As far as I know, US laws require that the <i>`x`</i> number of trials demonstrate the effectiveness of the drug and failured dont need to be reported. But this does not make sense to me, and I welcome the European laws. In the US system, even if I have a coin biased badly against coming up heads, if I toss it enough number of times I will get <i>`x`</i> heads. The tosses cost money and that is then used to justify the patent system.<p>One of the oft repeated justification for the absurd levels of IP protection and patent extensions that pharma enjoys is the huge cost of trials. But if huge development costs are the reason for these protections to exist, guess what, these costs will continue to remain huge. Its just self perpetuating.<p>Patents are primarily a preemptive measure against a hypothetical scenario. The hypothesis is that unless market pressures are cordoned off, innovation will stop. It is a believable hypothesis but not a quantitative one, and this exactly where we need a quantitative one. How many years exactly does one need to subvert the market so that a satisfactory level of innovation is maintained ? Nobody knows. In these scenario what we need is a feedback system, and pretty much the only scalable and fair apparatus that we have for such feedback on economic affairs is the market.<p>So rather than subverting the market, market should be explicitly and actively involved to work out this trade-off.
How exactly this is to be done needs to be worked out.<p>There could be a futures market on patents on drugs undergoing testing: competitors can promise to buy the patent to the (drug,usecase) pair at a particular price (even if its a dud) and if the owner decides not to sell the owner pay a particular compensation. Such measures will spread the risk. There should be mechanisms for a company to raise money for testing in lieu of rights over the product.<p>The initial period of validity of a patent should be short, like 3~6 years, following which the patent is on the market. Entities can bid to bring the patent to public domain. The owner(s) bids to retain it. Whoever wins gets the balance. Of course the "bring it to public domain" bidders will bid less because profitability is less when its in the public domain, but market decides who gets to own it. If the owner(s) think they can still extract lots of profit from the drug, bid high. We should stop handing out blank checks without a feedback loop, that is just bad design.