now, it is following through on its inexcusably foolish assault against the U.S. pharmaceutical sector.

Each year, American pharmaceutical innovators account for an astounding two-thirds of all new lifesaving drugs introduced worldwide.  That’s the direct result of our system of intellectual property (IP) protections, including patents, which consistently leads the world.

Instead of protecting that legacy of American Exceptionalism, however, the Biden Administration remains bizarrely determined to eviscerate it.  Today, the World Trade Organization (WTO) announced agreement to forcibly waive patent protections for Covid vaccines, a dangerous effort that the Biden Administration for some reason supports.

This is nothing short of a license to steal U.S. patents.

The WTO effort serves no valid purpose, because Covid treatments are already being provided to poor nations across the world and the underlying pharmaceutical patents it targets are already being licensed at reduced prices or even for free.  Moreover, the  nations that the WTO claims to help recognize that lack of immunizations stems not from vaccine shortages, but rather from local logistical distribution problems and vaccination hesitancy among unvaccinated people in those nations.  Indeed, biopharmaceutical manufacturers remain capable of producing 20 billion vaccine doses this calendar year, so the problem isn’t lack of vaccine availability.

Additionally, a  supermajority of American voters spanning the political spectrum oppose this forcible waiver of Covid vaccine patents, favoring instead the licensing of patents to boost the global supply of vaccines.  Specifically, over 70% of voters believe that waiving Covid vaccine IP could have significant negative implications on the safety and efficacy of supply.

American patent protections explain our unmatched record of innovation, and also why we produce the overwhelming share of new drugs worldwide.  As the pandemic demonstrated once again, that includes Covid vaccines.  The WTO proposal egregiously sacrifices U.S. property rights and undermines the rule of law, which in turn will mean fewer lifesaving vaccines and treatments in the future.  If the Biden Administration won’t correct course, Congress must intervene to do so.

 

 

 

 

April 26th, 2022 at 1:28 pm
Happy World Intellectual Property (IP) Day — Celebrating the Fuel of U.S. and Worldwide Innovation
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Happy World Intellectual Property (IP) Day!

Among the many elements explaining American Exceptionalism in worldwide innovation, power and prosperity, nothing stands above our enduring legacy of protecting IP – patents, copyrights, trademarks and trade secrets.

Since America’s founding, we’ve protected IP like no other nation before or since.  Our Founding Fathers deliberately inserted text protecting IP rights into Article I of the Constitution, which reads, “Congress shall have the Power … 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.”  And as James Madison explained in the Federalist Papers while advocating ratification of the Constitution, protecting IP respected the natural right of individuals to enjoy the fruits of their labors, while also serving the public good by encouraging innovation.

The assurance that one’s creations will enjoy legal protection in turn promotes creative activity, which is why Abraham Lincoln — himself a patent attorney — noted that America’s IP protections, “added the fuel of interest to the fire of genius in the discovery and production of new and useful things.”

Consequently, no nation spanning the entirety of human history even approaches America’s record of patented invention, from the telephone to the airplane, from lifesaving pharmaceuticals like the polio vaccine to the internet.   No society remotely rivals our copyrighted artistic influence, whether in the form of motion pictures, television programming or popular music.  No nation’s trademarks stand recognized in the way that the Coca-Cola or Apple logos are instantly identified across the world.  A direct relationship exists between our tradition of IP protection and our unrivaled success in innovation and prosperity.

That’s why we at CFIF are pleased to join over 100 other free-market, conservative and libertarian organizations here in the U.S. and across the globe in celebrating World IP Day, as highlighted by our collective open letter to World Intellectual Property Organization (WIPO) Director-General Daren Tang:

IP-intensive industries play a central role in job creation. In the United States, IP-intensive industries account for 44 percent of total employment, and jobs in these industries come with a 60 percent weekly wage premium over jobs in other industries… 

Intellectual property protections are also important for promoting economic growth.  The United States Patent and Trademark Office found that IP-intensive industries contribute $7.8 trillion USD to the U.S. economy, or nearly 41 percent of total U.S. DP.  The U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) further reported that these innovative industries account for over 40 percent of U.S. economic growth.  The role of robust IP protections is clearest when contrasting country scores and their World Bank income classification.  According to the 2021 International Property Rights Index, high-income countries’ scores were 33.5 percent stronger than the average score of upper-middle-income countries and 66.1 percent stronger than the average score of low-income countries.  This IP protection gap must be closed.”

