FDA standards are appropriate and necessary for public health. Recalibrating financial incentives for investors is necessary.

Since the early twentieth century, federal law has required the sellers of drugs to test their products and seek the government’s permission before launching.13 A new drug must be proven safe and effective for a particular medical use.14 Satisfying this standard entails laboratory and animal (³preclinical´) testing as well as several phases of human (³clinical´) trials. The federal government’s gatekeeping mechanism protects public health by ensuring that new drugs are, on average, more beneficial than harmful for the patients for whom they are intended.15 But gatekeeping comes at a price: the research required by the U.S. Food and Drug Administration (FDA) is not only expensive and time consuming, but risky.16 The inventor must make an enormous investment, without knowing whether the drug will succeed in trials (or for what indication, exactly), without knowing when the trials will be completed and the drug approved, and without knowing whether (if approved) the drug will be commercially successful.17 Distortion of the patent term stems from the fact that drug inventors usually file their first patent applications before they start testing in humans.18 This generally means that the patents issue before the trials are done and before approval of the drug. And while the premarket testing continues, the patent life runs. By the time the federal government permits the inventor to commercialize the invention, much of the patent term has lapsed. The years that remain are the ³effective´ life of the patent²the years during which the inventor may lawfully exploit the invention in the market, without others also using the invention. The irony for inventors of new drugs is that drugs requiring more premarket investment (more years of research) may enjoy less patent life at the end of the day.