How Do Patents Affect Follow-On Innovation? Evidence from the Human Genome

Abstract

We investigate whether patents on human genes have affected follow-on scientific research and product development. Using administrative data on successful and unsuccessful patent applications submitted to the US Patent and Trademark Office, we link the exact gene sequences claimed in each application with data measuring follow-on scientific research and commercial investments. Using these data, we document novel evidence of selection into patenting: patented genes appear more valuable—prior to being patented— than non-patented genes. This evidence of selection motivates two quasi-experimental approaches, both of which suggest that on average gene patents have had no quantitatively important effect on follow-on innovation. (JEL I10, O31, O34)