Unfortunately, too many political leaders here in America and across the world fail to respect the role of IP in boosting innovation and wellbeing, and actively seek to undermine it.  We cannot let that occur, lest we all suffer.  As we conclude in our coalition letter, “On this World Intellectual Property Day, we urge WIPO, along with other international organizations, national governments, and policymakers around the world, to continue to promote policies which strengthen intellectual property protections and ensure that a healthy innovation environment can thrive for today’s youth and for generations to come.”

 

 

March 31st, 2022 at 12:49 pm
Congress Mustn’t Tolerate WTO and Biden Admin Proposal Targeting U.S. Pharmaceutical Patent Protections
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This week, the Biden Administration’s United States Trade Representative (USTR) Katherine Tai appeared before the Senate Finance Committee and House Ways and Means Committee, offering an important opportunity to rally opposition to the administration’s agreement with a misguided proposal in the World Trade Organization (WTO) to suspend patent protections for Covid vaccines, treatments and other therapies created by U.S. pharmaceutical innovators (through what’s known as the Agreement on Trade-Related Aspects of Intellectual Property, or “TRIPS”).

Don’t let the esoteric nature of the treaty fool you – this is an extremely dangerous proposal to attack U.S. patent rights.  As The Wall Street Journal observed, “this may be the single worst presidential economic decision” since the Nixon Administration.

That assessment is well-founded.  Strong patent protections provide the foundation for U.S. pharmaceutical innovation, and explain why the U.S. leads the world by accounting for an astounding two-thirds of all new drugs introduced worldwide.  The Covid vaccines and treatments at issue provide just the latest example.  Contravening that obvious causal relationship, however, some WTO members demand that the U.S. surrender those vital patent and other intellectual property (IP) protections for Covid vaccines, diagnostics and other treatments.  Worse, some misguided politicians here in America who should know better echo those potentially destructive demands.

That would tragically and needlessly undermine the very policies that prompted pharmaceutical innovators to devise and develop the vaccines already providing relief to the world, and leave us less capable of addressing current and future diseases and pandemics.  Ironically, President Biden himself has historically supported patent and other IP rights, including sponsorship of the 1980 Bayh-Dole Act that proved so invaluable in promoting innovation, and which The Economist magazine labeled “possibly the most inspired piece of legislation to be enacted in America over the past half-century.”

It’s also important to note that more rational actors like the European Union, United Kingdom, Canada, Switzerland and Japan oppose the proposed TRIPS patent suspension.   In contrast, WTO members India and South Africa, which back the effort targeting U.S. patent rights, have even joined international rogues China and Russia to create their own joint “vaccine center.”  That betrays the bad faith of their broader effort.

India and South Africa have joined with China and Russia (and Brazil) to establish a joint BRICS vaccine center.

The proposed TRIPS waiver targeting U.S. drug innovators and patent protections is also unnecessary, because treatments are already being provided to impoverished nations across the world, and patent rights are already being licensed at abnormally low prices or even free of charge.  To the extent that difficulties in immunizing impoverished populations remain, as emphasized by the Africa Centres for Disease Control, the problems center on local logistical distribution problems and vaccination hesitancy among the unvaccinated, not supply shortages.  Indeed, biopharmaceutical manufacturers already possess the ability to produce 20 billion vaccine doses in 2022.

More broadly, lawmakers and American consumers must consider the dangerous signal that suspending patent rights for pharmaceutical innovators would send, and the long-term disincentives that would follow if pharmaceutical patent rights were weakened rather than protected.  Pharmaceutical innovation demands billions of dollars in sunk costs of investment and testing, not to mention potential product liability lawsuits for any error.  To suddenly signal that those costs and risks won’t be sufficiently and fairly rewarded through ensuing patent protections would have catastrophic effects over both the short and long terms.  That will increasingly become the reality if we accept policies that deprive innovators and investors of the incentives to create drugs that save millions and even billions of lives.

American patent protections are the leading reason why we continue to produce the overwhelming share of new drugs worldwide, including the Covid vaccines themselves.  The WTO and Biden Administration must recognize and respect that reality, and Congress must act to stop this potentially catastrophic WTO proposal.

