Eli5: What is the purpose of patents in the pharmaceutical industry and what kind of impact do they have on drug pricing?
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The purpose of a patent is the same in all cases. They …
1. Protect the property of the owner.
2. Encourage investment in innovation with the understanding that the fruit of the investment will not be stolen by others.
3. Give the patent holder the ability to license their property.
When it comes to the Pharma it can have an undesirable effects of
1. Stifling innovation by encouraging trolling in lawsuits
2. It encourages “evergreenimg” taking a patent making a small change to the formula and all a new patent to be issued. Also done by the combining of two expired patent medications into a single medication and getting a new patent.
3. India has a history of the extensive use of medical plants. Pharma has taken these plants found the active ingredient and then patented. India has wisely told them tough crap about patenting these and refuse to honor them.
Generally the impact on prices is not for the general benefit of mankind but that is what would be expected.
The biggest challenge world-wide is the effort to increase the durations of patents, trademarks, copywriters and IP laws. Combined with the immortality of corporations and you can see that these might need to be a rethinking of patents.
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