November 19, 2018
Originally posted 2017-02-27 12:10:18
The pharmaceutical industry is a wonderful example of the importance of intellectual property. In this particular industry, intellectual property does more than just maximize profits and keep the market competitive. The protection of intellectual property rights helps establish a strong and effective public health infrastructure.
One of the benefits of intellectual property in this industry is patent and trademark systems help authorities assess the quality of drug products that are being put out into the market. These protections allow authorities to take active measures to prevent counterfeit copies of drugs to enter the market. Without such protections, countries would have a difficult time protecting the safety of drugs that enter a country. Another benefit of intellectual property is it helps introduce new products into the market more rapidly by encouraging pioneer companies to enter the market.
Perhaps most importantly, intellectual property helps promote the development and availability of new products. To create new drugs, a substantial amount of money is spent on research, and without investments to support research, new drugs would take longer to hit the market. Money is needed to develop products and make sure they are safe, as well as effective. Intellectual property helps turn innovative ideas into possible new drugs, and thus provides and incentive for innovation.
While intellectual property rights in the pharmaceutical industry often have a bad reputation of only trying to maximize profits, they actually serve multiple important functions. If a company did not seek to get patents for a particular drug, then cheaper, lesser quality products could flood the market. This would disrupt market segmentation, as it would allow for lower priced products to enter into the higher priced market. To prevent this, it is essential that pharmaceutical companies pursue patent laws and other possible intellectual property rights.
Source: Wilder, Richard. Market Segmentation: techniques, actors and incentives – The use of intellectual property rights. 2011.