Opinion: A quantum of innovation and the incentives to match

What’s the smallest increment of medical innovation that is worth its cost to society?

That question underpins some of the controversy surrounding drug pricing. Is it innovative to turn a twice-daily pill into a once-daily pill or an intravenously administered drug into a simpler injection, or to combine two generic drugs into a single pill? Each of these represents a patent-protected upgrade that was launched at typical branded-drug prices.

Some experts argue that society should absolutely not pay for improvements like these with new patents or by lengthening existing patent exclusivity periods. Those arguments ignore three important facts.

First, every medical advance will serve humankind long after its patent ends. That means small advances can have genuine and substantial value over time, even if they initially come with high prices. This is the crux of the biotech social contract.

Read more: ‘One-and-done’ for new drugs could cut patent thickets and boost generic competition

Second, many upgrades dismissed as “merely incremental” represent real and compelling advances for patients.

Third, today’s upgrades become tomorrow’s standards. By providing incentives to make small improvements to existing therapies, we expand the menu of features that companies eventually incorporate into the 1.0 versions of the next generation of drugs.

For anyone who thinks that limiting incremental upgrades is the key to making drugs affordable for patients, I would point out that we could cut all drug prices in half, thereby wiping out profits and decimating the drug industry, yet many