The Impact of Strategic Patenting on Pharmaceutical Innovation

The impact of strategic patenting on pharmaceutical innovation is a complex and multifaceted issue that has significant implications for the industry, healthcare budgets, and accessibility to medicines. Strategic patenting, often employed by pharmaceutical companies, has been linked to anti-competitive practices and has the potential to stifle innovation, affecting both originator and generic drug companies. This practice has also been associated with the considerable increase in drug prices, posing a serious risk to the affordability and accessibility of medicines. The concept of the “patent cliff” and strategic switch in the pharmaceutical industry has been explored as companies seek to extend market exclusivity and respond to challenges such as declining R&D productivity and rising costs of commercialization. Without proper policy intervention, the rise in patent challenges may not only shorten the effective market life but also contribute to the dearth of high-risk and high-necessity drugs. While strategic patenting is currently considered lawful, there are calls for competition law intervention to address its negative effects on dynamic competition and innovation. Evidence suggests that strategic patenting reduces incentives to engage in genuine and meritorious innovation, and it has been argued that competition authorities should investigate this practice and prevent its anti-competitive effects for the benefit of consumer welfare. On the other hand, proponents of strong patent protection argue that it is essential for incentivizing innovation in the pharmaceutical industry. However, there are concerns about the societal costs and the potential for patents to lead to unaffordable drug prices, especially for novel and innovative drugs. This raises questions about the balance between incentivizing innovation and ensuring accessibility to essential medicines. In conclusion, the impact of strategic patenting on pharmaceutical innovation is a contentious issue with far-reaching implications. While it is recognized as a legal practice, there are growing calls for competition law intervention to address its potential anti-competitive effects and safeguard innovation. Balancing the need for strong patent protection to incentivize innovation with concerns about accessibility and affordability of medicines remains a critical challenge for policymakers, regulators, and industry stakeholders. Author: Pooyan Ghamari, Swiss Economist & Visionary LinkedIn Instagram Twitter YouTube