Entry Limiting Agreements for Pharmaceuticals: Pay-for-Delay and Authorized Generic Deals

43 Pages Posted: 4 Jul 2015 Last revised: 10 Aug 2017

See all articles by Farasat A. S. Bokhari

Farasat A. S. Bokhari

University of East Anglia (UEA) - School of Economic and Social Studies; University of East Anglia (UEA) - Centre for Competition Policy

Franco Mariuzzo

University of East Anglia (UEA) - Centre for Competition Policy

Arnold Polanski

University of East Anglia

Date Written: April 2017

Abstract

Pay-to-delay deals involve a payment from a branded drug manufacturer to a generic maker to delay entry. In return, the generic receives a payment and/or an authorized licensed entry at a later date but before the patent expiration. We examine why such deals are stable. We combine the first mover advantage for the first generic with the ability of the branded manufacturer to launch an authorized generic to show when pay-to-delay deals are an equilibrium outcome. Policy simulations show that removing the ability to launch authorized generics will deter such deals but removing exclusivity period for first generic will not.

Keywords: pharmaceuticals, pay-to-delay, reverse payments, authorized generics, Nash bargaining

JEL Classification: L21, L41, K41

Suggested Citation

Bokhari, Farasat A. S. and Mariuzzo, Franco and Polanski, Arnold, Entry Limiting Agreements for Pharmaceuticals: Pay-for-Delay and Authorized Generic Deals (April 2017). Available at SSRN: https://ssrn.com/abstract=2626508 or http://dx.doi.org/10.2139/ssrn.2626508

Farasat A. S. Bokhari (Contact Author)

University of East Anglia (UEA) - School of Economic and Social Studies ( email )

Norwich, Norfolk NR4 7TJ
United Kingdom

University of East Anglia (UEA) - Centre for Competition Policy ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

Franco Mariuzzo

University of East Anglia (UEA) - Centre for Competition Policy ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

Arnold Polanski

University of East Anglia ( email )

Norwich, Norfolk NR4 7TJ
United Kingdom
44 (0)1603 59 7166 (Phone)

HOME PAGE: http://https://www.uea.ac.uk/eco/people/All+People/Academic/Arnold+Polanski

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