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Evergreening, Patent Challenges, and Effective Market Life in Pharmaceuticals

47 Pages Posted: 5 May 2011 Last revised: 28 Jul 2013

C. Scott Hemphill

New York University School of Law

Bhaven N. Sampat

Columbia University - Mailman School of Public Health

Date Written: May 3, 2011

Abstract

Observers worry that generic patent challenges are on the rise and reduce the effective market life of drugs. A related concern is that challenges disproportionately target high-sales drugs, reducing market life for these “blockbusters.”

To study these questions, we examine new data on generic entry over the past decade. We show that challenges are more common for higher sales drugs. We also demonstrate a slight increase in challenges over this period, and a sharper increase for early challenges. Despite this, effective market life is stable across drug sales categories, and has hardly changed over the decade.

To better understand these results, we examine which patents are challenged on each drug, and show that lower quality and later expiring patents disproportionately draw challenges. Overall, this evidence suggests that challenges serve to maintain, not reduce, the historical baseline of effective market life, thereby limiting the effectiveness of “evergreening” by branded firms.

Keywords: Drugs, FDA, Innovation, Patents, Pharmaceuticals, R&D, Hatch-Waxman

Suggested Citation

Hemphill, C. Scott and Sampat, Bhaven N., Evergreening, Patent Challenges, and Effective Market Life in Pharmaceuticals (May 3, 2011). Journal of Health Economics, Vol. 31, 2012; Columbia Law and Economics Working Paper No. 399. Available at SSRN: https://ssrn.com/abstract=1830404 or http://dx.doi.org/10.2139/ssrn.1830404

C. Scott Hemphill (Contact Author)

New York University School of Law ( email )

40 Washington Square South
New York, NY 10012-1099
United States

Bhaven N. Sampat

Columbia University - Mailman School of Public Health ( email )

600 West 168th St. 6th Floor
New York, NY 10032
United States

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