Patent on Pharmaceutical Drugs - Essay Example

As explained by Davis (1995), intellectual property rights (IPRs) such as patents serve as a temporary protection to pharmaceutical companies which could last up to a maximum of 20 years of monopolistic right to sell a given drug. With this in mind, inventors of new pharmaceutical drugs could protect themselves from other people who wish to imitate and reproduce the said drug (IUS Mentis, 2011). It simply means that pharmaceutical companies that own patented drugs have the legal right to file a fraud case against any business entity or person who will be proven guilty of imitating a drug that has already been registered under the patent laws (Bently & Sherman, 2001).

In the past, several authors revealed that the use of patent right not only protects the business interests of pharmaceutical companies but also promotes continuous technological innovation on drug development (Eisenberg, 2001; Cornish, n.d.). For this reason, people should acknowledge the significance of IPRs in the promotion of better life. Even though excessive use of patent rights can impede fair market competition for at least two decades (Vedder, 2004; Sergio, 2001), we should not forget that there are quite a lot of health and socio-economic benefits associated with the use of this particular intellectual property right.

As common knowledge, the search and development of new pharmaceutical drugs can cost hundreds and millions of dollars before pharmaceutical companies can come up with new drugs that can cure diseases (Findlay, 1999). Because the monetary investment spent on the establishment of research and development (R&D) among the local and international pharmaceutical companies can be enormous, the process of making it illegal for pharmaceutical companies to receive a patent right protection for their drugs will not only hurt the long-term profitability of the company but also its ability and financial capability to be able to fund new projects related to the development of new drugs.

For instance: Company A spent US$50 million on the development and manufacturing of new drugs that can effectively cure an epidemic disease. In case company A is not protected by a patent, Company B or Company C may simply be tempted to copy or imitate the drug that has first been developed and manufactured by Company A. When this happens, the only way for Company B and C to grab a bigger portion of its market share is to sell a similar yet effective drug to domestic and international markets at a very much lower price.

Upon analyzing the given scenario, Company B and C are most likely to be capable of selling an imitated drug at a much lower market price as compared to the market price Company A is willing to sell the said drug. The fact that Companies B and C did not exert much effort nor invest so much money in their research and development (R&D) to come up with these drugs can already put Company A at a disadvantage. Based on this point of view, fair market competition for Companies A, B, and C has already been violated right from the start.