ALL IN THE NAME OF BUSINESS-INNOVATION THAT KILLS

Since the development of the patent system in 15th century Venice, entrepreneurs have sought a monopoly to sell their inventions. There have been differing opinions from innovators on the purpose, and importance of a patent. Benjamin Franklin, an entrepreneur, refused patent protection on some of his inventions because he saw his innovations as an opportunity to serve others. In contrast to Franklin’s approach to innovation, Henry Ford pursued profit for his new ideas.

Pharmaceutical companies have embraced the patent system to ensure they can protect, and recoup on their research and development costs. In a paper published by economists, Eric Budish from the University of Chicago and Benjamin N. Roin, and Heidi Williams from MIT, argued that pharmaceutical companies avoid innovation around new drugs that have long-term versus short-term returns on investment.

Budish and colleagues focused their research on innovation disparities around cancer research and innovation. The nexus of pharmaceutical avoidance of new innovation is that cancer clinical trials are assessed using the overall survival of the patient as an endpoint for the study. For example, the authors highlighted that a clinical trial for patients with metastatic prostate cancer lasts only three years compared to an 18-year-long trial for those suffering from a milder, localized prostate cancer. Moreover, in light of the fact that typical patent protection is for 20 years, the pharmaceutical company would only have two years of effective patent life left to commercialize a new drug targeted against localized prostate cancer.

Herein lies the problem where in the name of business-innovation kills.

Budish’s research found that pharmaceutical companies avert their research and development expenditures away from more curable, localized cancers that would result in an insurmountable return on invested dollars. The consequence is a focus on profitable, incurable metastatic and recurrent cancers instead.

Is the remedy to extend the patent life of an innovation past 20 years? Some opponents would argue that there is no direct link between patent life and innovation. Critics argue that extending patent life would only boost drug company profits, not address unmet innovation in areas like localized prostate cancer.

If there is no extension to patent protection for new innovation, does this lead to decreased innovation and fewer new drugs? Does the current patent system encourage pharmaceutical companies to push out drugs aimed at those patients who have almost no chance of surviving cancer? Have patients died and innovation suffered because it is all in the name of business?

William Taylor, Associate Editor of Business & Technology

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