My comment was purely rhetoric, and not really meant to engage with the substantive problem (which is hard, and even libertarians like me recognize that real public health issues like this may require public, rather than private, solutions).

However, Prof. Pasquale’s tendency to blame the “free market” for every scary headline he sees is becoming reflexive and careless. There are serious arguments that innovation is stifled because of the way intellectual property rights are distributed under the design of the current patent system. Prof. Pasquale’s assumption that problem’s with the current patent system means no “private sector solution” is possible is no less a “fascinating piece of rhetoric” than my comment.

On the one hand, “government-imposed” is a typical libertarian term favoring private effort and opposed to government intervention. But libertarians usually welcome the patent system (outside software) as creating incentives for private innovation. Even Uncle Milton allowed that the patent and copyright systems were good uses of government, because they created property rights (see, e.g., _Capitalism and Freedom_ @127). The other wrinkle is “-imposed”: patents are purely voluntary, at least from the patentee’s perspective. No one forces you to get a patent. You’re free to disclose your invention and let everyone compete with you on price and marketing. Or you can keep it as a trade secret. That people get patents is a kind of revealed preference, rather than a government requirement.

Apropos of Frank’s comment right after the block quote, is budget-balancing is really to blame? When has there been a balanced federal budget in the past 7 years? How often in the past 20?

Still, I agree that the patent system obviously has failed to work as an incentive (not that this is exceptional). Bruce Boyden made some interesting comments to Frank’s old post that’s linked in this one. He says:

“Don’t drug companies have an incentive to sell as many drugs as possible no matter what the patent protection is? … If you don’t have a patent, and your product is in danger of being imitated or is in fact challenged by competitors, that would seem to be the situation in which you’d want to sell the most the fastest. I suppose if there were some choice to be made — Company X can sell 100 lots now and 0 lots later, or can instead sell 50 lots now and 50 lots 10 years from now — then the length of patent exclusivity might add some amount of weight in favor of the first. But I don’t think super-bacteria present that sort of choice; they present the choice of 50 lots now (and 50 lots of some competitor’s drug now) versus 100 lots now. Given that choice, I think just about every profit-maximizing enterprise would have an incentive to opt for the latter.”

This begs the question of whether you’d bother to invest in a product you don’t have a patent in at all. (It also begs the question of whether real-life companies are “profit-maximizing”.) Especially in the pharma industry, there are many other expensive regulatory hoops you need to jump through even to manufacture generics. Major drug companies generally choose not to develop or sell products in which they don’t have some proprietary interest.