Trade secrets don't prevent someone else from independently developing the same thing, or reverse-engineering the solution. Very few things can be successfully kept as trade secrets for an extended time. Moreover, patents do not preclude trade secrets and in most cases can only make things worse: If one expects to be able to maintain a trade secret for at least the duration of a patent, without independent rediscovery, then one would choose secrecy over the patent since there is no built-in time limit. Patents are thus only viable for those things which would not be expected to remain secret. Having the discovery or invention documented in a patent (which you will be advised not to read due to the risk of a willful infringement penalty) but being prohibited from using it by law is strictly worse than having the knowledge hidden at first but potentially (re)discoverable and free to use once known.
Of course patents are preferable to trade secrets in the vast majority of cases. That's why I said trade secrets have many of the same the same problems, not that they are equivalent.
The problem is that when patents are no longer an option trade secrets (or public funding) become essentially the only viable option to pay for the majority of drug research.
If a drug is unique and desirable, forcing doctors, suppliers and patients into contracts that don't allow reverse engineering is the most likely outcome. In extreme cases drug companies could require patients to only be treated in a doctor's office.
In the case of drugs that can't be kept secret, given the time and effort necessary to develop, much of the economic incentive for that research evaporates.
>Patents are thus only viable for those things which would not be expected to remain secret.
That's not how the math works outs. You can easily construct a counter example where a drug has a greater than 50% chance of remaining secret during the length of the patent, yet taking the patent has a greater expected value.
> Of course patents are preferable to trade secrets in the vast majority of cases.
At least we agree on that much. My point is that when the patent is preferable (in the vast majority of cases, as you say) it implies that a trade secret would not have been expected to last as long as the patent—which makes the patent strictly worse from the public's point of view. We've granted a 20-year monopoly in exchange for revealing information which would have otherwise become public, without restrictions, in less than 20 years.
Maintaining tight control over the distribution of the drug only gets you so far, especially when the underlying research is already public knowledge. Trade secrets, unlike patents, don't block independent discovery, and only the rarest and most expensive drugs would warrant complete control over the supply chain.
As for the incentive to perform the research, that ultimately comes from the patients desiring treatment, not the pharmaceutical companies. Eliminating the monopolies would not reduce the demand for treatments, though it would reduce the profitability of individual pharmaceutical companies.
> You can easily construct a counter example where a drug has a greater than 50% chance of remaining secret during the length of the patent, yet taking the patent has a greater expected value.
Yes, if you are not confident that you can keep a trade secret then the patent becomes the better option. (Isn't that what I said before?) "Greater than 50% chance" is not what I would call "confident". It doesn't change the fact that patents only have a positive net expected value to the recipient in the situations where the public is expected to lose by granting a patent rather than having the knowledge kept as a trade secret for a time. The interests of the applicant and the public are diametrically opposed; if the patent applicant wins, the public loses.
>Yes, if you are not confident that you can keep a trade secret then the patent becomes the better option. (Isn't that what I said before?) "Greater than 50% chance" is not what I would call "confident".
Change it to any arbitrary likelihood below 1. The expected value of a drug during the length of the patent maybe arbitrarily greater than the expected value of a drug after that time period due to reasons other than duplication (alternative unrelated treatments etc..). If it is expected that drug will make nearly all of its total value during the length of the patent, then even a 1% chance of duplication means that the expected value of taking a patent is higher.
Such an extreme disparity between expected value during the patent length and after isn't even necessary when you factor in the additional costs of attempting to maintain a trade secret.
>It doesn't change the fact that patents only have a positive net expected value to the recipient in the situations where the public is expected to lose by granting a patent rather than having the knowledge kept as a trade secret for a time. The interests of the applicant and the public are diametrically opposed; if the patent applicant wins, the public loses.
This is wrong because it ignores the additional costs (both direct and indirect) of maintaining the trade secret.
>We've granted a 20-year monopoly
Minor point--most drug patents have an effective date of about 10 years because of the time it takes to bring a drug to market.
>Maintaining tight control over the distribution of the drug only gets you so far, especially when the underlying research is already public knowledge.
Without the potential benefit of patent protection, we'd almost certainly see research become less open to begin with.
>Trade secrets, unlike patents, don't block independent discovery, and only the rarest and most expensive drugs would warrant complete control over the supply chain.
Probably, but those drugs would become immensely more expensive, or the reward available to an individual company for developing them would go down. Every novel drug would likely warrant some extra level of control (and expense).
>though it would reduce the profitability of individual pharmaceutical companies.
The direct cost of maintaining trade secrets would effectively act as a tax on all pharmaceutical companies doing novel drug development. As would the direct cost caused by duplication of drugs during what would have been the patent protection period. Add in the indirect cost of decreased openness, and the only way to maintain the exact same level of drug research we have today without patents would be to increase public funding for drug development.
I think that's probably a better system to be honest.
