Why does the United States government give patents to pharmeceutical companies?

Question

Why does the United States government give patents to pharmeceutical companies? Specifically?

Answer 1

why not?

Answer 2

same reason they give them to everyone.

Without a patent, anyone could copy their product.  They would never develop any new porducts.  The cost is in the millions to develop a new product, and they cannot afford to let someone else have it for free.

Patents encourage innovation and new product development.

Without it we might have never got pass the wheel

Answer 3

Pharmaceutical can actually be argued to be a special case amongst patents. Firstly, we need to understand what a patent is and how to view them. They are a form of "intellectual property", but this term is obscuring the intension. Really, they are state allowed / enforced monopolies.

In a capitalist system, the free market usually will determine the price for a good. Early, when something has its "secret sauce" intact the company can have a higher profit margin because they are the only one with the "sauce". Later, other companies figure out the recipe and either improve it or charge less. Eventually, the price will go down to where the companies make a small amount of profit.

Here's the rub. If the costs to develop the secret sauce are deemed by the company to be more than these early inflated profits the product isn't viable. With a patent this changes because others  won't be able to sell against you and you can charge what ever the market will bare.

Due to the nature of pharm. development the costs are so high ($Billions) it has been argued that they need a monopoly to develop new drugs. In theory, this will make the population more healthy because it aligns the consumers needs with that of the companies.

There are problems. For instance, a lot of drugs are developed because the profit potential is high (think Viagra) not because it cures major illness. Often, situations where only 3rd world people have a disease are often ignored.

An alternate system could be universities doing the drug research funded by private endowments where the exist tech. transfer offices, which every research university has already, share the technology to the pill makers perhaps for a large fee or royalties.

However, other people will find out their secret sauce in due time and replicate their formula and hence cutting profits. This takes a lot of the profits out of the for-profit sector (in theory, because business can still compete) and puts them in the non-profit sector. The beneficial part of it is that only can one company control the product in the short term before the others catch on.

Perhaps this would encourage more drug development, not less? Private people will have to spend less on drugs and have a surplus of money (we're talking the economy as a whole) and perhaps they'd donate more to organizations like universities and private charities dealing with cancer. Look at the Gates Foundation.