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Archive for September, 2012

This is not my normal sort of post, but because I collected all this data and my blog is my normal publishing outlet I am presenting it in a fairly rough form.  It may be useful for you or someone else.


US Provides Most of Healthcare Research Occurring in the World

The US does most of the medical research in the world.  For instance, the US has produced more Nobel Laureates in medicine than any other county.  See  According to a 2006 New York Times article ( “In the last 10 years, for instance, 12 Nobel Prizes in medicine have gone to American-born scientists working in the United States, 3 have gone to foreign-born scientists working in the United States, and just 7 have gone to researchers outside the country.”  The Article goes on to state “In real terms, spending on American biomedical research has doubled since 1994. By 2003, spending was up to $94.3 billion (there is no comparable number for Europe), with 57 percent of that coming from private industry. The National Institutes of Health’s current annual research budget is $28 billion, All European Union governments, in contrast, spent $3.7 billion in 2000, and since that time, Europe has not narrowed the research and development gap. America spends more on research and development over all and on drugs in particular, even though the United States has a smaller population than the core European Union countries.”

Most academic articles on medical research come for the US and the difference is not small.  The US produced over 40% of the papers which dwarfs every other country.  See


Other Countries Freeload Off of US Medical Research

Europe, Canada, Mexico and most other countries refuse to pay for the research that goes into medication innovations.  These countries use their socialized medical system to force pharmaceutical and other healthcare companies to either lower their price so that they cannot recoup the cost of medical research or they are denied access to that market.  As a result, US consumers have to pay for the medical research for the whole world.

If the US moves to a socialized medicine model along the lines of Canada and Western Europe, it will be a disaster for medical innovation.  One of the biggest ways to save money in the short term for the US will be to cut research, both public and private.  As a result, everyone’s healthcare around the World will suffer.


Why the Cost of Healthcare is so High in the US

There are three major reasons the US healthcare is so expensive.  First, the US pays for most of the medical research in the world, as explained above.  Second, the regulatory costs are very high in the US.  For example, it costs about $1 billion dollars to bring a new drug to market.  Most of that money is spent on complying with the FDA’s rules.  Third, is the US tort system.  The regulatory and tort systems are not part of a free market and should be drastically curtailed or eliminated.  A cost benefit analysis of these systems would show they are a huge waste of money.  If the US fixed its regulatory and tort problems and the rest of the World paid for the medical research they use, then the cost of US healthcare would be similar to other western countries.


Life Expectancy and Infant Mortality Rates

The US life expectancy and infant mortality rates are often used to condemn the US system of healthcare.  A closer examination shows that US life expectancy, when grouped by ethnic background is about the same as the home country.  See “Comparisons of distinct ethnic populations in the U.S. with their country of origin find similar rates of life expectancy.  For example, Japanese-Americans have an average life expectancy similar to that of Japanese.  In addition, healthcare is not a good indicator of longevity.  The strongest correlation with longevity is per capita income.  The US healthcare system measures very well from the point of intervention of medical treatment.  See

            The US supposedly has a very high infant mortality rate compared to other countries.  But a closer examination shows that people are comparing apples to oranges.   Different countries have different ways of measuring infant mortality.

But infant mortality tells us a lot less about a health care system than one might think.  The main problem is inconsistent measurement across nations.  The United Nations Statistics Division, which collects data on infant mortality, stipulates that an infant, once it is removed from its mother and then “breathes or shows any other evidence of life such as beating of the heart, pulsation of the umbilical cord, or definite movement of voluntary muscles… is considered live-born regardless of gestational age.”  While the U.S. follows that definition, many other nations do not.  Demographer Nicholas Eberstadt notes that in Switzerland “an infant must be at least 30 centimeters long at birth to be counted as living.”  This excludes many of the most vulnerable infants from Switzerland’s infant mortality measure.

