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Patent Monopolies and the Costs of Mismarketing Drugs

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  • Ravi Katari, Dean Baker

Abstract

Patent monopolies have long been used as a mechanism for financing innovation and research. The logic is that the government awards a monopoly on a product or process for a limited period of time in order to reward innovation. However, in addition to providing incentives for innovation and research, patent monopolies also provide incentives for a wide-range of rent-seeking behaviors, many of which can have major social costs. This paper attempts to calculate one category of these costs for prescription drugs. It produces estimates of the costs associated with mismarketing drugs. The estimates are based on assessments of the costs in the form of increased morbidity and mortality associated with five prominent cases of mismarketing over the last two decades.

Suggested Citation

  • Ravi Katari, Dean Baker, 2015. "Patent Monopolies and the Costs of Mismarketing Drugs," CEPR Reports and Issue Briefs 2015-11, Center for Economic and Policy Research (CEPR).
    • Handle: RePEc:epo:papers:2015-11
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    File URL: http://www.cepr.net/documents/mismarketing-drugs-2015-04.pdf
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    References listed on IDEAS

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    1. Michele Boldrin & David K. Levine, 2013. "The Case against Patents," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 3-22, Winter.
    2. Van Zee, A., 2009. "The promotion and marketing of oxycontin: Commercial triumph, public health tragedy," American Journal of Public Health, American Public Health Association, vol. 99(2), pages 221-227.
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    Cited by:

    1. Dean Baker, 2016. "The International Trade Commission’s Assessment of the Trans-Pacific Partnership: Main Findings and Implications," CEPR Reports and Issue Briefs 2016-20, Center for Economic and Policy Research (CEPR).
    2. Eileen Appelbaum, 2017. "Domestic Outsourcing, Rent Seeking, and Increasing Inequality," Review of Radical Political Economics, Union for Radical Political Economics, vol. 49(4), pages 513-528, December.
    3. Dean Baker, 2015. "Measuring Recovery: The Impact of Exempting the Pharmaceutical Industry from Patent Reviews," CEPR Reports and Issue Briefs 2015-17, Center for Economic and Policy Research (CEPR).
    4. Dean Baker, 2016. "Working Paper: Rents and Inefficiency in the Patent and Copyright System: Is There a Better Route?," CEPR Reports and Issue Briefs 2016-12, Center for Economic and Policy Research (CEPR).

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    More about this item

    Keywords

    trade deficit; pharmaceuticals; off-label; rent-seeking; mismarketing; Vioxx; Avandia; Bextra; OxyContin; Zyprexa; Pfizer; Merck; GlaxoSmithKline; Eli Lilly; Purdue;
    All these keywords.

    JEL classification:

    • I - Health, Education, and Welfare
    • I1 - Health, Education, and Welfare - - Health

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