Pharmaceutical Industry

Research and Patents

The pharmaceutical business incurs tremendous costs in bringing a new drug or medical device from concept to market. These costs generally fall into four areas: Research & Development (R & D), the Food and Drug Administration (FDA) approval process, manufacturing, and advertising. Research and development is by far the most costly of the four and an area that is most open for fraud.

Pharmaceutical companies face great temptations to mislead health authorities, the FDA in particular, about the safety of their products. The companies expend an enormous amount of money, upfront, in the research of new drugs and are in great competition to be the first that obtains approval and a patent for the new discovery. With drug development, potentially hundreds of millions of dollars must be invested for a new compound that may never return a profit and, in a best-case scenario, will only begin returning money 12 to 15 years out. If another company gets its product on the market first, then a massive amount of money and time, already expended, is lost, not to mention the loss of future profits the company would have received if its drug were the one to obtain the market's share.

Currently, patents last for 20 years. The 20-year term is codified in 35 U.S.C. Sec. 154. Twenty years may seem like a lengthy and sufficient amount of time, but the 20-year term begins on the date of the patent application. This is very important for drug manufacturers, because drugs are generally patented before beginning the FDA approval process. Because the approval process can take so long, the “effective life” of the patent (the number of years left on a patent) is often less than half the original life once the product is actually available.

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