Even those who doubt the need for intellectual property laws usually point to pharmaceuticals as an exception, arguing that the research and development costs for developing drugs are so high that innovation requires patent protections. But the European experience suggests otherwise, according to an upcoming book, Against Intellectual Monopoly, by economists Michele Boldrin of the University of Minnesota and David K. Levine of UCLA.
In medicines, the book points out, innovations often build on existing procedures, so that any "increased incentive to innovate" that patents might create is "more than offset by the increased difficulty of doing so" caused by products or processes being unavailable. Until the late 1970s and the 1980s, most European countries either had no patent protection for medicines or protected only processes, not products. Companies were happy to enjoy monopolies in countries where they could get patents, such as the United States and England, and still reap the advantages of freely building on other innovations back home.
Boldrin and Levine also argue that the patent system creates wasteful spending, with companies shelling out hundreds of millions to develop drugs that are frequently functionally the same as existing ones. Since pharmaceutical companies are unable just to compete openly in production and sales, thanks to patent law, they strive just to "'invent something' the [U.S. Patent Office] can pretend to be sufficiently different from the original, patented, drug."
According to the conventional wisdom, the authors conclude, "countries such as Italy, Switzerland and, to a lesser extent, Germany, should have been the poor sick laggards of the pharmaceutical industry." Instead, the "opposite is and has been true. This is as macroscopic a contradiction of the intellectual monopoly apologists' argument for patents in general, and for medical patents in particular, as one can possibly imagine."