Insights
The cost of innovation Vs. The Cost of Living by Andre Burnett
The narcissistic proclamation by the lead character in the 2006 film, Talladega Nights often rings true in the business world. In the film Will Ferrell lets his partner know in no uncertain terms, “If you ain’t first, you’re last” and he means every word. Now, while Mr. Ferrell might have been speaking in hyperbolic terms but imagine for a second if Sony and Phillips had showed up to the patent office an hour after RCA dropped off their request for a compact disc patent. Second place wouldn’t have been worth the ink on a Madoff cheque right now. Ok, that may have been a hyperbole also but the point has been made.
T
he amount of money spent in Research and Development (R&D) each year by companies trying to extend their monopoly or break into a monopoly is considerable. Competition is fierce in almost all sectors but one industry where there has been a lot of debate about the cost of innovation and its cost to the pockets of the general public is in health care.
Atorvastatin may not sound at all familiar but then again New York based drug house Pfizer spent a lot of money to make sure that the name known to many of us is Lipitor. Lipitor is a popular cholesterol lowering drug and in the Jamaican market there are no available generics due to a patent claim active in the island. Thus the impact of purchasing such a drug impacts heavily on many Jamaicans who fight the battle to stay healthy yearly. Yet pharmaceutical companies posit that allowing generics to be available sooner than they are nowadays might save some dollars in the short run but would eventually hurt health care in the long run. yourmoney ezine
Insights
The cost of innovation Vs. The Cost of Living
After the initial “big, bad corporation” phase wears off, it sinks in that they have a valid argument. Currently the makers of a new drug enjoys up to 15 years before another drug company is legally allowed to produce a generic version of said drug. It seems long but it has been deemed the suitable time to allow the company to recoup their investment in R&D. Several experts have come forward to state that patent challenges could save money nowadays but could irreparably damage future innovation. Health care is still a business, no businessman worth his salt would willingly invest years and millions into delivering cutting edge medicine only to realize that he will never make a profitable return on investment. In the US, a patent lawsuit (Paragraph IV) can cost a generic company between $5 and $10 million to file while the cost of bringing a drug to the market is around $800 million, and with a 42% win rate for generics, it doesn’t hurt to try. Being a successful Paragraph IV challenger earns a 180 day exclusivity in which up to $80 million can be made. Data in the US shows that the number of new compounds approved by the FDA has decreased by an average of 35 from 2002-2007 compared to the previous five years. It may be a bit melodramatic to say that our efforts to cut costs today may impact our children’s future due to manufacturers’ unwillingness to be fodder for generic companies. The arguments have been made and any visit to the pharmacy will show that generic drugs are here to stay and with this economic forecast they might be more viable than ever. The bottom line is that it is all about the bottom line and even though it may be David versus Goliath there is no clear winner when the dust settles.
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In the US, a patent lawsuit (Paragraph IV) can cost a generic company between $5 and $10 million to file while the cost of bringing a drug to the market is around $800 million, and with a 42% win rate for generics, it doesn’t hurt to try.
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yourmoney ezine
business lounge
terrorism No Cost is Too High? by Andre Burnett
W
hen two female bombers blew themselves up in two separate subway stations in peak Moscow commute early on the morning of the 29th of February, 2010, they took with them 38 lives and the peace of mind of millions. Russian Prime Minister and former president Vladimir Putin has vowed to track down and “destroy” the masterminds of the dastardly attack which takes place some six years after any such attack. Ironically Putin himself had declared the war on terror in Russia as being “over” after the death of Chechen warlord and notorious terrorist Shamil Basayev in 2006 while he was still president. Basayev, Putin’s nemesis during his presidency, was responsible for hostage takings and mass murders including the 2004 attack on a school which resulted in the death of 400 people nearly half of which were children.
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The threat to the Winter Olympics is just one of the many ways that terrorism has cheated countries worldwide out of valuable dollars that could have been spent elsewhere.
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Monday’s attack has sent a nervous shudder throughout the world and in Russia there are new concerns about the prospect of the 2014 Winter Olympics to be held in the southern city of Sochi. The threat to the Winter Olympics is just one of the many ways that terrorism has cheated countries worldwide out of valuable dollars that could have been spent elsewhere.
against terror, domestically and internationall y, figures in somewhere around the US$1 trillion dollar mark. Yes, trillion with a “t” and that is since 2001. The sources of terrorism differ from country to country, but the determining factor always seems to be some form of intolerance or sense of injustice about some past infraction. The economic cost of terrorism pales substantially against the human cost and the fear that terrorism inflicts is sometimes more crippling than the act itself. It is a sombre mood around the world and once more the mindset has swung its needle to point back toward the origin. No cost is too high...indeed’
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What is alarming is that as terrorists become more advanced in their planning and in their sourcing of money, the rising cost of terrorism has begun to poke holes in the initial mindset that “no cost is too high”. In the UK, the cost of attempting to thwart terrorists is estimated to have tripled to 3.5 billion pounds from 2007. This is almost 6 times what it was in 2001 when terrorists forced governments to evaluate their priorities. This money that the UK spends is mostly domestic and involves not only intelligence and police efforts but also social programs which aim to keep young Muslims out of the clutches of radicals. The money that the US has spent overall in its various wars yourmoney ezine
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