Generally speaking, patents were established to foster innovation and to incentivize creativity. With most people financially benefiting from patents, this reasoning still holds true. A patent allows the creator to be the sole seller and profiteer of their product. A patent allows a company to edge out its competition. And in the case of biotechnology, a patent allows a biotech company to reap massive financial rewards. In one year alone, Pfizer yields $10 billion dollars from a single patented drug – Lipitor. Yet unique to this industry, virtually every dollar made on these mega-brand drugs goes back into research and development to produce other life-saving pharmaceuticals. Although these drugs are expensive for consumers, this industry as a whole perfectly exemplifies the aforementioned rationale behind establishing patents. But, with more than 10 drugs, from various pharmaceutical companies, with a combined annual revenue of $50 billion losing their patents this year, the productive cycle may come to a halt. The Director of the Center for the Study of Drug Development at Tufts University, Kenneth Kaitin, said, “I don’t think there’s a company out there that doesn’t realize they don’t have enough products in the pipeline or the portfolio, don’t have enough revenue to sustain their research and development.” Without the funds for research and development, pharmaceutical companies can’t test cancer-curing drugs or reduce the symptoms of heart disease. Some are even going so far as to engage in mergers and acquisitions with smaller companies, which have patents lasting for a few more years, in order to attempt to fund their research and development endeavors. Even these M&A transactions stifle creativity and the development of new pharmaceuticals by drastically decreasing the number of companies in the industry.
This article and the scenario as a whole raises the question, in the field of biotechnology, are patents hindering what they are supposed to foster, innovation?