2016
DOI: 10.1257/app.20150373
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Patents as a Spur to Subsequent Innovation? Evidence from Pharmaceuticals

Abstract: Research dating back at least as far as Nordhaus (1967) has analyzed the role of intellectual property protection in incentivizing innovation. The motivation for such protection tends to be the idea that without property rights, the free market might underinvest-relative to the socially optimal level-in the costly development of new technologies. The tradeoff is that bestowing a firm with market power leads to prices that are statically inefficient, driving a wedge between the allocation that is realized and t… Show more

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Cited by 14 publications
(9 citation statements)
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References 51 publications
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“…Unlike these papers, we use examiner variation to estimate the impact of patent scope on non-patent outcomes. Related to our results, Gilchrist (2016), who also builds on the theory of Gallini (1992), shows how longer drug patent term encourages the entry of differentiated originator products.…”
Section: Introductionsupporting
confidence: 78%
See 1 more Smart Citation
“…Unlike these papers, we use examiner variation to estimate the impact of patent scope on non-patent outcomes. Related to our results, Gilchrist (2016), who also builds on the theory of Gallini (1992), shows how longer drug patent term encourages the entry of differentiated originator products.…”
Section: Introductionsupporting
confidence: 78%
“…The effective length of pharmaceutical patents is 12.6 years, varying from one month to 20 years. Using related measures, Hemphill and Sampat (2012) and Gilchrist (2016) report average new drug patent lengths of 15.9 and 11.8 years, respectively.…”
Section: Summary Statisticsmentioning
confidence: 99%
“…A related article (Branstetter, Chatterjee, and Higgins, ) explores the relationship between generic entry and drug development, and finds evidence of an impact that is statistically and economically significant. In yet another article, Gilchrist () demonstrates a causal impact between first‐in‐class exclusivity (i.e., the length of time before generics are able to enter the market) and subsequent innovation in that class.…”
Section: Related Literaturementioning
confidence: 99%
“…49 Greater duration of market exclusivity can potentially motivate subsequent innovation, but much of this innovation may be "me too" drugs that are not meaningful clinical advancements. 50 Although we only examined therapeutic value of the novel drug in this study, the findings also underscore the need for reform of incentives for incremental innovation. For example, small changes to pharmaceutical formulations could be deemed legally insufficient to warrant new patents, or these patents could be subjected to heightened antitrust scrutiny.…”
Section: Discussionmentioning
confidence: 95%