Epstein Kuhlik (2004) - Is There A Biomedical Anticommons

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Reference

• Epstein, Richard A and Kuhlik, Bruce N (2004), "Is there a biomedical anticommons", Regulation, Vol.27, pp.54

@article{epstein2004there,
  title={Is there a biomedical anticommons},
  author={Epstein, Richard A and Kuhlik, Bruce N},
  journal={Regulation},
  volume={27},
  pages={54},
  year={2004},
  abstract={Six years ago in science, Michael Heller and Rebecca Eisenberg asked the disarmingly simple question whether patent protection could deter biomedical research. They treated patent protection as a two-edged sword: Happily, it spurs innovation by securing to inventors the fruits of their labors but, unhappily, it also creates a vast thicket that gives each patent holder a potential veto right over the innovations of others. They dubbed that potentially dangerous veto right "the tragedy of the anticommons." According to Heller and Eisenberg, that tragedy occurs when property rights are too strong and too many people can block some productive venture... We think that Heller and Eisenberg have overstated the case against patent protection at both the theoretical and empirical levels. The number of patents filed in recent years has continued to move sharply upward across the board. We see no reason to believe that the sole or dominant purpose for individual patentees is to block innovations by others...},
  discipline={Law},
  research_type={Discussion},
  industry={Biomedial},
  thicket_stance={},
  thicket_stance_extract={},
  thicket_def={},
  thicket_def_extract={},  
  tags={Anticommons, Gains from Innovation},  
  filename={Epstein Kuhlik (2004) - Is There A Biomedical Anticommons.pdf}
}

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Abstract

Six years ago in science, Michael Heller and Rebecca Eisenberg asked the disarmingly simple question whether patent protection could deter biomedical research. They treated patent protection as a two-edged sword: Happily, it spurs innovation by securing to inventors the fruits of their labors but, unhappily, it also creates a vast thicket that gives each patent holder a potential veto right over the innovations of others. They dubbed that potentially dangerous veto right "the tragedy of the anticommons." According to Heller and Eisenberg, that tragedy occurs when property rights are too strong and too many people can block some productive venture... We think that Heller and Eisenberg have overstated the case against patent protection at both the theoretical and empirical levels. The number of patents filed in recent years has continued to move sharply upward across the board. We see no reason to believe that the sole or dominant purpose for individual patentees is to block innovations by others...

Review

Definition of patent thicket

"...a vast thicket that gives each patent holder a potential veto right over the innovations of others. They dubbed that potentially dangerous veto right 'the tragedy of the anticommons.'"

Legal Discussion

Laws considered:

• Hatch-Waxman (1984)
• Pharmaceutical Market Access and Drug Safety Act of 2004.

Discussion:

• Patent thickets may create barriers to entry, but proposed legislation to reform and control prices may simply eliminate many of the advantages from patent ownership.

"Refusing to deal is a loss of opportunity. In addition, the patent is always a wasting asset; not only is it limited in time, but even during the period of its unquestioned validity its holder faces the possibility that new patents, old patents that have expired, and new techniques that come into the public domain will all erode its dominance. Those who do not deal will not prosper..."

"Only price discrimination by the patent holder allows it to reach potential consumers who could not otherwise pay the monopoly price for the drug."

Social Welfare Consequences

• Price control legislation would eliminate the benefits of holding a patent in the pharmaceutical industry, thus reducing incentives to innovate.

"The high initial but low marginal costs of drug development leave many groups clamoring to hasten the introduction of low-cost generics. Right now, the rates of return for pharmaceutical firms have been high, but those reflect the riskiness of the venture given the free entry into the industry and, some would argue, the implicit protection against competition supplied by the stringent set of nonnegotiable FDA licensing requirements."

Policy Advocated in Paper

• The benefits of patent reform for pharmaceutical industry will be outweighed by the losses incurred by patent holders.

"A direct frontal assault on the patent system generates little support given the social demand for innovation. But indirect attacks on the patent system could escape widespread social condemnation while eroding the protection that the patent system can supply its holders. It is therefore critical that we recognize that the past successes in biomedical innovation arise because the gains from innovation exceed any small dislocations from the so-called anticommons..."