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Lucy Xiaolu Wang, assistant professor in the Department of Resource Economics, has published research in the July volume of the Journal of Public Economics detailing how greater regulatory transparency can serve as an effective check on patenting manipulation in the pharmaceutical industry, without stifling meaningful innovation.

The study, co-authored by Dennis Byrski, Wang’s former colleague at the Max Planck Institute for Innovation and Competition, explores how the release of clinical trial data during the marketing authorization (MA) process in Europe affects the subsequent patenting behavior of drug companies. The findings suggest that this key regulatory milestone curbs the proliferation of “low-value” follow-on patents, particularly those designed to extend monopoly periods on existing drugs through minor tweaks, rather than true innovation.

When a drug receives MA in the European Economic Area, detailed clinical trial data become public. This disclosure creates what’s known as “prior art”—publicly available knowledge that can invalidate future patent claims lacking novelty. Wang and Byrski used a novel dataset linking drug approval timelines to European patent records and post-approval patent term extensions to examine how this prior art impacts subsequent patent filings.

Their findings show a statistically significant drop in secondary patents—such as those covering new drug formulations or delivery methods—after marketing authorization. These patents are often used strategically to delay generic competition. However, the study found no reduction in product patents or patents targeting new disease areas, suggesting that drugmakers remain committed to true research and development, despite reduced opportunities for patent gaming.

The study adds weight to long-standing concerns about “evergreening,” the practice of filing multiple secondary patents to extend market exclusivity. The authors found that both original drug developers (originators) and other companies (such as collaborators, competitors or generic firms) reduce their secondary patent filings after MA, although originators respond more quickly.

The research also found that this effect is driven specifically by the disclosure of clinical trial data. No comparable decline in strategic patenting was observed after earlier R&D milestones like the end of Phase II clinical trials, which provide valuable quality signaling but involve less comprehensive data disclosure. The authors have also discussed guidelines by European Patent Office (EPO) and several EPO Board of Appeal cases to contextualize the legal nuances.

The findings bolster calls for reforming patent systems—especially in the U.S., where concerns over low-quality pharmaceutical patents have drawn Supreme Court cases and academic debate. The study indicates that earlier and sufficient disclosure of key information in the regulatory process, when properly applied in patent examination and well informed, can help increase drug patent quality.

The complete article, “Marketing authorization and strategic patenting: Evidence from pharmaceuticals,” is available from the Journal of Public Economics here.