capital-intensive areas is the patent system, which has consistently been
regarded and lobbied for as a sine qua non of pharmaceutical innovation.
But even the ability to set monopolistic prices for on-patent drugs is of little
avail in certain areas.
6 The patent model reinforces the tendency of
pharmaceutical companies to focus R& D on drugs destined for markets with
“attractive investment returns.”
7 Diseases that, in spite of a high social cost
and medical burden, affect small populations or that primarily affect
populations with limited resources receive scant R& D attention.
However, other organizations and governmental agencies have provided
additional research incentives in the form of grants, exclusivities, vouchers,
and tax credits.
9 For example, the FDA administers the priority review
voucher program. Congress designed the program and similar incentives to
help cure market failures in pharmaceutical innovation when patent
incentives alone are insufficient. The design of the program, however, is
idiosyncratic. The FDA awards vouchers to drug sponsors who obtain
regulatory approval for drugs treating qualifying, underfunded diseases.
Sponsors can redeem vouchers to speed up the approval process for a separate
11 The vouchers help sponsors get their drugs on the market
faster and, in turn, collect larger profits.
Critics argue that the program fails to generate the type of innovative R& D
it purports to foster or to ensure the affordability of—and access to—drugs
approved under the program.
13 Nevertheless, from a political point of view it
has cyclically enjoyed the bipartisan support that is so elusive nowadays, and
will vary according to type of drug or therapy. See Dan L. Burk & Mark A. Lemley, Policy
Levers in Patent Law, 89 VA. L. REV. 1575, 1581, 1616, 1676 (2003) (noting how the “precise
statistics” of the costs associated with pharmaceutical R& D remain disputed).
5. See Rebecca S. Eisenberg, The Role of the FDA in Innovation Policy, 13 MICH.
TELECOMM. & TECH. L. REV. 345, 346 (2007) (noting the role of the pharmaceutical industry
in perpetuating a patent-based system for drug innovation: “[t]he pharmaceutical industry,
lobbying for stronger patent laws throughout the world, has sung the praises of the patent
system as a means of promoting costly and risky investments in research and development
6. Ezekiel Emanuel, Don’t Only Blame Mylan for $600 EpiPens, FORTUNE INSIDERS
(Sept. 8, 2016), https://insiders.fortune.com/dont-only-blame-mylan-for-600-epipens-
7. TUFTS, supra note 4, at 3.
8. Ridley et al., infra note 16, at 313.
9. See generally Daniel J. Hemel & Lisa Larrimore Ouellette, Beyond the Patents-Prizes
Debate, 92 TEX. L. REV. 303 (2013) (discussing the role of tax incentives in innovation policy);
Benjamin N. Roin, Intellectual Property versus Prizes: Reframing the Debate, 81 U. CHI. L.
REV. 999 (2014) (discussing the government’s various rewards for innovation).
10. See infra Part II. A. 2 (discussing the FDA’s voucher program as an incentives
11. See infra Part II. A. 1 (explaining the R& D incentive of “blockbuster drug” sales).
12. See infra Part II. A. 1.