New Report Emphasizes the Role of Patent Protection in the Global Diffusion of New Drugs

A new report from the National Bureau of Economic Research (NBER) has determined that strong patent protection accelerates the speed at which new drugs are launched in different countries.

Providing affordable access is often challenged by the need to provide adequate incentives for developing new drugs, and ensuring affordable prices once they develop.

Often neglected in the larger debate is that the speed at which drugs are launched and adopted in new countries is one of the more critical factors in generating the greatest public health benefit. The best scenario for the largest number of people is that new drugs are launched quickly in local markets and adopted widely throughout the country.

Based on drug launch data comprising of over 600 drugs in almost 80 countries from 1983-2002, the NBER study found that price regulation strongly delays launch, while longer and more extensive patent protection accelerates it.

This report studied patent regimes and price regulation, as well as economic factors, such as market size and demographics, which could potentially impact the speed and geographic extent of diffusion.

The analysis provided four key takeaways:

1. New drugs become available in many countries only after long lags (more than 10 years) between the date when a product first launches commercially anywhere in the world, and its launch in other countries. Many new drugs are never launched outside a handful of wealthier countries.

2. Patent policies that governments adopt strongly affect how quickly new drug therapies are launched in their countries. Longer duration and stronger patent rights substantially speed up diffusion. Importantly, we find that these effects hold equally for low and middle income countries as for high income countries.

3. Countries that adopt strong pharmaceutical price regulation experience significantly longer launch lags for new drugs (per period hazard of launch increased by 15 percent).

4. New drugs are launched much faster in countries that have health policy institutions that promote availability and distribution of drugs.

This report builds on a growing body of research supporting the need for robust patent systems in order to generate the best medical care in global markets. The evidence strongly supports the need for comprehensive patent protection in order to generate the maximum public health benefits.

AUSTIN DONOHUE | 11/19/2014


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