Optimal Patent Policy for Pharmaceutical Industry

Olena Izhak, Tanja Saxell and Tuomas Takalo

No 131, Working Papers from VATT Institute for Economic Research

Abstract: We show how characterizing optimal patent policy for the pharmaceutical industry only requires information about generic producers’ responses to changes in the effective duration and scope of new drug patents. To estimate these responses, we use data on Paragraph IV patent challenges, and two quasi-experimental approaches: one based on changes in patent laws and another on the allocation of patent applications to examiners. We find that extending effective patent duration increases generic entry via Paragraph IV patent challenges whereas broadening protection reduces it. Our results imply that pharmaceutical patents should be made shorter but broader.

Keywords: patent policy; pharmaceuticals; generic entry; innovation; imitation; Business regulation and international economics; I18; K20; L13; O34; O31; Terveyspalvelut (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino, nep-ipr, nep-law and nep-tid
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