NEW YORK — The authors of the new study argue that the law should go even further and actually give long-trial drugs more protection than short-trial drugs following approval, instead of less (and also potentially cut back protection for short-trial drugs). Their argument has two parts: First, drugs with short trial times also tend to have lower development costs, so they'd get done even without the extra protection. Second, since drugs with long trial times tend to focus on prevention or early-stage treatment, they may have higher societal payoffs than drugs that spend just a few years in development.
Yet such legal innovation would surely have unanticipated consequences: For every well-meaning rule change, creative legal teams would develop new and unexpected ways of gaming the system. It's for this reason that ex-Amgen CEO Sharer says that the rule-makers had better "shine a laser beam" on the particular disease classes where they hope to encourage innovations. Sharer points to the Orphan Drug Act of 1983, which gave seven years of market exclusivity, along with tax incentives, for drugs that treat rare diseases that would go uninvestigated without greater incentives.
It's likely that many industries besides biotech suffer from the same distortionary effects of the 20-year patent rule - biotech is hardly unique in the long lag between discovery and commercialization. And other areas of research may not have the workaround of extending protection through regulators like the FDA. So if you consider the implications of this new study more broadly, it's yet another argument that American legislators need to find the political will for a long-overdue overhaul of the patent system, and a responsibility to do it in such a way that logic and reason do defeat the lobbying assault that would accompany it. American business isn't exactly renowned for forward thinking, with executives rarely looking beyond the next quarter's earnings. The last thing they need is an ill-designed patent system to further encourage their short-sightedness.
Fisman is the co-director of the Social Enterprise Program and senior scholar at the Chazen Institute at the Columbia Business School. He is the co-author, with Tim Sullivan, of "The Org: The Underlying Logic of the Office."