Patents: More Important to Biopharmaceutical Sector than Other Industries

Print 26 May 2015
Setareh Samii / PhRMA

According to Abraham Lincoln, the patent system “secured to the inventor for a limited time exclusive use of his inventions, and thereby added the fuel of interest to the fire of genius in the discovery and productions of new and useful things.”

While this quote is from the mid-1800s, it is especially true today for the biopharmaceutical sector. It’s also timely as Congress is considering new legislation that would erode patent rights and potentially undermine industry’s ability to bring new treatments and cures to patients and grow the US economy.

A new study, coauthored by Boston University economist Iain Cockburn and Genia Long of Analysis Group, found patents are more important to incentivizing investment in biopharmaceutical R&D compared to other industries. The study also found that patents are more important than other forms of intellectual property (IP) protection and other strategic business assets (such as lead time) in fostering biopharmaceutical R&D investment. Without them, medical progress would stop because no company would invest in costly and time-consuming research if a competitor could just copy their research and sell their own version.

Bringing new medicines to patients is a long and challenging road. Average R&D timelines are at least 10 years with average costs of about $2.6 billion. What’s more, just 12 percent of molecules in clinical testing eventually receive FDA approval. Ultimately, these findings confirm what has already been established: patents are more important to R&D in biopharmaceuticals than other American industries.

Below, we’ve outlined what you should know about the importance of patents to the biopharmaceutical sector:

• Patents ensure the biopharmaceutical sector has the potential to recoup their significant R&D costs to fuel the next generation of scientific advancements, treatments and cures
• 61% of R&D-active biopharmaceutical companies indicated that patents are “very” or “somewhat” important to the sector, compared to just 4% of company respondents across all other industries surveyed in the study
• 89% of licensing professionals surveyed from the health care industry (including pharmaceuticals and biotechnology) characterized patents as “extremely important in creating a competitive advantage” for their organization
• Patents are critical to attracting the investors needed to  fund start-up and emerging biopharmaceutical companies (19% of all venture capital investments between 1980 and 2012 were in life sciences start-ups)

As policymakers weigh the possibility of making changes to the patent system, it’s imperative that they consider the significant role of strong, reliable patents to promoting investment in the discovery and development of new cures and treatments that help patients live longer, healthier lives.

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