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Authorized Generic Entry prior to Patent Expiry: Reassessing Incentives for Independent Generic Entry

  • Appelt, Silvia
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    Patent holders attempt to mitigate the loss of monopoly power by authorizing generic entry prior to patent expiry (early entry). Off-patent competition may be adversely affected if early entry substantially lowers the attractiveness of subsequent generic entry. This study assesses the impact of early entry, examining generic entry decisions made in the course of recent patent expiries. Using micro data and accounting for the endogeneity of early entry, I estimate recursive bivariate probit models of entry. Early entry has no significant impact on the likelihood of generic entry. Rent-seeking rather than strategic entry-deterrence motives drive early entry decisions.

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    File URL: http://epub.ub.uni-muenchen.de/13197/1/357.pdf
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    Paper provided by Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems with number 357.

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    Date of creation: Apr 2010
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    Handle: RePEc:trf:wpaper:357
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    1. Wilde, Joachim, 2000. "Identification of multiple equation probit models with endogenous dummy regressors," Economics Letters, Elsevier, vol. 69(3), pages 309-312, December.
    2. Andrew M. JONES & Xander KOOLMAN & Eddy VAN DOORSLAER, 2006. "The impact of having supplementary private health insurance on the uses of specialists," Annales d'Economie et de Statistique, ENSAE, issue 83-84, pages 251-275.
    3. Iván Moreno Torres & Jaume Puig & Joan-Ramon Borrell-Arqué, 2007. "Generic entry into a regulated pharmaceutical market," Economics Working Papers 1014, Department of Economics and Business, Universitat Pompeu Fabra.
    4. Magazzini, Laura & Pammolli, Fabio & Riccaboni, Massimo, 2004. "Dynamic Competition in Pharmaceuticals: Patent Expiry, Generic Penetration, and Industry Structure," MPRA Paper 15968, University Library of Munich, Germany.
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