ABSTRACT
A well-developed theoretical literature - dating back at least to Nordhaus (1969) - has analyzed optimal patent policy design. We re-present the core trade-off of the Nordhaus model and highlight an empirical question which emerges from the Nordhaus framework as a key input into optimal patent policy design: namely, what is the elasticity of R&D investment with respect to the patent term? We then review the - surprisingly small - body of empirical evidence that has been developed on this question over the nearly half century since the publication of Nordhaus's book.
ABSTRACT
We investigate whether private research investments are distorted away from long-term projects. Our theoretical model highlights two potential sources of this distortion: short-termism and the fixed patent term. Our empirical context is cancer research, where clinical trials - and hence, project durations - are shorter for late-stage cancer treatments relative to early-stage treatments or cancer prevention. Using newly constructed data, we document several sources of evidence that together show private research investments are distorted away from long-term projects. The value of life-years at stake appears large. We analyze three potential policy responses: surrogate (non-mortality) clinicaltrial endpoints, targeted R&D subsidies, and patent design.
ABSTRACT
We investigate whether private research investments are distorted away from long-term projects. Our theoretical model highlights two potential sources of this distortion: short-termism and the fixed patent term. Our empirical context is cancer research, where clinical trials--and hence, project durations--are shorter for late-stage cancer treatments relative to early-stage treatments or cancer prevention. Using newly constructed data, we document several sources of evidence that together show private research investments are distorted away from long-term projects. The value of life-years at stake appears large. We analyze three potential policy responses: surrogate (non-mortality) clinical-trial endpoints, targeted R&D subsidies, and patent design.
Subject(s)
Clinical Trials as Topic/economics , Investments , Research Design , Time Factors , Antineoplastic Agents/therapeutic use , Biomarkers , Chemoprevention , Clinical Trials as Topic/methods , Clinical Trials as Topic/statistics & numerical data , Financing, Government , Humans , Investments/economics , Investments/statistics & numerical data , Models, Theoretical , Neoplasms/drug therapy , Neoplasms/economics , Neoplasms/prevention & control , Patents as Topic , Private Sector , Survival Rate , United States , Value of LifeABSTRACT
Several large pharmaceutical companies have selectively downsized their neuroscience research divisions, reflecting a growing view that developing drugs to treat brain diseases is more difficult and often more time-consuming and expensive than developing drugs for other therapeutic areas, and thus represents a weak area for investment. These withdrawals reduce global neuroscience translational capabilities and pose a serious challenge to society's interests in ameliorating the impact of nervous system diseases. While the path forward ultimately lies in improving understandings of disease mechanisms, many promising therapeutic approaches have already been identified, and rebalancing the underlying risk/reward calculus could help keep companies engaged in making CNS drugs. One way to do this that would not require upfront funding is to change the policies that regulate market returns for the most-needed breakthrough drugs. The broader neuroscience community including clinicians and patients should convene to develop and advocate for such policy changes.