March 18th, 2022 at 4:30 pm
Congress Should Pass the American Music Fairness Act (H.R. 4130) to Bring Fairness to Performance Artists
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For years, we at CFIF have joined fellow conservative and libertarian organizations to spotlight the unfairness under federal law by which songwriters and others receive royalty payments when their songs are played on AM-FM terrestrial radio, but the performing artists themselves do not.

Exacerbating the illogic, performance artists do receive compensation when their songs play on digital broadcast platforms like the internet, satellite and over cable.  Yet terrestrial radio broadcasters remain exempt under existing law from having to pay that same compensation.

There’s no logical or legal justification for that paradox.  It amounts to crony capitalism in the form of a special government carve-out, and we’ve called for changes in federal law to finally correct it.

Fortunately, we can report good news in Congress on this unresolved issue.

New legislation before the House of Representatives entitled the American Music Fairness Act (H.R. 4130) would finally secure a performance right for artists whose recordings are played on terrestrial radio, with exceptions allowed for smaller mom-and-pop stations.

As we and fellow conservative and libertarian organizations wrote in our coalition letter to the House in 2021, that would protect artists’ natural intellectual property (IP) rights:

The Constitution protects intellectual property rights and specifically delegates to Congress authority to protect creative works.  Artists who produce music therefore have the right to protect their intellectual property, including both the writer and performer of a given recording.  When a given work is transmitted, common sense and basic fairness dictate that the medium of transmission should not affect the existence of these rights.  Yet, under the current regime, a performer does not hold effective or enforceable rights to his or her product when it is distributed through terrestrial radio.”

Opponents of the American Music Fairness Act might illogically allege that the proposal would introduce needless regulation of the market.  The truth, however, is that the market is already regulated in the discriminatory manner described above.  The proposed law would simply level the playing field and better respect the value of the artists’ works.

Opponents might also falsely attempt to portray H.R. 4130 as creating a “tax.”  As Grover Norquist of Americans for Tax Reform cogently answered, however, a tax is a compulsory payment to government while royalties at issue here are voluntary payments to broadcast others’ creations:

[W]hat is proposed is not, in fact, a tax but a royalty.  The definition of a tax is the transfer of wealth from a household or business to the government.  Taxes aren’t voluntary; paying a royalty is.  It is completely within the rights of broadcasters to decide not to pay for the use of a performer’s song by simply not using the song.  This may not be an ideal option, but these songs actually are the property of someone else…  Just as dishonest as calling a tax a fee or fine, so too is it wrong to apply the word ‘tax’ to a royalty payment.  Creating the negative perception that this legislation creates a new tax may be convenient in the short term and assist opponents in gaining political support;  in the long run it is incredibly unhelpful to those who work to reduce the burden of government in our everyday lives.”

Here’s the bottom line:  Performing artists have a natural right to enjoy the fruits of their labor and creativity, just like any of us do for our work.  Indeed, artists already receive payment from non-terrestrial radio stations, reflecting the value of the artists’ work.  Accordingly, the existing federal carve-out is unfair and illogical, and this bill simply corrects that imbalance.

It’s therefore time for Congress to pass the American Music Fairness Act (H.R. 4130) and achieve common-sense reform at last.

 

February 2nd, 2022 at 4:20 pm
Opposition to Biden FCC Nominee Gigi Sohn Reaches Critical Mass
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For months, CFIF has articulated why the U.S. Senate must reject the Biden Administration’s nomination of hyperpartisan Gigi Sohn to sit on the Federal Communications Commission (FCC), including our expression of support for Senator Roger Wicker’s (R – Mississippi) demand for rehearing based upon potential ethical concerns regarding Ms. Sohn after reviewing the substance of a $32 million litigation settlement between television broadcasters and the defunct Locast streaming service following her nomination.  Sohn sat on the board of Sports Fan Coalition, a nonprofit organization that operated Locast:

As Senator Wicker rightfully notes, the FCC oversees and regulates companies that were party to the $32 million settlement in question. Accordingly, the possibility of Ms. Sohn’s future financial liability to companies over which she would wield power if confirmed to the FCC merit immediate and full investigation. In addition, the timing of the settlement following her nomination by the Biden Administration offers additional reason for full public hearing to resolve any ethical questions.”

