Working Paper, Rents and Inefficiency in the Patent and Copyright System: Is There a Better Route?

This paper analyzes the evidence for rents due to the patent and copyright systems for financing innovation and creative work. It notes research suggesting that in both the patent and copyright system, the costs in the form of monopoly pricing and rent-seeking activity outweigh the benefits. It then proposes alternatives to the patent and copyright system.The Kauffman Foundation helped support this work

Innovation as a Nonlinear Process, the Scientometric Perspective, and the Specification of an "Innovation Opportunities Explorer"

The process of innovation follows non-linear patterns across the domains of science, technology, and the economy. Novel bibliometric mapping techniques can be used to investigate and represent distinctive, but complementary perspectives on the innovation process (e.g., "demand" and "supply") as well as the interactions among these perspectives. The perspectives can be represented as "continents" of data related to varying extents over time. For example, the different branches of Medical Subject Headings (MeSH) in the Medline database provide sources of such perspectives (e.g., "Diseases" versus "Drugs and Chemicals"). The multiple-perspective approach enables us to reconstruct facets of the dynamics of innovation, in terms of selection mechanisms shaping localizable trajectories and/or resulting in more globalized regimes. By expanding the data with patents and scholarly publications, we demonstrate the use of this multi-perspective approach in the case of RNA Interference (RNAi). The possibility to develop an "Innovation Opportunities Explorer" is specified.Comment: Technology Analysis and Strategic Management (forthcoming in 2013

Stagnation in the Drug Development Process: Are Patents the Problem?

The rate of new drug development has stagnated, in spite of large increases in both private and public sector spending on biomedical research. The flip side of slower progress is higher drug costs. The cost of developing new drugs has been rising at an average real rate of more than 7 percent since 1987. This report considers the ways in which government patent monopolies distort incentives so that pharmaceutical companies may not opt to minimize research costs. It documents some of the perverse incentives created by patent monopolies in drugs

The scientific influence of nations on global scientific and technological development

Determining how scientific achievements influence the subsequent process of knowledge creation is a fundamental step in order to build a unified ecosystem for studying the dynamics of innovation and competitiveness. Relying separately on data about scientific production on one side, through bibliometric indicators, and about technological advancements on the other side, through patents statistics, gives only a limited insight on the key interplay between science and technology which, as a matter of fact, move forward together within the innovation space. In this paper, using citation data of both research papers and patents, we quantify the direct influence of the scientific outputs of nations on further advancements in science and on the introduction of new technologies. Our analysis highlights the presence of geo-cultural clusters of nations with similar innovation system features, and unveils the heterogeneous coupled dynamics of scientific and technological advancements. This study represents a step forward in the buildup of an inclusive framework for knowledge creation and innovation

An Overview of Progress in the International Regulation of the Pharmaceutical Industry

[Excerpt] “The pharmaceutical industry, a significant source of healthcare throughout the world, has several features that distinguish it from the rest of the health industry. In the last half-century, new technology, better technological know-how, and overall economic growth have led to widespread and rapid growth in the pharmaceutical sector. Advancements in pharmaceutical research and development have led to the production of drugs that can routinely combat afflictions that, only years ago, were untreatable or even fatal. Since 1970, the average share of Gross Domestic Product (GDP) on pharmaceutical goods has increased in most Organization for Economic Cooperation and Development (OECD) countries by approximately 50%, meaning that pharmaceutical expenditure has increased on average 1.5% more per year than GDP growth. Given that access to health care is fundamental to developed society and that pharmaceutical goods are a significant source of healthcare, drugs should be accessible to everyone across the world. However, universal accessibility to drugs is not an easy feat. As nations work with their pharmaceutical industries to provide the best possible access to drugs, they must do so on limited budgets and while maintaining proper incentives for pharmaceutical companies to continue to innovate. These conflicting objectives are problems unique to the pharmaceutical industry and critical to its successful future. In the European Union (EU), major steps are being made to balance these objectives through the establishment of a Single Market for Pharmaceuticals. As stated in a Commission Communication on the single market in pharmaceuticals, “The purpose of the completion of the Single Market in Pharmaceuticals is not just to provide an environment which is favorable for pharmaceutical innovation and industrial development, it is also to improve consumer choices in pharmaceuticals of the required quality, safety and efficacy, at an affordable cost.” The aim of this note is to present an overview of the major factors that are currently shaping and effecting international trade in the international pharmaceutical industry, and of how these factors contribute to the EU\u27s progression towards a single market. Through outlining the present status of the industry, we hope to facilitate the making of future decisions to reach a better balance between industry innovation and healthcare accessibility.

Health Care Costs and the Arc of Innovation

Health care costs continue their inexorable rise, threatening America’s long-term fiscal stability, competitiveness, and standard of living. Over the past half-century, efforts to rein in spending have uniformly failed. In this Article, we explain why, breaking with standard accounts of regulatory and market dysfunction. We point instead to the nexus of economics, mutual empathy, and social expectations that drives medical innovation and locks in low-value technologies. We show how law reflects and reinforces this nexus and how and why health-policy-makers avert their gaze. Next, we propose to circumvent these barriers instead of surmounting them. Rather than targeting today’s excessive spending, we seek to leverage available legal tools to bend the arc of innovation, away from marginally-beneficial technology and toward high-value advances. To this end, we set forth a novel, value-based approach to pricing and patent protection—one that departs sharply from current practice by rewarding innovators in proportion to the therapeutic benefits new tests and treatments yield. Using cancer therapy as an example, we explain how emerging information technology and large troves of electronic clinical data are opening the way to near-real-time assessment of efficacy. We then show how such assessment can power ongoing adjustment of pricing and patent terms. Finally, we offer a blueprint for how laws governing health care payment and intellectual property can be tailored to realize this value-focused vision. For the reasons we lay out, the transformation of incentives we urge will both slow clinical spending growth and greatly enhance the social value that this spending yields