Patents are important to pharmaceutical companies business model, However, paten
ID: 1136144 • Letter: P
Question
Patents are important to pharmaceutical companies business model, However, patents and other copyright mechanisms are pretty much non-existent on the financial and banking world. How would consumers be affected if, let's say, banks had the right to patent a new type of personal loan or savings account? Think about factors such as monopolistic power and possibly the role of externalities Patents are important to pharmaceutical companies business model, However, patents and other copyright mechanisms are pretty much non-existent on the financial and banking world. How would consumers be affected if, let's say, banks had the right to patent a new type of personal loan or savings account? Think about factors such as monopolistic power and possibly the role of externalitiesExplanation / Answer
Let us understand what a patent is.
A patent can be defined as " an intellectual property that gives the owner the right to exclude others from producing, selling using or importing an invention for a particular period of time.
Patents help to reduce the cost of research and development and ensures that those engaging in technoligical development are not made to paid for.
Pharma companies are allowed to primarily be able to patent the technology and the chemical composition of medicines that they produce, since the cost of research and development is considerably high and they get covered for this incase someone misuses the invention.
On the other hand it is theoritically extremely tough to patent a new type of personal loan or saving bank account. This is because financial services are different from healthcare. It creates a situation wherein people would deposit their money only with one banking company because it offers a unique situatuon.
Consider a situation in which a bank has a patent over a savings bank or a loan type. This would then mean, no other bank would be able to offer such a savings account meaning that the bank could then charge as much interest as it would want on the same and would effect the overall economic health.
While Pharma companies and the patents which they get on medicines and equipment is specific to a particular set of people. Financial services on the other hand are offered to mass public at a very big scale compared to the later.
Also, since Financial services have a big impact on the overall economy and a monoply like situation would be a disaster for the economy it is generally prohibited to hold such an arrangement for any financial service.
The consumers always would prefer more choices and interest rates that would be manageable. Therefore it highlights the importance of why patents have yet not been implemented in the financial services sector to such a degree.