Patents and the Global Diffusion of New Drugs

Abstract

This project was initiated by Jean (Jenny) Lanjouw. Tragically, Jenny died in late 2005, but had asked us to complete the project. This took much longer than expected because it involved complete reconstruction of the data set and empirical work. It is essentially a new paper in its current form, but it remains an important part of Jenny's legacy and a topic to which she devoted much of her intellectual and policy efforts. We hope she would be satisfied with our work which, for us, was a labor of love. We thank Judy Chevalier, Alberto Galasso, Matt Gentry, Bronwyn Hall, Saul Lach, Margaret Kyle, Scott Stern, Glen Weyl, Brian Wright, and seminar participants at Berkeley, MIT Sloan School, the USPTO, and numerous other universities for their suggestions on earlier versions of the paper. We are grateful to the World Bank, the Brookings ABSTRACTThis paper studies how patent rights and price regulation affect how fast new drugs are launched in different countries, using newly constructed data on launches of 642 new drugs in 76 countries for the period 1983-2002, and information on the duration and content of patent and price control regimes. Price regulation strongly delays launch, while longer and more extensive patent protection accelerates it. Health policy institutions, and economic and demographic factors that make markets more profitable, also speed up diffusion. The effects are robust to using instruments to control for endogeneity of policy regimes. The results point to an important role for patents and other policy choices in driving the diffusion of new innovations.

How Do Patents Affect Research Investments?

“…To name but a few examples, researchers have investigated what role patents play in encouraging the international diffusion of new pharmaceutical drugs (Cockburn, Lanjouw and Schankerman, 2016; Duggan, Garthwaite and Goyal, 2016; Kyle and Qian, 2014), the role of patents in enabling technology licensing (Gans, Hsu and Stern, 2008), how to set royalties for standard-essential patents (Lemley and Shapiro, 2013), and whether the establishment of the US Court of Appeals of the Federal Circuit caused growth in patenting (Kortum and Lerner, 1999). The well-known paper by Hall, Jaffe and Trajtenberg (2001) documenting a linkage between the Compustat data and granted US patents has almost 3,000 citations (Google Scholar, August 6 2016), one summary indicator of the volume of patent-related research using that data set alone.…”

Privacy Discrimination: What it is and why it matters

“…From a social welfare perspective, price discrimination does not have to be negative, but can have upsides [20], for example by fostering research and development (R&D) efforts [21]. However, regulation of prices can also delay launches of new medication or even deter the launch in specific countries [22].…”

Profiting from Innovation through Cross‐Border Market co‐Creation and co‐Opetition: The Case of Global Pharmaceuticals

“…Emerging countries, which lacked strong IP protection, did not engage as much in innovation or trade. Besides potential resource constraints, this is in part because in weak IP regimes, drug firms may not have strong incentives to carry out necessary clinical trials to meet local requirements, obtain regulatory approval, educate healthcare providers, or even to build marketing and distribution infrastructure to sell their drugs (Cockburn et al, 2014).…”