Biotechnology and pharmaceutical R&D and licensing trends: You pays your money and takes your chances

R&D costs in the biotechnology and pharmaceutical industries continue to rocket, as do royalty rates for the relatively few new drugs and technology that successfully complete clinical testing. Several of the issues that led to last year's joint Department of Justice/Federal Trade Commission (DOJ/FTC) hearings are significant within those industries, including (1) recent court decisions reaching inconsistent results or at odds with public agency positions; (2) proliferation of new patent filings; (3) efforts to expand the scope of patents; (4) mergers and acquisitions reducing competition and consumer choice; (5) more restrictive, licenser-oriented licences; (6) patent blocking; and (7) patent settlements with reverse payments. This article discusses the results of studies evaluating the rising costs and declining success rates of new biotechnology and pharmaceutical product offerings, the upward trend in royalty rates and litigation awards, and the implications of the DOJ/FTC hearings.