NCPA - National Center for Policy Analysis

Tampering With Drug Patents is Short-Sighted and Risky

July 12, 2002

Congress is considering legislation to trim patent protections on prescription drugs in order to speed generic drugs to the market. The problem is that such a policy might also reduce drug companies' incentives to spend the more than $30 billion a year on research they do now.

  • Columbia University's Frank Lichtenberg has estimated that, on average, each new drug approved during the period 1970 to 1991 saved 11,200 life-years in 1991.
  • Although today's drug patents run for 20 years, the Food and Drug Administration's approval process eats up half or more of that protection.
  • Moreover, the 1984 Hatch-Waxman Act allowed generic drug firms to use and test patented drugs and avoid repeating the FDA approval process -- allowing them to begin selling on the market the day a patent expires.
  • Generics now account for almost half of the drug market -- up from just one-fifth in 1984.

Slicing away at drug patents is supported by an organization called Business for Affordable Medicine. Its members include General Motors, Wal-Mart, Verizon, Eastman Kodak, Motorola, Weyerhauser, Kellogg and Georgia-Pacific. A number of those companies hold valuable patents. If the aim is to save consumers money, critics point out, why stop with pharmaceuticals? Why not perform a little surgery on those patents?

Source: Doug Bandow (Cato Institute), "Fighting the Patent Wars," Washington Times, July 12, 2002.


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