Should the patent system for new medicines be abolished?

“It is hard to think of many industries that have contributed as much to human welfare as the pharmaceutical industry.” This statement was made not by a pharmaceutical industry chief executive officer but by two antitrust regulators, Roy Levy and Abraham Wickelgren, with the Federal Trade Commission.1 There is indeed evidence from the medical and economics literature that new drugs have played a central role in increased longevity, enhanced quality of life, and improved labor-force participation and productivity. Recent studies have attributed as much as half of all welfare gains worldwide during the 20th century to the introduction of new medicines and technologies.2,3 Despite these noteworthy accomplishments, the industry has been subjected to hostile criticism and radical policy proposals. One of the major targets of these proposals is the patent system, in which inventors are awarded exclusive rights to develop and commercialize new medicines. A variety of alternative schemes have been offered, but virtually all come down to greater reliance on the government to fund the discovery and development of new drugs. This would be done through either a prize fund for private inventors of new medical technologies or direct government funding of the research through grants and contracts. The advantage claimed for these proposals is that they would lower drug prices and allow greater access to new medicines, because without patents all medicines would be “genericized” at the time of introduction.