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Are Patents Impeding Medical Care and Innovation? (Part 1)

PatentAs a strong believer in free market capitalism, I support the notion of intellectual property, which include patents. However, an interesting and oddly written book by Michael Crichton called “Next” explored serious current and potential future dilemmas of patented medical inventions and questioned the wisdom of this approach. Chichton discusses the strange practice employed by research groups and pharmaceutical companies whereby naturally occurring biological processes are patented. How does one claim ownership of a cellular process? Does the pharmaceutical company then own parts of your body? Do you need their permission to seek alternative treatments? “Next” is mentioned only because this book fueled my interest in the benefits and drawbacks of medical patents, and I am admittedly off topic somewhat as the current patent discussion takes a more practical approach. Part 1 highlights E. Richard Gold’s viewpoint on medical patents.

E. Richard Gold’s Viewpoint: We Could Increase the Productivity of Biomedical Innovation Systems by Rethinking How We Use Patents
The question posed in the title of this PLoS Medicine debate seems to be a simple one, but there is a complex spectrum of answers depending on how one interprets the question. In this article, I lay out four different interpretations and their corresponding answers.

How Are Existing Patent Rights Impeding Medical Care and Innovation?
The narrowest version of the question focuses on the effect of existing patents held by actors (industry, university, government laboratories, etc.) on medical care and innovation.

In high-income countries, the evidence suggests that existing patents increase the cost of medicines [1]. Whether patents increase the cost of other services, such as diagnostics, is unclear [2]. For example, in their recent analysis of patents on genetic testing, Robert Cook-Deegan and colleagues concluded that “prices of patented and exclusively licensed tests are not dramatically or consistently higher than those of tests without a monopoly” [2]. What impact do existing patents have on the total cost of medical care in rich countries? Again, the evidence is unclear. Patents could conceivably reduce the total cost of care if new patented medicines turn out to be cheaper than existing medical interventions.

In those low- and middle-income countries in which current medications are subject to patent rights, existing patents seem to make medicines more expensive and increase the difficulty of creating novel mechanisms through which to deliver medicines [3],[4]. In all countries, existing patents make research and development more expensive for the simple reason that researchers and companies must clear patent rights to do their work. Whether this cost is offset by other benefits is a subject I turn to next.
How Is The Prospect of Obtaining Patent Rights Impeding Medical Care and Innovation?

The theory underlying patent rights is that patents encourage people to invest in bringing a compound through clinical trials and into practice [5],[6]. The prospect of future patents may, therefore, increase innovation today and may increase medical care by encouraging manufacturers to introduce new medicines [7]. While pharmaceutical companies spend almost twice as much on marketing than on research [8], they nevertheless invest heavily in developing new medicines.

Two questions remain, however. First, while patents provide an incentive to bring a new product to market, are these incentives better than those provided by alternative mechanisms? We know that existing business strategies of both pharmaceutical and biotechnology companies rely heavily on patents [6],[9], but this does not prove that they could not have developed strategies that did not rely on patents. It appears that the biomedical industry’s reliance on patents is historically arbitrary [10], rather than being necessary to spur innovation. So, for example, would a prize awarded to those who discover new medicines be a better mechanism than using patents [11]? Neither theory nor evidence provides a clear answer. Second, are the benefits of patents in encouraging the development of new medicines offset by the increased prices we pay for existing medicines and by the higher fees that researchers must pay? Again, empirical research is inconclusive but is strongest in the biomedical sector [10]. In the end, we have no better answer today than in the 1950s when economists Edith Penrose and Fritz Machlup concluded that the evidence supporting or undermining the patent system is lacking [12],[13].
How Is The Patent System Impeding Medical Care and Innovation?

If we look at the outcomes of biomedical innovation, a different answer emerges. The patent system—not just patent rights but how they are obtained and used—has resulted in an innovation system characterized by a dramatic increase in health care costs and decreasing (quantitatively and qualitatively) levels of innovation, especially by dollar spent [9]. While one cannot say that these problems are inherent in patent law they are, nevertheless, an outcome of the manner in which actors deploy patent rights.

The evidence points to a crisis in biomedical innovation even if not to a solution. While health care costs are increasing rapidly, the fastest growing component of those costs are pharmaceutical products [14]. The costs of developing a new medicine from discovery through clinical trials appear to double every decade [15]. Yet, despite increasing investments in research and development, industry is producing fewer new drugs every year of which a declining percentage is truly innovative [16]. Beyond this, investments in the health needs of developing countries remains very low by any standard, and patents continue to get in the way of modifying existing medicines for the needs of those countries [3].

All of this shows an industry in serious difficulty and a health care system facing unsustainable cost increases and fewer new products. There are many reasons for this crisis that stretch well beyond the patent system. To the extent, however, that the industry’s current business models are build around patents, the patent system itself must shoulder its share of responsibility.

Would a Different Deployment of Patents Impede Health Care and Innovation?
While some nongovernmental organizations call for the creation of alternatives to the patent system, such as prize systems [11], these are even less proven than the patent system in sustaining innovation and increasing health care. A more practical solution to the problems described above is not to do away with patent rights but to use them more wisely. This means everything from deciding not to apply for patents over certain inventions, as does the Structural Genomics Consortium [17], to licensing out patent rights widely for research purposes, as does the Health Commons (, through to exploring the possibility of creating “open source” licenses in biomedicine [18]. None of these strategies require changing patent laws, but all present a serious challenge to the way that universities and industry obtain and deploy patent rights.

There are many questions buried within the question “How are patents impeding medical care and innovation?” At bottom, we do know that our biomedical innovation system is too expensive and too unproductive and that patents play an important role within that system. If, in the end, it is results that count, then it is certainly time to question the business models that sit on top of our existing patent system [9],[18].

Part 2 and Part 3
Part 2 is now available, and Part 3 of this series on medical patents will be published in the next few days.

Material adapted by CFisher from:

Gold ER, Kaplan W, Orbinski J, Harland-Logan S, N-Marandi S, (2010). Are Patents Impeding Medical Care and Innovation?. PLoS Med 7(1): e1000208. doi:10.1371/journal.pmed.1000208

Please see the original open access article for the extensive reference list. Numbered references in this current article match the references in the original article.

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