Drug Patents, Economic, and Health Outcomes

Students

2020
Engineering and Applied Sciences

Faculty

Professor of Law, Business Economics, and Public Policy

Project Summary

This summer, I have been working with Professor David Abrams at the Law School. We have been studying patents and their ability to highlight technological, economic, and social value in inventions. Essentially, patents operate just like academic papers in that they cite other, older patents. This officially serves a legal purpose, by delineating where the focal patent’s intellectual property “begins” and where similar intellectual property “ends.” However, since a 1990 paper published by Manuel Trajtenberg in the RAND Journal of Economics, this citation procedure has also proven to be a popular method of tracking intra- and interdisciplinary knowledge flows and economically significant inventions. The theory is that an invention that receives many citations by subsequent inventions is important, in a number of potential ways.

My job was to literally read every academic journal article that employed this patent citation method and to classify the object for which patent citations were used as proxies––innovation, knowledge diffusion, or private value, to name a few. In doing so, I encountered a large volume of texts on mergers and acquisitions, firm alliances, research and development performance, knowledge and technology networks, and university research. Although I discovered that scholars overwhelmingly use patent citations as proxy for technological progress, my primary takeaway from this task was not related to economics or law. Rather, I found that scholars are ambiguous in the way they define terms like “value.” I hope to keep that in mind when I conduct my own research in the future.

After completing this, I moved on to a related project more relevant to my chemical engineering interests––investigating the cost-effectiveness of specialty pharmaceuticals. Like my first task, this involved quite a bit of reading. My goal was to calculate, from each paper, the absolute quality-adjusted life years (QALYs) of each pharmaceutical in question. QALYs reflect the amount of time a drug can prolong a patient’s life, but also take into account the quality of that life. Authors consequently derive “utility” values (by surveying patients) for different health states that accordingly adjust life duration. One year of perfect health is assigned a value of 1.0, but this value is decreased by utility values related to living with hypertension, blindness, joint pain, etc. Most QALYs are incremental in nature; they evaluate the efficacy of a drug compared with the next-best treatment available. I was instead interested in deriving absolute QALYs, the effectiveness of a pharmaceutical compared to no treatment at all.

Putting these two ideas together, the aim of the research project as a whole is to validate (or invalidate) the use of patent citations to identify economically and/or socially significant pharmaceuticals by, among other measures, assessing their effectiveness in QALYs over other drugs. Then, we can evaluate whether pharmaceutical patents that receive many citations are in fact the drugs that increase incremental or absolute QALYs for patients. This part is still a work in progress!