A Follow-on Innovation Perspective in the Biopharmaceutical Industry
New Horizons in Competition Law and Economics series
Chapter 1: Biopharmaceutical R & D: The Increased Importance of Cumulative Innovation and Related Concerns
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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