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Entry limiting agreements: First mover advantage, authorized generics and pay-for-delay deals

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  • Farasat A.S. Bokhari

    (Centre for Competition Policy and School of Economics, University of East Anglia)

  • Franco Mariuzzo

    (Centre for Competition Policy and School of Economics, University of East Anglia)

  • Arnold Polanski

    (School of Economics, University of East Anglia)

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.

Suggested Citation

  • Farasat A.S. Bokhari & Franco Mariuzzo & Arnold Polanski, 2020. "Entry limiting agreements: First mover advantage, authorized generics and pay-for-delay deals," Working Paper series, University of East Anglia, Centre for Competition Policy (CCP) 2015-05v4, Centre for Competition Policy, University of East Anglia, Norwich, UK..
  • Handle: RePEc:uea:ueaccp:2015_05v4
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    References listed on IDEAS

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    More about this item

    Keywords

    pharmaceuticals; pay-for-delay; reverse payments; authorized generics; first mover advantage;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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