How Patents Harm Biotech Innovation

from the scaring-people-off dept

Patent defenders often claim that patents are necessary because top venture capitalists would never invest without patents. And yet, we keep pointing to examples of some of the best venture capitalists in the business who are quite skeptical of patents. For the most part, those have been limited to software patents, but Brad Feld seems to have jumped the hurdle to recognizing it's not just software patents that are the problem, and is digging into the research on how much patents have held back innovation in lots of other fields as well (Brad: if you want a list of more such research, let us know...). He's written up a post about some upcoming research concerning patents in the biotech field, where he explains how patents are hindering innovation in that field as well by scaring off research into certain areas:
Regularly, patent advocates tell me how important patents are for the biotech and life science industries. However, there apparently is academic research in the works that shows that patents actually slow down innovation in biotech. The specific example we discussed was that there is increasing evidence that when a professor or company gets a patent in the field of genetics research, other researchers simply stop doing work in that specific area. As a result, the number of researchers on a particular topic decreases, especially if the patent is broad. It's not hard to theorize that this results in less innovation around this area over time.
I can't wait to see the final results of that study, as it would fit in well with a few other studies that have found similar results.

Filed Under: biotech, brad feld, innovation, patents, vcs

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  1. icon
    Mike Masnick (profile), 7 Feb 2010 @ 10:29am

    Re: Re: Re:

    Not what I said. Without patent protection, there would be making existing drugs more efficiently and cheaply, but there would be very few new drugs (of course I cannot prove this, as it has not happened yet, but it seems logical to me)

    Ok, well, how would you feel about evidence in the other direction? Let's start with Switzerland in the late 19th century. It did not have a patent system that covered chemicals, and Switzerland very quickly became a huge chemical powerhouse (at that time it was focused on dyes, but those companies are what became the modern pharmaceutical industry), creating all sorts of new things. The market was competitive and the incentive was to keep innovating and creating new things that topped those that came before.

    In fact, it was the chemical industry that fought against patents for a very, very long time. But once foreign pressure became too strong, the Swiss gov't folded, and competition decreased, the number of players in the market rapidly decreased.

    Or, let's look at Italy in the mid-20th century, when its patent system did not cover pharmaceuticals. What happened? Again, highly competitive, and very innovative. Many new discoveries were made there, and the industry was one of the largest in the world. So what happened? Pressure from big foreign pharma... a new patent rule... and the pharma industry in Italy is decimated.

    Currently drug patents give the holders a brief competitive advantage allowing them to maximize profits. Without patent protection why would profit-seeking businesses develop new drugs?

    To sell the drugs? Even in today's world, the first mover commands a *significant* premium over generic copies. There's still a tremendous value in being the first to the market. Alternatively, you could come up with other business models as well. What if health insurance firms did drug development themselves -- and it gave patients more reason to go with that firm, knowing that they had better/cheaper pharma available?

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