“The penicillin of malnutrition treatment”

The NYT has a long story on Plumpy’Nut, which engages issues about intellectual property and domestic-sourcing rules for foreign aid.

The story of Plumpy’Nut – peanut butter fortified with vitamins and minerals and sweetened for taste, which allows children with severe malnutrition to be “treated” at home – raises many issues, but two of them stood out to me:

– Why is there no mechanism by which patents such as this can be bought up in the public interest, either by governments or by foundations? I’m delighted that the folks who figure out how to make the stuff and get it to market are getting rich; allowing people to get rich is one way of encouraging them to solve problems. The implicit message that it’s OK to get rich making crap rich people like, but not serving the desperate needs of poor people, strike me as morally disgusting. But, on the other hand, monopoly rents are always inefficient compared to lump-sum payments. If an agency or a foundation can figure out what sort of innovation is needed, it can offer a prize for developing it, and put the patent in the public domain. But where, as in this case, the invention comes out of the blue, there ought to be a negotiation where the patent-holder takes a lump sum in lieu of monopoly rents.

– Can’t we get rid of the rule that American foreign aid has to deliver American-made products? Losing the political muscle of foreign-aid vendors in support of the aid budget would be a problem, but the current rules pointlessly inflate costs and deprive the aid effort what ought to be its complementary goal of stimulating economic activity in countries poor enough to need aid.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

14 thoughts on ““The penicillin of malnutrition treatment””

  1. In this case, some wealthy benefactor ought to front the money for a lawsuit seeking a declaratory judgment that the patent at issue here is invalid by reason of prior art (viz., peanut butter) and obviousness.

  2. The OECD has been soldiering away on untying aid for years. It has only SFIK managed to get a voluntary pilot project and a database of untied loans. A binding agreement is conceivable, with conditional triggers for untying more. Collective action problem: rich industrial counntres will collectively get about as much coming back in supply contracts, only more efficiently.

  3. Alkali, your solution would make the product cheaper between now and 2017, and also tell all the world's entrepreneurs and venture capitalists to say away from inventing anything helpful to poor people. It wasn't obvious that you could make a fortified peanut butter containing enough of the right nutrients to replace inpatient malnutrition treatment, stable without refrigeration, and palatable to infants. Or, at least, no one had seen how to do it. I don't begrudge the patent-holders their payoff: I just want to deliver that payoff without limiting the size of the market.

  4. From the private/foundation side, surely there's a mechanism: the Gates Foundation could walk into NutriSet and make them an offer. Surely there is *some* lump-sum amount of cash that's worth more to the owners than their expected future profits. If my lone amateur-economist neuron is correct, from the foundation's perspective, this is a *better* use of money (i.e. it feeds more kids per dollar) than simply buying the marked-up product.

  5. I'm curious about what the patentable invention was exactly — the article didn't say, or at least I didn't catch it. You can't patent a recipe for food. You can hold it as a trade secret (Coca-Cola, Thomas' English Muffins) but that doesn't seem to be an issue here.

  6. I'm not sure it's an unforeseen improvement in the state of the art.

    In the early '80's I used to read about small-boat sailors mixing up peanut butter, honey, non-fat dry milk, brewer's yeast and childrens' liquid vitamins and packing Tupperwares with it as emergency/lifeboat rations.

  7. I don't think there is a need to set up a prize system (I agree that's a good idea). The USA (say) could just buy the patent. The idea of a low paid bureaucrat negotiating with people how much money the US government should give them sure makes me nervous, but, hey, the USA does that all the time.

    I'm pretty sure the patent could be seized (with compensation) by emminent domain (sp ???). There is a WWII era law still on the books which was mentioned when Buroughs Welcome was charging a huge amount per patient for AZT.

    I doubt that would be necessary. I'd guess the inventors were motivated partly by a desire to help malnourished kids, but even if they were totally selfish the patent is worth more to an altruist as a selfish monopolist only gets part of the gains from trade which are also reduced by monopoly pricing.

  8. Peanuts are poison to lots of people. This is very scary. Or do we discount the less than 10% who die from eating peanuts?

  9. Modaca, the Wikipedia article on peanut allergy gives the prevalence at 0.04%-0.06%. Total deaths from all food allergies in the USA run at about 150 a year. The prevalence in poor countries is lower (hygiene hypothesis). So the risk is obviously worth taking; malnutrition kills hundreds of thousands of children.

    Anyway, the problem is fixable. Wikipedia again:

    "On July 20, 2007, the North Carolina Agricultural and Technical State University announced that one of its scientists, Dr. Mohamed Ahmedna, had developed a process to make allergen-free peanuts."

    Mohamed? {irony}An actual Islamofascist scientist?{/irony} I wish he could find a cure for sensitivity to wingnuts.

  10. PS: I support BM's suggestion that the Gates Foundation just buy out the patent, which can't be that strong. They could assign it to a new foundation with input from the real discoverer, Dr André Briend, and license it cost-free to Nutriset and others.

  11. "Can’t we get rid of the rule that American foreign aid has to deliver American-made products?"

    You're imagining that the money is dedicated to foreign aid, and now we're debating whether to spend it here or abroad. In reality, the money will get spent on American products of some sort … fortified peanut butter, cruise missiles, whatever. The friends of foreign aid have channeled some of those products to the developing world.

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