No time to die: The patent-induced bias towards acute conditions in pharmaceutical research and development (R&D)

Examining how patents influence the direction of pharmaceutical R&D

With private pharmaceutical firms being the drivers of innovation in medicine, how can we ensure research focuses on areas with the greatest social value? This study examines how the patent system creates dissonance between the private and social value of pharmaceutical R&D. This misalignment leads firms to overinvest in acute, rather than chronic conditions. The research will then evaluate which policies could mitigate this distortion and incentivize medical treatments for conditions with the greatest benefit to society.



The challenge

Whilst progress against diseases relies heavily on the innovative efforts of the private sector, these efforts are driven by profit motives rather than concerns about the benefits to society. Patents are a key policy tool for incentivising innovation in the pharmaceutical industry – with high-up front costs and negligible replication costs, there is little incentive to innovate in the absence of intellectual property rights.

A new treatment will only generate profits for the inventor until its patent expires. However, the treatment stays useful for society long after patent expiry. The differing motivations of firms and society are therefore hard coded in the existing patent system. Importantly, the patent system affects which areas pharmaceutical firms consider attractive to invest in. This, in turn, determines which diseases see medical advances, having a direct impact on people’s lives.

The intervention

To better align pharmaceutical firms’ incentives with broader societal benefits, we must understand how the current system affects their motivation to research different disease areas. By proposing a new method for quantifying the gap between the private and social value of medical treatments, this project aims to explore the impact of the current patent system – how it drives investment towards some areas over others. This can inform policymakers about how to harmonise incentives and create an innovative environment that fosters technological progress with greater benefits to society.

The potential impact

Tackling this challenge requires taking a systemic view of the pharmaceutical industry. This research has the potential to implement change in the policy that governs the pharmaceutical industry in a way that generates real benefit to society – ultimately solving a challenge that continues to have a significant impact on people’s health, and consequently their livelihoods.