Switzerland is far from the only nation to have peculiarities in its measure.  Italy has at least three different definitions for infant deaths in different regions of the nation. The United Nations Statistics Division notes many other differences. Japan counts only births to Japanese nationals living in Japan, not abroad.  Finland, France and Norway, by contrast, do count births to nationals living outside of the country.  Belgium includes births to its armed forces living outside Belgium but not births to foreign armed forces living in Belgium.  Finally, Canada counts births to Canadians living in the U.S., but not Americans living in Canada.  In short, many nations count births that are in no way an indication of the efficacy of their own health care systems. (see


On a common sense level, do you think a pre-mature baby has a better chance of living in the US or Canada?  Canada’s healthcare system will not spend the money necessary to keep a severely premature baby alive.


Access to Healthcare in the US

Everyone in the US has access to healthcare.  Emergency rooms at hospitals are not allowed to turn people away for lack of insurance or the inability to pay.  If you are “poor” you are covered by Medicaid and if you are old you are covered by Medicare.  The myth that Canadians have better access to healthcare is nonsense.  There are thousands of stories of Canadian dying while they wait for their “free healthcare”, including one of my aunts.


Morality of Paying for Healthcare

A common argument for socialized medicine is that it is a necessity so people should not have to pay for it.  First of all, socialized medicine is not free.  It just changes the payment system.  Instead of the individual paying the doctor, hospital, or pharmaceutical company, the individual pays the government and then the government pays the doctor, hospital, or drug company.  Second, food is a necessity and yet no western country has a socialized food delivery system.  We still pay the farmer, or grocery directly.  Only the USSR attempted to have a socialized system of food delivery and production and the result was catastrophic.  Millions of people starved to death and the USSR was not able to feed its population until they allowed small private plots.  By the way this is also the story of the Pilgrims.

Socialized medical systems are immoral.  This system involves taking money from people against their will and giving it to other people for their private benefit.  That is theft.  Theft does not become moral, because it is for a good cause.  It does not become moral because we all voted for it.  Theft is always wrong and evil.  On top of it those countries where government steals more from its people or inhibits their people’s ability to produce have shorter life spans, less access to health care, less education, more pollution, etc. etc. etc.  See and

Every measure of human progress increase with increasing levels of economic freedom.


Reforming US Healthcare

This is not to say the US healthcare is perfect.  However, it is clear that socialized medicine is not the answer.  (Actually more socialized medicine.  Medicare is already socialized medicine for people over 65).  First of all, the US needs to get rid of the FDA or severely cut it back.  Second of all, the US needs to reform its tort laws so doctors can practice without paying a fortune in insurance.  This will also allow the cost of vaccines and other medicines to fall.  One result of the US’s run out of control legal system, vaccines have gone from being almost free in the 1960s to being a very expensive part of young parents’ life.  Third we need to eliminate the regulation of insurance companies at the state level and allow insurance companies to sell insurance across state lines.  Fourth, we need to get the government out of the business of providing health insurance.  This means we need to eliminate Medicare, Medicaid, and the VA system.  Obviously, we cannot cut off today’s seniors on Medicare, but we need to move it to a more free market system.  Seniors should be receiving a lump sum to buy insurance, with a fund that pays for people who cannot find insurance.  Fifth, the tax code needs to be reformed so that people do not lose their health insurance when they lose their job.  These reforms would drastically decrease the cost of insurance, increase the efficacy of the US healthcare system, and provide more access.


The Fraser Institute just released their annual Survey of Economic Freedom .  According to the Study the US has fallen from 2nd in 2000 to 8th in 2005 to 19th in the World this year.  This is consistent with my book, which suggests that the US started heading in the wrong direction around 2000.  It is time for the Socialists and the Obama Administration and the Republican Establishment to admit they don’t give a damn about freedom or economic growth.  Solving our economic problems is straight forward, we just need more economic freedom.  Keynesians, big government promoters, and environmentalists are either Ludditesor they are lying to the American people.  I think it is the later.

