Illegal interlocks among life science company boards of directors.

Competition between life science companies is critical to ensure innovative therapies are efficiently developed. Anticompetitive behavior may harm scientific progress and, ultimately, patients. One well-established category of anticompetitive behavior is the 'interlocking directorate'. It is illegal for companies' directors to 'interlock' by also serving on the boards of competitors. We evaluated overlaps in the board membership of 2,241 public life science companies since 2000. We show that a robust network of interlocking companies is present among these firms. At any given time, 10-20 percent of board members are interlocked; the number of interlocks has more than doubled in the last two decades. Over half of these interlocked firms report over $5 million in historical revenue, exceeding a legal threshold that makes an interlocking directorate a violation of antitrust law. Those interlocks are only illegal if the companies compete, even in part. Using the disease categories for which companies have sponsored clinical trials, we discover that a few markets are responsible for a large fraction of interlocks. We show that in dozens of cases, companies share directors with the very firms they identify as their biggest competitive threats. We provide a data-driven roadmap for policymakers, regulators, and companies to further investigate the contribution of anticompetitive behavior to increased healthcare costs and to enforce the law against illegal interlocks between firms.

Patenting nanotechnology.

Universities and companies are rushing to the patent office in record numbers to patent nanotechnology inventions. This rush to the patent office is so significant that many law firms have established nanotechnology practice groups and the U.S. Patent and Trademark Office has now created a new technology class designed to track nanotechnology products. Three big differences between the emerging science of nanotechnology and other inventions make the role of patents more significant in this arena than elsewhere. First, this is almost the first new field in a century in which the basic ideas are being patented at the outset. In many of the most important fields of invention over the past century--computer hardware, software, the Internet, even biotechnology--the basic building blocks of the field were either unpatented or the patents were made available to all users by government regulation. In others, patents were delayed by interferences for so long that the industry developed free from their influence. In nanotechnology, by contrast, companies and universities alike are patenting early and often. A second factor distinguishing nanotechnology is its unique cross-industry structure. Unlike other new industries, in which the patentees are largely actual or at least potential participants in the market, a significant number of nanotechnology patentees will own rights not just in the industry in which they participate, but in other industries as well. This overlap may significantly affect their incentives to license the patents. Finally, a large number of the basic nanotechnology patents have been issued to universities, which have become far more active in patenting in the last twenty-five years. While universities have no direct incentive to restrict competition, their interests may or may not align with the optimal implementation of building-block nanotechnology inventions. The result is a nascent market in which a patent thicket is in theory a serious risk. Whether it will prove a problem in practice depends in large part on how efficient the licensing market turns out to be.