HEDS is part of the School of Health and Related Research (ScHARR) at the University of Sheffield. We undertake research, teaching, training and consultancy on all aspects of health related decision science, with a particular emphasis on health economics, HTA and evidence synthesis.

Monday, 29 February 2016

Patent Purchase as a Policy for Pharmaceuticals…..

…..is the title of a Sheffield Economic Research Paper by Ben van Hout, Jolian McHardy and Aki Tsuchiya.  The Abstract is below:
Image: Laura Gilmore
Image: Pills by Laura Gilmore

We often observe that when the first of a new class of drug is patented it does not halt the development of further drugs of the same class resulting in a number of drugs with similar efficacy and price well above production costs. We construct a life-cycle analysis of the welfare gains from a policy for pharmaceutical patenting where society grants and purchases the patent of the first of a new class of drug (instead of purchasing the drug), awarding no further patents to runner-up drugs, and producing or licensing production with price set to maximise welfare subject to covering costs. We show that under such a policy society could substantially reduce the cost of duplicated R&D and the price of the drug benefiting more patients and producing large health gains. The results are generated based upon a number of stylised facts regarding R&D in the pharmaceutical industry.