Title

Research Tool Patenting and Licensing and Biomedical Innovation

Date of Original Version

2003

Type

Working Paper

Abstract or Table of Contents

Over the last two decades changes in technology and policy have altered the landscape of drug discovery. These changes have led to concerns that the patent system may be creating difficulties for those trying to do research in biomedical fields. Using interviews and archival data, we examine the changes in patenting in recent years and how these have affected innovation in pharmaceuticals and related biotech industries.

We find that there has in fact been an increase in patents on the inputs to drug discovery (“research tools”). However, we find that drug discovery has not been substantially impeded by these changes. We also find little evidence that university research has been impeded by concerns about patents on research tools. Restrictions on the use of patented genetic diagnostics, where we see some evidence of patents interfering with university research, are an important exception. There is, also, some evidence of delays associated with negotiating access to patented research tools, and there are areas in which patents over targets limit access and where access to foundational discoveries can be restricted. There are also cases in which research is redirected to areas with more intellectual property (IP) freedom. Still, the vast majority of respondents say that there are no cases in which valuable research projects were stopped because of IP problems relating to research inputs.

We do not observe as much breakdown or even restricted access to research tools as one might expect because firms and universities have been able to develop “working solutions” that allow their research to proceed. These working solutions combine taking licenses, inventing around patents, infringement (often informally invoking a research exemption), developing and using public tools, and challenging patents in court. In addition, changes in the institutional environment, particularly new U.S. Patent and Trademark Office (USPTO) guidelines, active intervention by the National Institutes of Health (NIH), and some shift in the courts’ views toward research tool patents, appear to have further reduced the threat of breakdown and access restrictions although the environment remains uncertain.

We conclude with a discussion of the potential social welfare effects of these changes in the industry and the adoption of these working solutions for dealing with a complex patent landscape. There are social costs associated with these changes, but there are also important benefits. Although we cannot rule out the possibility of new problems in the future, our results highlight some of the mechanisms that exist for overcoming these difficulties.