The Problem of Unpatentable Innovation in Pharmaceuticals

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As capital intensive public goods, pharmaceuticals are likely to receive inefficiently-low investment in the absence of government intervention. The patent system functions well to promote innovation in the pharmaceutical industry. However, because innovation in pharmaceuticals depends on patent protection, there is under-investment in unpatentable innovation. As a result, the public is deprived of potentially biologically plausible interventions, some of which are only unpatentable because of how the novelty requirement is applied to patent prosecution. To mitigate this unfortunate result, a complement to the federal patent law is needed. State law is one potential option, though such an approach would require modification of Supreme Court precedent or an advancement in technology. Otherwise, the solution is likely federal.

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