A Trilateral Perspective
Edited by Josef Drexl and Nari Lee
Public health, safety and access to reasonably priced medicine and healthcare are recognized policy goals in this sector. At the same time, research and development (R & D) for new chemical entities for medicinal uses is costly. In contrast, chemical entities are prone to imitation, once the exact chemical composition is disclosed. The social benefits of useful medical knowledge exceed the individual benefits of the patient as the consumer of a given drug, since the disclosed knowledge can form the basis of further research. The combination of these factors identifies the production of medical knowledge as a classic case of a public goods problem that describes the risk of underproduction and calls for regula- tory intervention to incentivise investment in R & D and disclosure. Protection of the exclusive patent right is one of the core measures to incentivize investment in R & D and disclosure. However, patent law as an incentive for innovation and, maybe in interaction with competition law, as a means to promote follow-on research have to be coordinated and balanced with the interest in fostering public health, product safety and access to medicine. Facing increased competition from new entrants and generics in the market, and the slow-down of breakthrough research, originator pharmaceutical firms employ various strategies to extend the profitability of their commercially successful products and the market position they have attained based on patent protection. In some cases, it may appear that patent protection is not primarily sought as a means to recoup R & D investment but rather as an instrument to prolong market exclusivity.