One Year Anniversary of Patent Reform: Two Reasons Why it is Un-Constitutional

A year ago the pork laden so called Patent Reform bill known as the America Invents Act (AIA) was enacted.

First to File Provision: 

Article 1, Section 8, Clause 8 of the Constitution states:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

The Constitution does not give Congress the authority to grant patents to the first person to file and doing so violates the exclusive Rights of inventors.  The proponents of the AIA argue that it is really a First Inventor to File system, not a first to file system.  This is nonsense.  There is no such thing as being the second or third or ninth inventor.  An inventor is the first one to create something.  For more information see Lawsuit Challenges AIA’s Constitutionality.

Fee Setting Authority: 

Article 1, Section 7, Clause 1 states.

All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills.

The AIA gives the US Patent and Trademark Office (USPTO) fee setting authority.  However, the part of the AIA that made sure that USPTO would be able to keep all its fees was removed by Representative Paul Ryan.  Since it is very unlikely that the USPTO will keep all its fees, they are creating a bill for raising Revenue.


According the World Economic Forum (WEF), the USA has fallen to seventh in the world in economic competitiveness.  According to WEF the US was number one in 2008 and has fallen four straight years.  The Heritage Foundation explains that our debt levels and business uncertainty are to blame.  WEF dates the decline in US competitiveness to 2008, but I date it from the end of the Clinton Administration.  In the final days of Clinton’s term we passed the (November 29, 1999) Intellectual Property and Communications Omnibus Reform Act of 1999.  This weakened the rights of inventors by requiring the publication of most patent applications 18 months after they were filed.  Then Bush passed the Patriot Act, which essential meant Al Qaida won.  This was followed by Sarbanes Oxley in 2002, which killed off funding for startups and has decimated all the legitimate (non-political) venture capital firms.  These innovation killing laws resulted in the unbalanced economy that imploded in 2008.  Certainly, Freddie Mac, Fannie Mae, and the Community Reinvestment Act, the Federal Reserve and other non-free market institutions contributed.  Now we have added the America Invents Act, Frank Dodd Financial Reform Act, not to mention Obama Care and thousands of innovation killing regulations (Thanks EPA).

The solutions to our problems are simple conceptually, but difficult politically.  Hopefully reports like this one will spur American’s out of their complacency.


Hank Rangar to the Rescue

Lawsuit Challenges AIA’s Constitutionality

According to the New York Times Article Inventor Challenges a Sweeping Revision in Patent Law, a lawsuit has been filed to challenge the Constitutionality of the “first to file” provisions of the America Invents Act (AIA).  The lawsuit was filed by Mr. Stadnyk who holds several patents related to motorcycles.  He compares his fight against the AIA to the battle against Obama Care, which I believe is very appropriate.  Both were large complicated pieces of legislation laden with special interest goddies.  Both ignored the clear meaning of the Constitution.  Given this it is surprising that Mr. Stadnyk selected an attorney who is not committed to the Constitution.  Mr. Stadnyk attorney is Jonathan S. Massey, who is a protégé of Laurence H. Tribe.  Mr. Tribe has been a leading advocate of the ‘living Constitution’ concept and believes the Commerce Clause is an open ended excuse for the expansion of government power.  Hopefully Mr. Massey will be able to argue effectively despite these leanings.  I also hope that they hire a patent attorney.  As the Supreme Court has proven over a century of confused decisions, most attorneys do not understand patent law and cannot pick it up by just reading the confused decisions of the Supremes.

I and others have argued that the First-to-File (FTF) provision of the America Invents Act (AIA) is unconstitutional.  For instance see First to File is it Constitutional, which is a open letter by a number of law professors.  The essence of the argument is that Article 1, Section 8, Clause 8, grants Congress the power to protect inventors’ rights in their creations, not the first person to file at the Patent Office.  I suspect the opponents will argue the following points:

*Standing:  Mr. Stadnyk holds a number of patents, but these are not going to be effected by the AIA.  Mr. Stadnyk may have filed a number of patent applications, but these are not going to be effected.  If I were the opponents, I would argue that only a patent application that was denied under the first-to-file rule, but would have been issued under a first-to-invent (FTI) system would be well enough developed issue to provide standing.  If they succeed with this argument it could be years before a plaintiff had standing to sue.

