Replace pharmaceutical patents now.
Pharmaceutical patents are anachronistic holdovers from an era in which modern economic understanding and tax tools were unavailable. Superior mechanisms lie somewhere between a first best pricing solution for the entire economy at one extreme and the current arrangements at the other. We discuss the economics of suggested alternatives and suggest that the intertemporal bounty is the best way to meet the multiple objectives of immediate distribution at marginal cost pricing of newly innovated patented drugs and easily administered, efficient inducement to continued innovation. The intertemporal bounty prevents the expansion of monopoly power resulting from co-pay or -insurance provisions common to modern prescription drug plans.
Grinols
Earl L
EL
Department of Economics, Baylor University, Waco, Texas 76798, USA.
Henderson
James W
JW
D004345:Drug Industry / Q000191:economics*; D007880:Legislation, Drug / Q000639:trends; D018803:Models, Economic; D010330:Patents as Topic / Q000331:legislation & jurisprudence*; D004364:Pharmaceutical Preparations / Q000191:economics*; D012106:Research
D004364:Pharmaceutical Preparations