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Innovation for the 21st CenturyHarnessing the Power of Intellectual Property and Antitrust Law$
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Michael A. Carrier

Print publication date: 2009

Print ISBN-13: 9780195342581

Published to Oxford Scholarship Online: May 2009

DOI: 10.1093/acprof:oso/9780195342581.001.0001

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Innovation Markets: Saving Lives and Money in the Pharmaceutical Industry

Innovation Markets: Saving Lives and Money in the Pharmaceutical Industry

Innovation for the 21st Century

Michael A. Carrier

Oxford University Press

This chapter begins by defining innovation markets, which are markets for research and development (R&D). It then sets forth the critiques that have been leveled against the markets. It proposes a new five-part test for the antitrust enforcement agencies—the U.S. Department of Justice (DOJ) and FTC—to apply to innovation markets. The test improves the current analysis by replacing the seemingly ad hoc approach with a comprehensive framework based on the Merger Guidelines. It also breaks new ground in considering not just the number of firms in research and development but also their respective stages of U.S. Food and Drug Administration (FDA) review. The chapter provides background on preclinical studies as well as clinical trials. It concludes by presenting the results of five case studies from the past two decades—four mergers that the FTC challenged and one that it did not.

Keywords:   innovation market, R&D, Schumpeter, Arrow, drastic innovation, FDA, Federal Trade Commission, Preclinical studies, clinical trials, Pompe disease

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