Table of Contents

Competition Law and Patents

Competition Law and Patents

A Follow-on Innovation Perspective in the Biopharmaceutical Industry

New Horizons in Competition Law and Economics series

Irina Haracoglou

Using the example of research tools in biopharmaceutical research and innovation, this book examines the complexities of the relationship between two fundamental areas of law and policy – intellectual property rights and competition law. It addresses a question that is certain to become paramount in other industries also: how to strike the balance between initial and follow-on innovation so as to ensure that access to ‘essential’ research tools (or other fundamental elements to follow-on innovation) is not impeded. The book concludes by suggesting how competition law could be used to complement the patent balance.

Chapter 1: Biopharmaceutical R & D: The Increased Importance of Cumulative Innovation and Related Concerns

Irina Haracoglou

Subjects: economics and finance, competition policy, law - academic, biotechnology and pharmaceutical law, competition and antitrust law, intellectual property law


1. Biopharmaceutical R&D: the increased importance of cumulative innovation and related concerns We often talk about how important patents are to promote innovation, because without patents, people don’t appropriate the returns to their innovation activity, and I certainly very strongly subscribe to that … On the other hand, some people jump from that to the conclusion that the broader the patent rights are, the better it is for innovation, and that isn’t always correct, because we have an innovation system in which one innovation builds on another. If you get monopoly rights down at the bottom you may stifle competition that uses those patents later on, and so … the breadth and utilization of patent rights can be used not only to stifle competition, but also [can] have adverse effects in the long run in innovation. We have to strike a balance. 1.1 Introduction Recent changes in the nature of research in the biopharmaceutical industry have given rise to new concerns regarding innovation. In the US, in particular, the industry has become fragmented into a two-tier system, in which small biotech firms carry out all of the innovative research, which the large pharmaceutical companies then further develop, produce, prepare and market. Much of the research carried out by small biotech firms involves upstream innovative research that is fundamental to the development of downstream research on products and processes. Hence, research has increasingly become dependent on access to other fundamental upstream research. J.E. Stiglitz before the FTC Hearings on Global and Innovation-Based...

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