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

2. Roadmap Superbugs The issue Pharmaceutical Research and Development
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
"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
“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 & Expensive Imitation: 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 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
Medicines in Development
by Country (2011)*
Australia
416
Chile 44
China
139
Japan
476
Malaysia 26
New Zealand
101
Peru 34
Philippines 46
Singapore 74
South Korea
231
Taiwan
132
Vietnam 2
United States
2908
*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,

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
“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 Embrace what works
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.
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