Both to address unmet medical needs and to improve industry competitiveness, regulators in both the United States and the European Union have taken bold steps to translate academic research from the university lab to the patient. A pharmaceutical public-private partnership (PPPP), which is a legally binding contract between a private pharmaceutical enterprise and a public research university (or a private university doing research funded with public funds), can be a significant tool to ensure a more efficient payoff in the highly regulated world of pharmaceuticals. In particular, a properly framed binding contract, coupled with respect for positive social norms, can move the parties away from an inefficient prisoners’ dilemma Nash Equilibrium to the Pareto Optimal Frontier. When coupled with appropriate attention to the difficult task of coordinating the actions of interdependent actors, a PPPP arrangement can enhance the likelihood of successful commercialization by flipping the parties’ incentives as compared with more traditional contracts. Because PPPPs are less common in Europe than in the United States, a key purpose of this article is to provide an annotated roadmap that universities, private firms, and EU policy makers can use to create efficient PPPPs to enhance for-profit innovation in the pharmaceutical industry in Europe. A secondary purpose is to suggest amendments to the U.S. laws governing the patenting of government-funded technology to prevent undue burdens on the sharing of certain upstream medical discoveries and research tools. Our analysis is not only comparative; it also combines, we believe for the first time, a game theory and law and management approach to for-profit PPPPs.
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