By Christopher P. Singer --
Last Thursday, the Biotechnology Industry Organization (BIO) published a white paper entitled: "The Myth of the Anticommons." The paper, authored by Dr. Ted Buckley (BIO Director of Economic Policy), asserts that there is a lack of any strong theoretical or empirical data which supports the theory of the "tragedy of the anticommons." The basic notion behind this theory is that a system which allows for "over-patenting" stifles, rather than promotes the advancement of downstream technology, because the patenting of upstream technology increases transactional costs and induces more anti-competitive strategic behavior. Dr. Buckley sets forth some compelling arguments as to why, nearly a decade after Heller and Eisenberg introduced the tragedy of the anticommons to the public (Heller and Eisenberg, 1998, "Can Patents Deter Innovations? The Anticommons in Biomedical Research," Science 280: 698-701), there appears to be no actual manifestation of this theory in the biotechnology industry.
After providing some general background on the economics of the patent system and the anticommons theory, Dr. Buckley begins his argument by first examining the theoretical underpinnings of the theory. While he acknowledges that the anticommons approach is elegant and compelling, the focus of Dr. Buckley's argument is on how the theory is too simple to apply to a system with the inherent complexity and diversity of biotechnology. He notes that many of the analogies used to explain the theory are not applicable to biotechnology because the industry does not have the same type of scarcity of resources ("biological commons") that are present in typical geometrical or geographical models (such as toll roads 
and waterways). Dr. Buckley uses several examples to argue that biotechnology lacks such scarcity. He points to the multiple statin-based drugs that are currently on the market and used to lower cholesterol, the variety of breast cancer drugs in clinical development, and the number of products being developed for the treatment of chronic myeloid leukemia. These examples, he argues, demonstrate how patents have taught the biotechnology industry to explore alternative pathways to try and solve a common challenge, essentially creating new "real estate."
Dr. Buckley also presents several lines of empirical evidence which, he argues, demonstrates in real economic terms that the anticommons approach may not be relevant to biotechnology. Because the lead time of a drug product from patent to market is anywhere from nine to twelve years, he presents an examination of several "inputs" that are critical to the production of novel therapeutics. In particular, there are three inputs that Dr. Buckley believes would be occurring if the anticommons theory was happening: (1) the amount of R&D would decrease; (2) the number of potential therapies being tested would decrease; and (3) companies and researchers would lobby for a change in policy. The data Dr. Buckley presents shows a general increase in dollars spent on R&D, an increase in venture capital investment, and an increase in employment in the biotechnology industry. He also cites to an increase in both the number of investigational new drug (IND) submissions and of biological compounds entering clinical trials as indicators that more potential therapies are being tested (contrary to what the anticommons would predict). Lastly, Dr. Buckley points to industrial and academic opinion on the state of the patent system to show that there is not a large movement for patent reform from these groups. He states that BIO (i.e., the biotech industry) has a positive position on maintaining the current state of the patent system and "fundamentally opposes the notion that patents on [a] broad array of biotechnology inventions are hindering innovation." He also cites to a 2005 study conducted by the National Academy of Sciences that requested opinions from researchers from universities, non-profits, and government labs, concerning patents and whether the system has hindered research. The results overwhelmingly showed that only 1% of responders had experienced a delay of more than one month because of patents on "research inputs." None of those responding to the questions indicated that they had abandoned a line of research because of patented technology.
As Dr. Buckley notes, it is impossible to completely dismiss the possibility that the tragedy of the anticommons may manifest itself at some point. Nevertheless, he makes several convincing arguments as to why it appears that the anticommons may not have applicability to the biotechnology industry.
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