2021/26 | LEM Working Paper Series | ||||||||||||||||
Big pharma and monopoly capitalism: A long-term view |
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Giovanni Dosi, Luigi Marengo, Jacopo Staccioli and Maria Enrica Virgillito |
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Keywords | |||||||||||||||||
Intellectual property rights; patents; pharmaceutical industry.
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JEL Classifications | |||||||||||||||||
L65, O31, O34
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Abstract | |||||||||||||||||
Are IPRs institutions meant to foster innovative activities or conversely to
secure appropriation and profitability? Taking stock of a long-term empirical
evidence on the pharmaceutical sector in the US, we can hardly support IPRs
intended as an innovation rewarding institution. According to our analysis, pharma
patents have constituted legal barriers to protect intellectual monopolies rather
than an incentive and a reward to innovative efforts. Patenting strategies appear to
be quite aggressive in extending knowledge borders and enlarging the space
protected from the possibility of infringements. This is also witnessed by the fact that
patent applications are very skewed in the covered trade names and patent thickness
expands over time. Conversely, the number of patents protecting new drugs
approved by the FDA which draw upon government-sponsored research – as such
a mark for quality – falls. Firm-level analysis on profitability confirms strong
correlation, restricted to listed pharmaceutical firms, between patent portfolio and
profit margins.
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