Annals of Science and Technology Policy > Vol 6 > Issue 1

Government Royalties on Sales of Pharmaceutical and Other Biomedical Products Developed with Substantial Public Funding: Illustrated with the Technology Transfer of the Drug-Eluting Coronary Stent

By Robert S. Danziger, Professor of Medicine, Pharmacology, Physiology and Biophysics, University of Illinois at Chicago, USA, rdanzig@uic.edu | John T. Scott, Professor of Economics, Emeritus, Dartmouth College, USA, john.t.scott@dartmouth.edu

 
Suggested Citation
Robert S. Danziger and John T. Scott (2021), "Government Royalties on Sales of Pharmaceutical and Other Biomedical Products Developed with Substantial Public Funding: Illustrated with the Technology Transfer of the Drug-Eluting Coronary Stent", Annals of Science and Technology Policy: Vol. 6: No. 1, pp 1-99. http://dx.doi.org/10.1561/110.00000020

Publication Date: 08 Sep 2021
© 2021 Robert S. Danziger and John T. Scott
 
Subjects
Strategic management,  International business,  New product diffusion,  Product development,  Product innovation,  Knowledge, innovation, and technology,  Technology management and strategy,  Government programs and public policy,  High technology,  Health economics,  Industrial organization,  Public economics,  Regulation
 

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In this article:
1. Introduction
2. The Two Avenues for Public Funding of Pharmaceutical and Other Biomedical R&D
3. The Story of Drug-Eluting Coronary Stents
4. The Incentives Issue
5. The Circumstances Affecting Incentives for the Development of Drug-Eluting Stents
6. A Proposal for Government Royalties for Biomedical Products Developed with Substantial Public Funding for R&D
7. Conclusion
Acknowledgements
Appendices
A. Incomplete Pass Through of the Royalty to Price Given Market Power
About the Authors
References

Abstract

This study develops a detailed description of the successful technology transfer of an invention—the drug-eluting coronary stent—originating in intramural research within the National Institutes of Health. The history of the commercialization of the invention is used to illustrate a new policy, proposed and explained in this study, for the payment to the government of royalties on the sales of biomedical products developed with substantial public funding provided through indirect as well as direct funding avenues. The proposed policy addresses concerns about the high prices that taxpayers as consumers pay for biomedical products that were developed with funding from the taxpayers as investors. The study explains the theoretical circumstances in which the policy would not adversely affect the appropriate level of R&D investment, and then uses the history of the drug-eluting coronary stent as an example where biomedical R&D is consistent with those circumstances.

DOI:10.1561/110.00000020
ISBN: 978-1-68083-820-6
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ISBN: 978-1-68083-821-3
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Table of contents:
1. Introduction
2. The Two Avenues for Public Funding of Pharmaceutical and Other Biomedical R&D
3. The Story of Drug-Eluting Coronary Stents
4. The Incentives Issue
5. The Circumstances Affecting Incentives for the Development of Drug-Eluting Stents
6. A Proposal for Government Royalties for Biomedical Products Developed with Substantial Public Funding for R&D
7. Conclusion
Acknowledgements
Appendices
A. Incomplete Pass Through of the Royalty to Price Given Market Power
About the Authors
References

Government Royalties on Sales of Pharmaceutical and Other Biomedical Products Developed with Substantial Public Funding: Illustrated with the Technology Transfer of the Drug-Eluting Coronary Stent

This study develops a detailed description of the successful technology transfer of an invention — the drug-eluting coronary stent — originating in intramural research within the US National Institutes of Health. The history of the commercialization of the invention is used to illustrate a new policy, proposed and explained in this study, for the payment to the government of royalties on the sales of biomedical products developed with substantial public funding provided through indirect as well as direct funding avenues. The proposed policy addresses concerns about the high prices that taxpayers as consumers pay for biomedical products that were developed with funding from the taxpayers as investors. The study explains the theoretical circumstances in which the policy would not adversely affect the appropriate level of R&D investment, and then uses the history of the drug-eluting coronary stent as an example where biomedical R&D is consistent with those circumstances.

 
ASTP-020