Perverse Results from Pharmaceutical Patents in the United States

In the United States, pharmaceutical patents have had a number of perverse and anticompetitive effects on the development and marketing of prescription drugs. Although some of these effects are unique to the United States, others have implications for patent policy across the world. Among the negative effects of drug patents are: (1) examples of misguided, anti-social, and anticompetitive promotion of patented drugs; (2) misguided incentives that push drug firms toward too much or too little research and development in critical areas: and (3) cartel-facilitating conduct linked to patent licenses or settlements of litigation involving drug patents. Some of these issues can be addressed directly through reforms in patent and competition law policy. There is, however, a need for a broader study of the role of patents in promoting drug research. That study should consider alternatives to the patent system, such as a prize system structured to supplement or partially replace patent rewards for pharmaceutical R&D.