What if the government “snatch[ed] their patents” from American companies? That’s how Sen. Kamala Harris told voters she’d lower drug prices, before she dropped out of the presidential race. Other politicians embrace the same socialistic approach. The answer’s simple as to what would happen, and stems from core property rights principles.
Think about it this way: What if the government could easily devalue or take away your home or your money? Even in the Land of the Free, our government can do this. Only, thanks to our Founding Fathers, the government faces high hurdles to exercising these powers. Eminent domain. Taxation. Asset forfeiture. The U.S. Constitution checks these powers through due process, the rule of law, just compensation, etc.
The Founders had faced powerful government’s abuses under English rule, so they wisely placed restraints on our government in order to protect individuals and private property rights. Thus, the American republic was intentionally designed to constrain government so it could not “snatch their patents” or take away other forms of private property, at least not without strong protections to make this the exception.
When the government controls property, be it land, money, automobiles or patents, private citizens and businesses can’t readily use the “public” property, can only use it under a lot of red tape, and often lack title and therefore certainty of ownership. The Obama administration infamously exerted regulatory takings to exclude people and companies from public lands. Obama denied due process and skirted laws intended to protect property rights — leaning into socialistic abuse of private property rights, including curbing private access to public resources, especially when those private parties were politically disfavored by the Obama regime. Not exactly policies consistent with the rule of law and due process.
The latest misguided cause celebre involves the cost of pharmaceuticals. Congress and the Trump administration are rushing to “do something” — destructive of property rights or otherwise. Unfortunately, most drug pricing proposals destroy private property rights, most especially patents and intellectual property. H.R. 3 is merely the worst. Price controls, compulsory patent licensing, antitrust persecution for iterative invention, importation of foreign medicines and foreign price controls. Every bill seems to contain some assault on IP exclusivity, such as the CREATES Act.
Some (e.g., Sen. Harris) are pushing the tool of foreign freeloaders, socialists and totalitarians: expropriation. “Snatching” the patents of innovators qualifies as government expropriation of private property. For example, Costa Rica has a history of easy IP expropriation. President Reagan’s Commission on Industrial Competitiveness reported, “Costa Rica amended its patent law in 1983 to permit the government to nullify a patent if the technology and know-how it protects are determined to be in the public interest.” The U.S. Chamber Global Innovation Policy Center’s 2019 index identifies Costa Rica’s weak pharma-related patent rights. Costa Rica ranks 23rd of the 50 countries examined — right between those deserts of innovation Malaysia and Mexico.
Remember: Secure IP rights are vital if you want innovation to occur. Patents and IP secure private rights of exclusivity to property that didn’t previously exist. If you can’t enforce your right to exclude, you don’t have meaningful rights. That’s why Harris et al.’s comfort with outright government expropriation should frighten every right-thinking, property-respecting person.