Patented Brand Drugs are Essential Facilities and Regulatory Compacts

The COVID-19 health pandemic highlighted the need for more readily affordable patented drugs. Brand drug companies argue that they need to recuperate their research and development (“R&D”), marketing and advertising expenses. The incentive to innovate also needs to be preserved. Drug companies are entitled to a profit and a return on their investment, just as afforded to utility monopolies.

Intellectual property and human rights clash relative to access to patented drugs. We provide several proposed approaches to resolve this dilemma and conclude with an argument that patented drugs should be considered a public utility. A model based on the public utility approach has a great deal of merit as a model for setting prices for essential drugs and treatments. The price, however, setting should not be the province of back-room discussions between drug companies and insurers.

Prices should be negotiated in public with full transparency just as electricity rates. Investor-owned utilities are profitable essential facilities that are of great benefit to consumers and provide reasonable and regular return on investment for their owners. This can happen for manufacturers of essential drugs as well.