Question

The government grants market exclusivity to new molecular entities (NCEs). How come then that they often face competition?

Answer 1

The government grants market exclusivity to new molecular entities considering legislation would create a regulatory pathway. One major issue is the data exclusivity for innovators. It is an important intellectual property that is similar to patent protection. Exclusivity of data is the time period before a competitor enters the market relying whole on or partly on the innovator's data on safety and efficacy. From the viewpoint of economic theory, industries, where R&D process is costly and risky, need longer exclusivity periods to realize innovation benefits compared to those industries where innovation is easier and cheaper. Similarly when an output of innovation has external benefits to society as in the case of new medicine and new indications for existing medicines.