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The Bacterial Challenge to Patents as Innovation Incentives

The WSJ had a chilling article (and blog post) on a recent study of bacterial resistance a few days ago:

Every time the patient took his medicine, the antibiotics killed the weakest bacteria in his bloodstream. Any cell that had developed a protective mutation to defend itself against the drug survived, passing on its special trait to descendants. With every round of treatment, the cells refined their defenses through the trial and error of survival. “It means that during a normal course of treatment there is an evolutionary revolution going on in your body,” said Stanford University biologist Stephen Plaumbi, author of The Evolution Explosion: How Humans Cause Rapid Evolutionary Change.

The piece reminded me of an LLM thesis I read in May on the unique challenge of developing antibiotics.  As Maggie Mahar’s Money Driven Medicine observes, drug companies have a far greater incentive to create pills that need to be taken every day than for one-shot items like most antibiotics–there’s more time to spread payments over.  Even more confounding is the tension between the economics of patent terms and the public health consequences of bringing new antibiotics to the market.

Ideally, the medical community “holds in reserve” the newest and strongest antibiotics for those rare cases when they are desperately needed.  The majority of cases should be treated with “old standby’s.”  The faster the newer antibiotics come into general usage, the more bacterial resistance can develop.  But with an effective patent term of less than 20 years, firms have an economic incentive to promote immediate use of a drug before it goes generic.

Kevin Outterson launches an even deeper critique of patents in his article The Vanishing Public Domain: Antibiotic Resistance, Pharmaceutical Innovation, and Public Health. He notes that

The problem is not limited to antibiotics. Variants of the human immunodeficiency (AIDS) virus develop resistance to anti-retroviral drugs. Some pharmaceutical knowledge is exhaustible, a conclusion which upends the conventional wisdom for IP policy stretching back to Jefferson and beyond.

Though drug patents are often justified on the grounds that the drugs they cover eventually go into the public domain, that’s little consolation if resistance renders the drug ineffective by the time it becomes generic. 

3 thoughts on “The Bacterial Challenge to Patents as Innovation Incentives”

  1. This sounds like a problem but I don’t get the connection to patents. Don’t drug companies have an incentive to sell as many drugs as possible no matter what the patent protection is? Cheerios aren’t patented, but General Mills strives mightily to make sure you eat as many Cheerios as possible.

  2. My sense is that the patent encourages the acceleration of sales during the patent term, because that’s when the owner of the patent can obtain a monopoly price.

    I would think that, if Cheerios were patented at some time, the effort to sell them during that time would be far more intense than late efforts. Moreover, one could invest profits from the supracompetitive price into a stronger marketing effort.

    I suppose the market approach here might involve overruling Brulotte v. Thys…

  3. If you don’t have a patent, and your product is in danger of being imitated or is in fact challenged by competitors, that would seem to be the situation in which you’d want to sell the most the fastest. If, on the other hand, you have a guaranteed period of exclusivity, you can afford to think of the longer term. Of course, people of all stripes, including business people, are often bad at envisioning long-term profits, but I don’t see how the pressure to sell today gets greater if you lose long-term exclusivity.

    I suppose if there were some choice to be made — Company X can sell 100 lots now and 0 lots later, or can instead sell 50 lots now and 50 lots 10 years from now — then the length of patent exclusivity might add some amount of weight in favor of the first. But I don’t think super-bacteria present that sort of choice; they present the choice of 50 lots now (and 50 lots of some competitor’s drug now) versus 100 lots now. Given that choice, I think just about every profit-maximizing enterprise would have an incentive to opt for the latter.

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