The NYT discussed the debate over providing extensive periods of data exclusivity to biotech drugs in order to prevent generic competition. As the article notes, prescriptions of biotech often sell for tens of thousands of dollars per year. While the article discusses the debate over the best length for periods of exclusivity, it does not ever discuss alternatives to patent financing for pharmaceutical research. As the price of drugs diverge further from their marginal cost of production, the inefficiency of the patent system gets much larger. (The inefficiency increases in proportion to the square of the gap between the patent protected price of the drug and the free market price.) Therefore it would be reasonable to discuss alternatives, such as direct public funding or the prize system advocated by Nobel Laurette Joe Stiglitz, in the context of very expensive drugs.
--Dean Baker
