Pharma patents encourage innovation by allowing the inventor to profit off the drug for a limited time.
Lietzan and Lybecker 20 , Erika Lietzan is a William H. Pittman Professor of Law and Timothy J. Heinsz Professor of Law at the University of Missouri School of Law. Kristina M.L. Acri née Lybecker is Associate Professor and Department Chair, Department of Economics & Business, Colorado College. (Erika and Kristina M.L. Acri née, 10/1/2020, “Distorted Drug Patents,” Washington Law Review, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3458588)
New drugs are famously expensive and can remain so for years, until copies become available.1 Concern about their prices and the wait for cheaper copies has sparked legislative hearings and policy proposals over the years²including, recently, suggestions that the government impose price controls or even strip drug companies of their patent rights.2 These proposals implicate another significant public policy challenge: that we still lack effective treatments for many serious diseases. We have no meaningful treatment for Alzheimer’s Disease, for instance, even though ten percent of the U.S. population aged sixty-five or older has been diagnosed with Alzheimer¶s dementia, and the number of sufferers is projected to reach 7.1 million by 2025.3 Many cancers²such as pancreatic cancer, diffuse intrinsic pontine glioma, and glioblastoma multiforme²remain essentially untreatable.4 And many chronic diseases, though treated, continue to exact a toll.5 Better treatments for these conditions are needed.
The two issues²the high price of new drugs, and the need for new drugs²are intertwined. The U.S. legal system stimulates the invention and development of new drugs in part by promising a period of exclusivity in the market, which is attractive because it provides an opportunity to charge higher prices during the period.6 This exclusivity is made possible in part by the protection of patents associated with those new drugs.7 Patent protection ensures that an inventor can enjoy a period during which others cannot make or sell copies of the invention.8 The patent permits a temporary high price for the resulting new drug, and it thus encourages innovation.9 Although there is disagreement on the matter, many conclude that we cannot have the one (the innovation, meaning the drug) without the other (the encouragement to innovate, and thus a temporarily high price).10 What remains is the question of balancing: how much exclusivity in the market is needed for the optimal amount of medical innovation.11