On the Necessity of Drug Patents

Everyone (except for the most unreasonable of intellectual monopolists) agrees that patent quality is a glaring problem in the software patent and business method patent domains, but most don't realize that patent quality is almost as bad in most traditional patent areas, such as the drug industry.

Generic pharmaceutical companies win 75% of their lawsuits against brand-name drug makers -- a striking indication that the big pharmaceuticals are just as likely to apply for and recieve low-quality patents in order to obtain unjust monopolies over drugs that don't deserve patent protection.

Of course, this fact is not lost on the big pharmaceuticals. In an attempt to bolster their monopoly protection, brand-name pharmaceuticals are now agreeing to shorten their patent terms by entering into agreements with generic pharmaceuticals which ban the production of knockoffs for a period of time less than the 20-year patent monopoly. The FTC worries that these agreements amount to payola for the generics companies -- free money for sitting on their hands and allowing the brand-names to charge monopoly prices for dubious 'inventions.'

We've previously argued that the case for patent necessity in the drug industry is actually quite weak.