The True Cost of Compulsory Licensing

Brazil's AIDS program utilizes 'compulsory licensing' to provide cheaper medications to its HIV positive population in hopes of copying Thailand's strategy (Economist, A conflict of goals, May 10, 2007). What is the true cost of breaking patents in order to provide lower cost medications?

Rothbard defines property rights as two fold: 1) the right to ownership of your own person, and 2) the right to ownership of those resources or transformed resources acquired through investment of your own person. By Rothbard's definition, a breaking of patent, is a breaking of property rights.

The breaking of pharmaceutical patents has been a trend throughout the world, not just Brazil and Thailand. As a consequence, there has been decreased financial return for pharmaceutical companies on their blockbuster drugs. The Economist cites how the pipeline for drug companies discoveries have been decreasing as well as their returns in the market (Dec 5, 2006).

The true cost of compulsory licensing and the breaking of patents is the decrease of new drugs on the market. This is fine if we are satisfied with the current options we have at our disposal for our patients.