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

48 Pages Posted: 4 Jul 2015 Last revised: 21 Apr 2020

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: January 1, 2020

Abstract

During patent litigation, pay-for-delay deals involve a payment from a patent holder of a branded drug to a generic drug manufacturer to delay entry and withdraw the patent challenge. In return for staying out of the market, the generic firm 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 when there are multiple potential entrants. 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-for-delay deals are an equilibrium outcome. We further show that limiting a branded firm's ability to launch an authorized generic prior to entry by a successful challenger will deter such deals. However, removing exclusivity period for the first generic challenger will not.

Keywords: pharmaceuticals, pay-for-delay, reverse payments, authorized generics, first mover advantage

JEL Classification: L41, K21, 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 (January 1, 2020). 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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