European Policy for Intellectual Property (www.epip2017.org)

1. IP & Access to Medicines
Round Table, EPIP 2017, Bordeaux
Chirantan Chatterjee (Chair), Indian School of Business
Panelists: Margaret Kyle (MINES ParisTech) & Ellen ‘t Hoen (U-Groningen)

2. How to handle the Teslas & Marconis of Medicines?

3. Let’s Start With A Lagniappe on Firms/Entrepreneurs..
“How selfish soever man may be supposed, there are evidently some principles in his nature, which
interest him in the fortune of others….” Adam Smith (1759), The Theory of Moral Sentiments (p. 1)
“I am in favor of strengthening the freedom of the market. At the same time, I am very unhappy
about the conceptual restrictions imposed on the players in the market. This originates from the
assumption that entrepreneurs are one-dimensional human beings, who are dedicated to one mission
in their business lives – to maximize profit. This interpretation of capitalism insulates the
entrepreneurs from all political, emotional, social, spiritual, environmental, dimensions of their lives.
This was done perhaps as a reasonable simplification, but it stripped away the very essentials of
human life.” Muhammad Yunus (2006), Nobel Lecture
“What is the appropriate objective function for a firm? We analyze this question for the case where
shareholders are prosocial and externalities are not perfectly separable from production decisions.
We argue that maximization of shareholder welfare is not the same as maximization of market value.
We propose that company and asset managers should pursue policies consistent with the preferences
of their investors. Voting by shareholders on corporate policy is one way to achieve this. “ Hart &
Zingales (2017)

4. Access versus Innovation in Global Medicines

5. One Size May Not Fit All 1/2

6. One Size May Not Fit All 2/2
• Firms & Social Planner Need Nuanced Appreciation of Therapeutic Market
Contingencies
• For example: In Antibiotics Innovation –> Cross Molecular Resistance –> may
necessitate Strong IPR (Eswaran & Gallini 2017), may not be the norm in other
innovation
• Generic Penetration is Reducing Early Stage Pharmaceutical Innovation & Changing
the Direction of Innovative Activity (Branstetter, Chatterjee, Higgins 2017) but not in
all therapeutic markets.
• Heterogeneity in Innovator Tastes & Preferences & Hybrid Organizational Models

7. One Size May Not Fit All 2/2

8. One Size May Not Fit All 2/2
• Are Patents the Only way Forward?
• Priority review vouchers (Grabowski, Ridley, & Moe 2009) & Advanced Market
Commitments in Vaccines (Berndt, Glennerster, Kremer, Lee, Levine, Weizsäcker, &
Williams 2007)
• Innovation Prizes (Khan 2008 and others) & Entrepreneurial Activity, The Role of Venture
Capital, Complementary Regulation (Kortum & Lerner 2001)
• Weak Patents & Weak Complementary Health Infrastructure? (Chatterjee, Inoue,
McGahan, 2017)
• Price Controls may deter entry resulting in
• Unintended consequences & Perverse welfare effects (Kyle & McGahan 2012,
Bhaskarabhatla et.al 2017)
• Responsible firms need to converge w/Responsible Social Planner

9. Wrap-Up w/a Two-by-Two
Global And Local
Welfare Consequences
Responsible Less than Responsible
Responsible {DP + Patents} {DP + Infringement/CL/PI}
Less than Responsible {MP +
Infringement/CL/PI}
{MP + Patents}
FIRMS
SOCIAL PLANNER