I think the counter argument is that any inventor whose actions have been effected (changed) because of the change in the rule should have standing.  I think this may be the most difficult argument for Mr. Stadnyk to win because it will allow the courts to avoid the difficult questions presented by this suit.

*First Inventor-to-File:  The proponents of the FTF system have argued that the AIA is really a first inventor to file.  What does that mean?  How can you be the first inventor to file?  What does the word inventor mean?  INVENTOR means the first person to create an invention.  There is no such thing as the first inventor to file.  There can only be one (one group of) inventor.  All others are just re-creators.  For example, if I, with no knowledge of Calculus, were to recreate it today that does not make me the discover of Calculus and the equivalent of Newton or Leibnitz.  Even if my discovery is close in time to the inventor’s, I am still just a re-creator.  This is no different than science or the winner of a race, or the winner of a football game.  There is only one winner and there is only one inventor.

Now advocates of the AIA will argue that the first person to create an invention is not always considered the inventor under the present system.  Under the rules of interferences the second person to create the invention can be considered the inventor, if they did it without any knowledge of the first creator’s work and if the first creator abandoned their efforts to perfect the invention or concealed the invention.  If someone abandons an invention, then it was not created or at the least it provided no benefit to world or even the inventor.  You cannot award a patent or inventorship to someone who does not tell you about their invention.  In the case of abandonment, I do not see how that person can be considered an inventor.  The other case is concealment.  In that case, the proponents of the FTF system should argue that no patent should issue not that we should change our whole system to accommodate this very rare circumstance.


*Alice in Wonderland Argument:  Proponents of the FTF system will argue that the word INVENTOR can mean anything that Congress decides it means.  If that were true, why write a Constitution.  IF Congress can define every word as it wishes, then it is pointless to write down a founding document.  This is a nonsensical argument, but one the statists on the Supreme Court are likely to find appealing.

*Promote the Progress of Science and Useful Arts:  Proponents of the AIA are likely to argue that the Constitutional purpose of a patent system is to ‘promote the progress of science and the useful arts’ and Congress can do anything to further that purpose.  First of all this theory confuses the purpose of the preamble with the actual right involved.  The purpose of a preamble is explanatory, but not mandatory.   This is exactly the way preambles work in patent law.  Second, the Constitution says the EXCLUSIVE RIGHTS of inventors.  It is the only RIGHT mentioned in the original Constitution and when the founders used the word right they meant natural rights.  The purpose of government is to secure these rights – see the Declaration of Independence.  The purpose of government is not to promote the progress of science and the useful arts that is the result of securing the exclusive rights of inventors (and authors).

The proponents of the AIA will not admit it, but all empirical evidence shows that a FTI system is more effective at promoting science and the useful arts than a FTF system.  This is not surprising since a FTI system rewards the creator not just the person who can game the system the best.

*Treaty Obligation:  The advocates of the AIA will argue that our treaty obligations require the US to award patents to foreigners under the FTF system.  This is true.  However, treaty obligations do not trump the Constitution.  We should renegotiate these treaties not trash the Constitution.


It would be nice to believe that patent law is not influenced by politics, but a century of activist Supreme Court Judges shows this is not the case.  The most egregious example was the 1949 case Jungersen v. Ostby & Barton Co., 335 U.S. 560, 572  (1949) where Justice Jackson ignored the Constitution and stated that “The only valid patent is one which this Court has not been able to get its hands on.”  None of the present Supreme Court Justices understands patent law as well as a first year patent law associate and so this case will probably turn more on politics than the law or logic.


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