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When Do Generics Challenge Drug Patents?

37 Pages Posted: 29 Oct 2011  

C. Scott Hemphill

New York University School of Law

Bhaven N. Sampat

Columbia University - Mailman School of Public Health

Multiple version iconThere are 2 versions of this paper

Date Written: December 2011

Abstract

The Hatch‐Waxman Act regulates competition between brand‐name and generic drugs in the United States. We examine a feature of the Act that has attracted great controversy but little systematic attention. “Paragraph IV” challenges are a mechanism for generic drug makers to challenge the patents of brand‐name drug makers as a means to secure early market entry. We first present descriptive results that chart the rise of brand‐name patent portfolios and Paragraph IV challenges. Over time, patenting has increased, measured by the number of patents per drug and the length of the nominal patent term. Meanwhile, the fraction of drugs subjected to patent challenges has increased. Drugs are also challenged sooner, relative to brand‐name approval. Our econometric analyses of challenges over the past decade show that brand‐name sales have a positive effect on the likelihood of generic challenge. The likelihood of challenge also varies with the nature of the patent portfolio. A drug with weaker patents faces a significantly higher likelihood of challenge, conditional on sales and other drug characteristics. That is not because the drug's patent protection is weaker overall; additional patents, even weak ones, generally strengthen a brand‐name firm's ability to exclude. Rather, a weak patent, particularly if it expires later than the basic patents, disproportionately attracts a challenge to the pertinent drug. Overall, our results suggest these challenges serve a useful purpose by promoting scrutiny of weaker and late‐expiring patents.

Suggested Citation

Hemphill, C. Scott and Sampat, Bhaven N., When Do Generics Challenge Drug Patents? (December 2011). Journal of Empirical Legal Studies, Vol. 8, Issue 4, pp. 613-649, 2011. Available at SSRN: https://ssrn.com/abstract=1950943 or http://dx.doi.org/10.1111/j.1740-1461.2011.01235.x

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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