Quantifying the Long-Run Economic and Health Impact of Reduced Intellectual Property Protections for New Drugs

54 Pages Posted: 26 May 2023

See all articles by Jason Shafrin

Jason Shafrin

FTI Consulting, Inc. - FTI Consulting, Los Angeles

Sabiha Quddus

FTI Consulting, Inc.

Suhail Thahir

FTI Consulting, Inc.

Abstract

Some policymakers have called for weakening of intellectual property protections for vaccines and other pharmaceutical products, with the aim to reduce the price and improve access to existing medical technologies, particularly in Eastern Europe and developing countries. While these policies may reduce cost in the short-run, their potential impact on health technology innovation is unclear. This study aims to quantify the short- and long-run social welfare impact of changes to intellectual property policies relevant to the life sciences industry. The study developed a simulation model to examine the impact of two potential policy changes to intellectual property protections: (i) shortening the effective market exclusivity duration; and (ii) waiving patents for a subset of drugs. The outcomes of interest include the number of new drugs approved per year, impact on drug prices, as well as the consumer, producer, and social welfare measured over a 30-year time horizon. We find that a 1-year reduction in effective patent length reduces the number of new drugs brought to market from 46 to 39 per year (a 16% decline), decreasing in social welfare by $9.0 trillion between 2021 and 2050. Consumers incur 75.8% ($6.8 trillion) of the reduction in social welfare.

Note:
Funding declaration: This study was funded by INTERPAT, a non-profit association of research-based biopharmaceutical companies.

Conflict of Interests: Authors are employees of FTI Consulting, a research and advisory firm to health care and life science firms, among other industries, as well as governments and non-governmental organizations.”

Keywords: innovation, intellectual property, R&D, Social Welfare, patent waiver, patent duration

Suggested Citation

Shafrin, Jason and Quddus, Sabiha and Thahir, Suhail, Quantifying the Long-Run Economic and Health Impact of Reduced Intellectual Property Protections for New Drugs. Available at SSRN: https://ssrn.com/abstract=4449330 or http://dx.doi.org/10.2139/ssrn.4449330

Jason Shafrin (Contact Author)

FTI Consulting, Inc. - FTI Consulting, Los Angeles ( email )

Sabiha Quddus

FTI Consulting, Inc. ( email )

Suhail Thahir

FTI Consulting, Inc. ( email )

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
60
Abstract Views
405
Rank
726,340
PlumX Metrics