Category Archives: markets

Why We Protect Inventions

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The Indian Supreme Court has rejected the idea of patent protection for Novartis’ drug Glivec, saying that an active ingredient in Glivec was well-known prior to the development of the drug.  Those worthies also rejected Novartis’ argument that the innovation that deserved patent protection was their transformation of that active ingredient into a “beta crystal” form, which made it a viable treatment for cancer.

Never mind, said the Court, India doesn’t feel like patenting this and making it harder for an Indian company to profit from the foreign Novartis’ work.

Novartis isn’t alone in this strait.

India’s patent office last year ordered Germany’s Bayer AG to issue a license allowing an Indian generics company to copy its patented cancer drug Nexavar and market it at one-thirtieth the cost.

And

In November, India’s government approved caps on a third of the country’s drugs, up from 18% under a previous regime—a level of price control not seen since the 1970s.

Novartis had this on the wisdom of further investment in India:

If innovation is rewarded, there is clear business case to move forward.  If it isn’t rewarded and protected, there isn’t.

And

We’ll continue to build our business, but we will certainly be cautious in investments in R&D and innovation in India.  And until the climate for intellectual property and the ecosystem is fully in place, I don’t think any investment in R&D will take place here.

Well, NSS.  It’s time for the Indian government to figure this out, too.

Competition and Cadillac Insurance

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Under Obamacare, writes Emily Chasan in The Wall Street Journal, employers will be required by 2018 to pay a tax of 40% on health care plans that President Barack Obama and his minion, Health and Human Services Secretary Kathleen Sebelius, decide for themselves are somehow “excessively rich” in the benefits they pay out.

The excuse these two and other Progressives make for this is that these Cadillac plans, with their low deductibles and “generous” medical coverage, will encourage overuse of our health-care system.  Sure.  Everyone needs to be covered.  But only to a government-approved degree.  And never mind that those low deductibles make the policy purchasers ineligible for Health Savings Accounts—Progressives don’t want Americans to have those, anyway.

But these folks also ignore—or don’t understand—another aspect of their interference.  Competition in a free market for health insurance, including an ability for insurers to charge risk-based premiums, and for health services would address that “overuse” concern much more efficiently than a 2000 page law with its tens of thousands of pages of HHS rules ever could.  Such an environment would directly impact the costs born both by suppliers and their customers/patients.

The competition would drive down the prices charged, and risk-based premiums within that environment would enable insurers to bill for the coverage offered in accordance with the actual likelihood of payout.  Yes, some high-risk coverages would get more expensive, but the vast majority of coverages, by not having to be priced so as to subsidize those high risks, would get a lot cheaper.

Also, customers and patients would gravitate to the combination of policy coverage and medical service usage that actually interested them, instead of having to buy a government-approved policy that included things only a bureaucrat could love.  An equilibrium would develop that had customers and patients getting the policies and services they wanted at prices that suited them with insurers and providers offering those services and policies at prices that would let them stay in business.

There’s no need of a tax to manage demand and supply.  Americans are fully capable of doing that for themselves in a free, competitive market.

Why Not Just Take It All?

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Spiegel International Online notes that the Cypriot government may be figuring out some of the foolishness of the troika’s (ECB, EC, and IMF) demand concerning the latter’s “offered” bailout as well as some of the variants under discussion.  Some of those variants include reallocating the confiscationtax according to more deposit account sizes than just two, and hitting the highest—still those over €100,000 with a 15.6% claim.

[C]oncerns have emerged that a large number of foreign investors and depositors will withdraw their money from the country en masse.  Critics warn this would devastate Cyprus as a financial center and also threaten the country’s entire economy.

Well, yeah.

Still, even the current proposal has central bankers nervous.  Officials at the Cypriot central bank are still fearing a massive capital flight.  Central bank head Panicos Demetriades said he expects that at least 10 percent of deposits will be transferred abroad during the first few days after the banks reopen, according to lawmaker Roula Mavronikola who attended the session.

Demetriades is optimistic.  The Cypriot banking system would be fortunate to retain a single euro, were this institutionalized theft to go through.  The only way to stop the capital flight would be for the government to steal it all.

