The effects of patenting on development of diagnostics products. How patents influence incremental innovations and monopolies in market niches.

Abstract

In 1998 Heller and Eisenberg raised concerns that patenting of genes could be counter to the common social interest. This sparked extensive research on the effect of gene patenting on research and product development. To date there is a lack of a comprehensive picture of the effects of gene patenting on product development. We operationalize this research gap by analyzing how patents influence market niche based on gene patenting and those based on other biological patents. To test the effects we sampled 288 market niches for diagnostic products approved by the FDA and we linked them to 1199 patents in the USPTO and 1602 licensing agreements. We test whether different qualities of patenting affects the rate of incremental innovation, the strength of monopoly and the strength of the barriers to entry in a market niche. The results show that patenting of genes does not have different effects than other type of patenting, thus the concerns of raised by Heller and Eisenberg on product development remain unsubstantiated.