New Approaches to Rewarding Pharmaceutical Innovation

Many observers take it as self-evident that patents are necessary for pharmaceutical drug innovation. Modern research, however, has raised questions about the effectiveness of patents in spurring innovative activity in general, and drug innovation in particular. Mechanisms that may be more effective have been proposed, including "push" programs (public subsidies of biomedical research and clinical trials) and "pull" programs (impact-based and royalty-based rewards for new drugs). It is unclear whether these proposed alternatives — either alone or in combination — would spur drug research and development or could be integrated into the current systems of drug safety and efficacy regulation, insurance, and patent treaties. In this article, we review the limitations of the drug patent system, describe some promising alternatives to patents and propose a program of research to evaluate these alternatives.