In the event, though, the Cypriot Parliament rejected any sort of levy, rather resoundingly.

More Obama Sequester in Action

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A few of items.

Congressman Ted Poe (R, TX) is wondering about sequester cuts to tuition aid for our military veterans while we continue to send education aid to Pakistan.  The Marines, for instance, had spent $47 million tuition aid in 2012, while nearly $13 million went to Pakistan for “higher education.”  And then, post-sequester, the Obama administration committed another $37 million to the Pakistan program.

Hmm….

And there’s this example of Obama cynicism.  Recall that the US Department of Agriculture would be forced to “furlough” a significant portion of its meat inspectors, among other personnel.  In the meantime, though, and again post-sequester, the Obama administration

continues to pursue a “partnership” with the Mexican government to “raise awareness” about food stamps among immigrants from that country.

In complete disregard for current immigration law that says immigrants can’t come in unless they are, or can reasonably be expected to be, self-supporting.

And this:

School officials on Native American reservations across Minnesota are forced into making cuts to their current budgets in anticipation of sequester cuts.  These  are programs that had been making progress, improving high school graduation rates by the small, but concrete, 3% per year.

But in post-sequester DC, a six-figure income position was created for a former aide to Congressman Charles Rangel (D, NY) with the important title of Executive Director of the White House Initiative on Educational Excellence for African-Americans.

Apparently some uses for post-sequester money are more important than others.  Especially when there’s political gain to be had.

Magical Thinking

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Well, that didn’t take long.  President Barack Obama already has failed his test.

The Progressives’ idea of a budget is out of the Senate Budget Committee, now, and on the Senate floor, where Senate Majority Leader Harry Reid (D, NV) will do his best to thrust it home with as little debate allowed as he can achieve.  Here’s the summary table (and scroll down a bit to this table; sorry you have to crane your neck); the whole thing can be viewed, in piecemeal form, on the Senate’s site:

Notice that.  Aside from continuing to gut Defense, overall spending continues apace, President Barack ObamaSenator Patty Murray (D, WA), the Budget Committee’s Chair, demands even more taxes from working Americans than he got in January, and our national debt explodes.

The Democrats want, with an absolutely straight face, to increase spending every year–$3.6 trillion in FY 2014, $4.05 trillion in FY 2016, and so on to $5.7 trillion in FY 2023, a 62% increase over the current level for FY 2013.

Reading the fine print in one of those piecemeal parts at the Senate site, we see that the Progressives want to create a(nother) $100 billion program aimed at generating new jobs, again by funding infrastructure work.  Of course, we know Obama already tried this, repeatedly, throughout his first term.  As he’s already confessed, “Shovel-ready was not as shovel-ready as we expected,” and as those earlier programs demonstrated, the jobs aren’t there at any time in his government programs.  This is magical thinking.

And it turns out Murray lied about those taxes, too, cynically understating them at “only” an additional $975 billion.  The Weekly Standard has this table, provided by a staffer for the Senate Budget Committee’s (Murray’s committee) minority membership:

Murray cynically understated Obama’s tax demands by fully one-third.  These $1.5 trillion in new taxes, combined with the $600 billion in new taxes Obama got at the start of the year, adds up to $2.1 trillion in new taxes being demanded in just these two and a half months.

Progressives just can’t stand to not raise taxes.  Their addiction to OPM is palpable.

And that debt.  The Progressives fully intend to explode it to $24 trillion by 2023, with annual interest payments running nearly to $800 billion.  This also assumes the market would be willing to buy such risky debt at those rates.  But then Obama denies, ostrich-like, that there’s any urgency to our debt fiasco.  This is more magical thinking.

All of this is predicated, too, on Obama’s/Murray’s pipedream of a GDP annual growth rate over the next 10 years of 4.2%-6.6% each year—rates we’ve never sustained in any 10 year period in our history.  With all of this taxing and spending taking money out of the private economy—the economy in which Americans actually live, work, and die—positing such rates is…wrong.

Matched with the $975 billion in claimed spending cuts, this isn’t even the balance about which he’s been yammering.  This is more…magical thinking.

This proposal is a disaster waiting to happen.