Systems biology--the use of software models that produce outputs acting like living organisms--holds great promise for the pharmaceutical industry. Four drug firms are part of a group using it to learn the effect of new drugs on the heart.

The prospect is that this approach can speed up the drug testing process. A British firm, e-Therapeutics, says it can test the effects of a new compound in two weeks, compared to the usual two years.

Testing can go beyond this though, to assay alternative therapies, such as herbs and clinical nutrition, and possibly to determine the causes of diseases caused by genetic and environmental factors.

Here is the article, "All Systems Go", from The Economist.

After WW II the proprietary drug industry developed a blockbuster model supported by the patent system. Global markets and monopoly rents fueled these firms' stock prices for years, despite the growth of generic competition. But its model is becoming unglued. As blockbusters come off patent, the revenues and earnings from these drugs are becoming more difficult to replace. Some drugs have failed and have been scrapped. Pfizer's recent decision to scrap its hoped-for insulin inhaler blockbuster Exubera after investing more than $2 billion developing it was unprecedented, according to the Wall Street Journal. The patent system itself is under political and legal pressure.

So now these firms are going back to the drawing board and seeking ways to innovate their way out of the mess. Outsourcing, long the bane of the industry, is coming into vogue. Marketing is also being rethought. Big pharma spends one-third or more of its revenues in the U.S. on marketing compared with less than a fifth on R&D. Are sales reps and ad agencies really that innovative?

In addition to changing their R&D focus to encompass personalized medicine and other innovative techniques, proprietary firms are diversifying into generics, diagnostics, biotechnology, and other areas. In diversifying their portfolios, they are hedging their risks, but also increasing their chances of finding new innovations and markets.

Call it the Goldman Sachs model. That firm has prospered by having a good management team, by innovating, and by venturing into new markets. If one market get into trouble, it's so diversified and well managed that it can keep chugging along, innovating as it goes.

The Economist reports in "Beyond the Pill".

Here is the Wikipedia article "Personality Rights" , which covers the so-called right of publicity. Note that in the U.S. this latter right developed out of the "right of privacy," which I think was pioneered by Louis Brandeis in a Supreme Court decision and later elaborated in a famous 1962 Supreme Court case, Griswold v. Connecticut .

Among the many inner contradictions of the right of publicity is the fact that, contrary to what I posted in a previous comment, in the U.S. it applies in only 28 states, not in all 50. So here we have an alleged right that doesn't apply universally. Where is John Locke when we need him? At least "fair use" applies across the board to all copyrighted material in all jurisdictions. (Excuse me while I sneak into your garage and take your car out for a spin around the neighborhood. It's just fair use and I promise to bring it back. And then I'll be hitting a few serves with your tennis racket. And then to sample some food in your fridge. If I don't like it my dog will put a sample on your carpet. :-)

Indiana, a state I spent part of my misspent youth in, is the league leader in this right. Not surprisingly, California and New York have been in the forefront of pushing this right, thanks undoubtedly to the prominence of the entertainment industry (and entertainment attorneys) in these states.

The right of publicity boils down to the alleged right not to have one's image or likeness commercially used without permission or compensation. Although I don't think Tom G. Palmer considered this aspect of "IP" in his 1990 Harvard Journal of Law & Public Policy essay "Are Patents and Copyrights Morally Justified? The Philosophy of Property Rights and Ideal Objects" [PDF], you can probably substitute "publicity right" for "copyright" and understand why this right is a non sequitur.

I'm putting this post under the topic "IP as a Joke."

James E. Bessen and new Nobel winner Eric Maskin maintain that the software, semiconductor, and computer industries have seen considerable innovation with little patent protection. When patents were granted to these industries starting in the 1980s, they demonstated no R&D increases or productivity gains. Here is the paper .

Thanks to Alex Tabarrok at www.marginalrevolution.com.

The NYU chapter of Free Culture will host a screening of "Good Copy Bad Copy," a movie about copyright and culture, next Tuesday with two other groups. Lawrence Lessig and other copyright experts will be there.

More information is available here .

The New York Times today reports on a new student group, Students for Free Culture, which was founded at Swarthmore in 2004. A student at Brown organized a chapter there after he paid a $3,000 fine to the RIAA for using his property as he saw fit in downloading some copyrighted music. Here is the story .

The RIAA might be the best recruitment vehicle to the anti-intellectual monopoly cause going.

I had never seen the British magazine Prospect before, but the August issue's cover tag line "Pop Economics: The Rise and Fall of the Recording Industry," caught my attention, so I bought it. Robert Sandall's article "Off the Record" is the best overview of the recorded music industry I have seen.

He discusses how the recording industry has been the co-author of its own demise, and makes a numbers-based case that even legal downloading will not stanch the blood letting. Money fact: In the 1980s, a ticket to a live concert by a star cost the same as a CD. In 2006 a ticket to Madonna's concert at Wembley Arena cost more than double what you would have paid for her whole catalogue.

According to the Oct. 8 issue of Business Week, drug and medical-device companies give about $19 billion of gifts to doctors annually. Here's the story .

Hey, they gotta do something with those patent-enabled rents besides actual R&D.

Senators Grassley and Kohl want a national registry to record gifts worth more than $25. Why not opt for competition in drug development, starting with abolishing the patent raj?

The "Pepper ... and Salt" cartoon on the editorial page in today's issue of the Wall Street Journal depicts a man on the street, who looks like he's seen better times, holding a jerry built contraption that might contain coins donated by passers by. It looks vaguely like a Swiss Army knife. Beside him is a sign that says, "Invented the Swiss Army knife but Forgot to Patent It."

I assume the Swiss Army knife, invented in 1891 or so, was patented. But as Tim Lee says in this post at The Technology Liberation Front, "If there's prior art for the individual blades, then the knife is obvious, even if no one has happened to sell a knife with that particular combination of blades."

And why should we believe that the inventor's first mover advantage and entrepreneurial moxie couldn't have enabled him to earn competitive rents from the sale of Swiss Army knives? Another unexamined prejudice, this time in cartoon form.

Considered in this paper , mentioned by Tyler Cowen at marginal revolution .

The author evidently accepts the idea of a natural right in ideas. Does he consider that the market can provide an appropriation mechanism which is sufficient to stimulate the innovations that would be elicited by prizes?

Of course, prizes are part of the market insofar as they are privately funded.

Here is Tyler Cowen's recent talk at Google, in which he discussed prizes vs. grants.