Most experts agree that pharmaceutical firms would not commit so many resources to developing new drugs if not for the privilege of being the sole producer for a number of profitable years. Drugs are generally far more costly and harder to access worldwide while they are under patent protection. However, without the patent, the drug may never have been discovered. The slow pace of innovation, especially the span of time from discovery to market, more than merits 20 years of protection. Even once an active ingredient is found to be effective and a patent is awarded, the drug must pass rigorous testing before it is allowed into the open market. This testing, manufacture, and marketing time eats into the profitable life of a medication. After an active ingredient reaches the end of its patent-protection, it is fair game for production and marketing by manufacturers of generic drugs.
Teva Pharmaceuticals, based in Israel, has about 21% of the worldwide generics market, and makes money from manufacturing inexpensive versions of drugs with identical active ingredients to the original. They do not have the expense of research and testing, but they have to wait until the patent on the drug has expired. Many insurance companies will not pay for a brand-name drug if a generic is available. Pharmaceutical companies extend the profitable life of an active ingredient by combining two drugs and applying for a new patent, or by marketing the same drug for a different purpose under a new patent. For instance, a blood pressure medication may be combined with an anticoagulant like aspirin (acetylsalicylic acid) and marketed under a new name.
The idea of a patent is an essential foundation for innovation in developed societies. Inventors have an incentive to invent because they can collect money from their invention even if someone else discovers their technology. This is important when a good is manufactured by someone other than the inventor. And it allows others to innovate on the original invention. This doesn’t work if patents for software are given too easily.
Software patents can be so vague that a patent is awarded for something where an identical patent already existed. Developers are inhibited from further innovation by fear of bumping into a patent protected area of the market. Modern software development moves at the speed of light and 20 years of protection is no longer practical, nor is in needed to make a technological innovation profitable. New “apps” make it to the top of the market and are forgotten so fast that the entire patent process can barely keep up.
The speed of innovation in advance of patent reform has led to “patent trolls,” companies who hoard patents in order to aggressively pursue legal action as their primary source of profit. This has lead to many software and innovation companies acquiring mountains of patents as both armor against lawsuits and kindling for their own offensive legal actions. Companies file for and purchase patents of dubious quality in order to build their portfolios, emphasizing quantity over quality.
There must be a faster and more transparent system to review patents and fish out the ones that should never have been awarded in the first place. Having the same patent law to cover pharmaceuticals, machines, software, transportation, and business practices is no longer practical. Patent law must keep up with innovation, and in order to do this, it must be sensitive to the needs of different industries.