Now, The Wall Street Journal joins the accumulating chorus of opposition, bluntly asking, “Does an independent agency nominee who has deceived Senators about her business conflicts deserve to be confirmed?”

After the hearing Mississippi Sen. Roger Wicker followed up with a written question:  ‘Where did the money come from for the payment of the $32 million settlement in connection with the Locast case?’  If a company donated the funds, she might have to recuse herself from matters involving the donor.  She responded that the ‘settlement funds come from amounts collected to fund [Sports Fan Coalition NY] after SFCNY pays its vendors.’  SFCNY is the name of the nonprofit that operated Locast.  This was an odd answer because SFCNY’s IRS 990 form showed only $794,159 in assets and funds at the end of 2020.  Where did the other $31 million come from?

Ms. Sohn declined the Senate’s request for a copy of the settlement, and now we know why.  Bloomberg Law reported this week that the settlement was signed Oct. 27 — one day after President Biden nominated her.  Locast only agreed to pay $700,000.  We’ve independently reviewed a copy of the settlement, which has Ms. Sohn’s signature.  In other words, on the day after she was nominated to her powerful regulatory position, broadcasters agreed to a settlement that cut the liability of her nonprofit by 98%. Interesting timing.

Why didn’t Ms. Sohn correct Mr. Wicker about the ‘$32 million settlement’?  Even if there was nothing improper about the settlement agreement, her lack of candor is a problem.  The settlement also creates the appearance of a conflict given her pending power over broadcasters, which she must pledge to avoid in an FCC ethics agreement.”

Beyond her ethical failures as articulated by Senator Wicker and The Wall Street Journal, Ms. Sohn’s nomination gravely threatens America’s thriving internet sector.   Specifically, she seeks to more heavily regulate that sector in the image of European internet service, which performed poorly throughout the Covid pandemic compared to the United States.  Despite nationwide quarantines and surges in internet use, U.S. broadband speeds actually increased by 91% in 2020.  Europe, in contrast, suffered service bottlenecks and overload, prompting regulators to ask content providers to throttle back.  Ms. Sohn would undermine the private U.S. broadband sector and remake it in that demonstrably inferior European image.  She has signaled support for rate regulation of broadband and is a staunch advocate of government-owned broadband, which would undermine private investment and network expansion, as well as the jobs that investment and expansion create.

Sohn also favors radical reimposition of Title II so-called “Net Neutrality” regulations, which would regulate private internet service as a “public utility” under 1930s statutes aimed at copper-wire telephones.  After the Obama FCC first imposed those regulations in 2015, the negative effects were immediate:  For the very first time ever outside of an economic recession, private internet investment actually declined.  When the Trump Administration FCC under Chairman Ajit Pai subsequently reversed the Obama FCC’s Title II regulation, private investment rebounded and internet service speeds immediately increased.

Our internet service sector mustn’t be subjected to the sort of disruptive overregulation that Sohn would bring if confirmed to the FCC.  She’s also notoriously weak on U.S. intellectual property rights, and advocates imposition of consumer privacy laws in a crony capitalist manner.  She’s simply too radical to be confirmed to the FCC at a time when Americans rely more than ever on a thriving internet service sector, and Senator Wicker is to be applauded for his leadership on this issue.

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December 6th, 2021 at 12:19 pm
AEI’s Michael Rosen: “Omicron Variant Sows Chaos but Doesn’t Move Needle on Patent Waiver Debate”
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In our latest Liberty Update, we highlight an eye-opening new study confirming how drug price controls kill pharmaceutical investment and innovation at the worst possible time, when America and the entire world depend upon them more than ever.

In similar vein, American Enterprise Institute (AEI) Adjunct Fellow and healthcare expert Michael Rosen nicely illustrates how the omicron variant of Covid has paused the destructive global effort to suspend enforcement of patent rights belonging to lifesaving vaccine developers:

But the new omicron variant of the virus has intervened, shelving the planned WTO meeting and throwing into continued contrast the supposed haves and have-nots of vaccine protection…  But the EU has held firm in resisting the vaccine waiver, and rightly so.”

Unfortunately, even the EU remains too accommodating of calls to kill the goose that lays the golden vaccine eggs, but hopefully this latest experience brings greater collective wisdom.  If we seek to maximize healthcare and pharmaceutical innovation, the solution isn’t any secret.  Get bureaucrats and suffocating price controls and patent threats out of the way.