Policy Documents

Is There A Biomedical Anticommons?

Richard A. Epstein and Bruce N. Kuhlik –
June 1, 2004

This essay in CATO's Regulation magazine investigates patent law of whether patent protection could deter biomedical research. Patent protection as a two-edged sword: Happily, it spurs innovation by securing to inventors the fruits of their labors but, unhappily, it also creates a vast thicket that gives each patent holder a potential veto right over the innovations of others: it includes the potentially dangerous veto right “the tragedy of the anticommons.”

This tragedy occurs when property rights are too strong and too many people can block some productive venture. The extent of the anticommons is highly disputed with respect to intellectual property. But, without question, it arises in other contexts. One notable example is sequential monopolists, e.g., toll stations on a river that are operated by rival princes. Because of the multiple tolling, traffic along the river would be sharply reduced, thereby decreasing social welfare by reducing profits for the toll operators and travelers alike. The clear implication for patent law is that inventive activity could be reduced as well, as the blocking power of patents stymies innovation by product users.

 


Richard A. Epstein is the James Parker Hall Distinguished Service Professor of Law at the University of Chicago and the Peter and Kirsten Bedford Senior Fellow of the Hoover Institution. He has worked as a consultant for PhRMA on drug issues

Bruce N. Kuhlik is senior vice president and general counsel for the Pharmaceutical Research and Manufacturers of America.