Wednesday, August 4, 2010

Open Science and Economics

The Open Science Summit (here are my slides) has concluded, and it marks the start of a very important ongoing conversation, including discussions we should continue to have about the practical effects of patents on innovation. My arguments have always been both theoretical and practical. While Ron Bailey at Reason relates "Numerous studies have so far failed to find that gene patents are a big impediment to either research or innovation" in reporting on our session at the Summit, there are also numerous such studies showing that the impact is in fact bigger than some make it out to be. One noteworthy recent addition to the empirical evidence is this article, by Heidi Williams of Harvard University - Department of Economics; National Bureau of Economic Research (NBER), entitled "Intellectual Property Rights and Innovation: Evidence from the Human Genome" which just came out this past month. She sent me the following link, and below I summarize and provide some useful quotes:

Williams tracks the progress of individual discoveries, looking at the research that was conducted on both patented and unpatented genes, and comparing the rate of innovation and commercialization resulting from both. she states, in describing her methodology: "My empirical analysis relies on a newly-constructed data set that traces out the distribution of Celera's IP across the human genome over time, linked to gene-level measures of scientific research and product development outcomes." ... significantly, she finds:

"For each gene, I collect data on publications investigating potential genotype phenotype links, on successfully generated scientific knowledge about genotype-phenotype links, and on the development of gene- based diagnostic tests that are available to consumers. Both the cross-section and panel specifications suggest Celera's IP led to economically and statistically significant reductions in subsequent scientific research and product development outcomes. Celera genes have had 35 percent fewer publications since 2001 (relative to a mean of 1 publication per gene)."

finally, she concludes:

"I estimate a 16 percentage point reduction in the probability of a gene having a known but scientifically uncertain genotype-phenotype link (relative to a mean of 30 percent), and a 2 percentage point reduction in the probability of a gene having a known and scientifically certain genotype-phenotype link (relative to a mean of 4 percent). In terms of product development, Celera genes are 1.5 percentage points less likely to be used in a currently available genetic test (relative to a mean of 3 percent). The panel estimates suggest similarly-sized reductions, on the order of 30 percent. Taken together, these results suggest Celera's short-term IP had persistent negative effects on subsequent innovation relative to a counterfactual of Celera genes having always been in the public domain. The panel estimates measure a transitory effect of Celera's IP, and suggest that innovation on Celera genes increased after Celera's IP was removed. However, the cross-section estimates measure more persistent e ffects and suggest that Celera genes have not 'caught up'"

The evidence is growing more damning all the time. This study cites the Murray study I have previously cited here, and nails the lid in the coffin, as far as I can tell, on the economic effects of gene patents. I hope you'll read this paper. I am thankful that economists like Williams are continuing to blow the lid on the real story of patents, and how they inhibit both science and commerce.

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