Excavating Treasure from the Amber of the Prior Art: Why the Public Benefit Doctrine is Ill-suited to the Pharmaceutical Sciences

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This paper explores incongruities between patents and regulation as applied to the pharmaceutical industry in the United States. Research, development and marketing of a new pharmaceutical agent generally requires large, high-risk investments. The time and expense of conducting clinical trials to obtain pre-market approval from the Food and Drug Administration provides an additional barrier to entry. The patent system stimulates such investment by providing a legal barrier to appropriation of these investments by free-riders and increasing the likelihood of capital return on these investments. These two barriers are intertwined. For the most part, firms only attempt to clear the regulatory barrier when patent protection is certain. As a result of the uniquely challenging economic situation presented by the regulatory barrier, a common line of reasoning in patent policy and jurisprudence, that inventions which are barred from patenting benefit the public, is flawed. To the contrary, the patent/regulatory system forever traps pharmaceutical inventions, once placed in the public domain. Pharmaceutical companies cannot afford to invest the resources needed to clear the regulatory barrier if the investment is quickly appropriated by a free-riding manufacturer. Various implications of, and solutions to, this policy artifact are explored.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Robert Hess | Attorney Advertising

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