Sustainable Health: The Role of Pharmaceutical Patents

1. Sustainable Health: The Role of Pharmaceutical Patents Dr. Kristina M. Lybecker The Colorado College Department of Economics & Business August 7, 2017

2. Roadmap • Superbugs • Description • Origins • The issue • Historical Perspective • Running out of Options • Pharmaceutical Research and Development • Market Failure and Remedy • Patents! • Policy Implications

3. "Superbugs should be a concern to everyone. Antibiotics are the foundation on which all modern medicine rests. Cancer chemotherapy, organ transplants, surgeries, and childbirth all rely on antibiotics to prevent infections. If you can't treat those, then we lose the medical advances we have made in the last 50 years.“ Brian K. Coombes, PhD, of McMaster University in Ontario

5. “We are fast running out of treatment options. If we leave it to market forces alone, the new antibiotics we most urgentyly need are not going to be developed in time.” Dr. Marie-Paule Kieny, W.H.O, Assistant Director General

8. Patents “Research and development is complex, risky and expensive [By restricting what drugs can be patented] you’re telling companies … ‘Don’t bother putting your resources here.’ ” Corey Salsberg, Head of Intellectual Property Policy at Novartis

9. The Heart of the Industry: Innovation • patents are again seen as “unambiguously the least effective of the appropriability mechanisms” • the drug industry regards them as strictly more effective than alternative mechanisms • Propensity to patent… 99% of product innovations (rank 1st) 43% of process innovations (rank 4th) Levin, Klevorick, Nelson and Winter (1987), Taylor and Silberston (1973), Scherer (1997), Mansfield (1986), Mansfield, Schwartz and Wagner (1981), Tocker (1988), Mossinghoff (1998), Peretz (1983), Mossinghoff (1987), Santoro (1995), Smith (1990a, 1990b), Mossinghoff and Bombelles (1996), PhRMA (1997), and Bombelles (1999)…….

10. Innovation: Difficult & ExpensiveImitation: Easy & Cheap • Patents: disproportionally important • High fixed costs of drug development $1.2 billion: controversial! • Time Consuming Endeavors Patent Length vs. Effective Patent Life 20 years vs. 8-12 years • (Relatively) Low cost of production • Incentive for Innovation: tradeoff

11. Complex, Risky and Expensive

12. Complex, Risky and Expensive

13. Complex, Risky and Expensive

14. Current Medical Innovation Underway *Chart shows the number of medicines clinical trials (phases 0-II/III) for all countries. Source: Medicines in Development by Country, Adis R &D, accessed March 7, 2011. http://bi.adisinsight.com/;

15. Fighting Superbugs → Innovation → Patents • Market Failure & Remedy • Patents incentivize • 20 year period of exclusivity • Static loss and Dynamic gain • Becoming more difficult • Two US Supreme Court Rulings: 2012 and 2013 • Products derived from nature

16. Economic Wisdom It is critical to balance the value of increasing the amount of knowledge available for use in the future against the benefits of ensuring the optimally efficient use of the knowledge available in the present. Kenneth Arrow, 1962

17. “For every complicated problem there is a simple solution. And it’s usually wrong.” Mark Twain

18. Moving in the wrong direction • Current efforts to weaken IP rights • United Nations High-Level Panel on Access to Medicines • Damaging recommendations • Dismantling the system • Missed opportunity • Research on new antibiotics • 1980 • 36 multinational pharmaceutical firms • Today • Novartis AG, Merck & Co., GlaxoSmithKline Plc, and Sanofi SA

19. Ultimately…

20. Policy Prescriptions • Time is of the essence • Dire predictions of a “post-antibiotic era” • Embrace what works • Patents and strong Intellectual Property Rights • Incentivize what we want

21. Thank you for your time and attention. Contact Information: Kristina.Lybecker@ColoradoCollege.edu