Endogenous Licensing Fee Clause Samples

Endogenous Licensing Fee. If the branded firm launches an authorized generic, it would charge a licensing fee. The authorized generic, however, is only launched if it increases the profit of the branded firm relative to an alternative outcome, and also increases the profit of the generic. In our game tree described above, and with just two challengers, this would be in the subgame Γ2,G, where the second challenger G2 rejects payment X2 to stay out of the market, and the court decides in favor of the generic. In this case, in period one the brand’s options are either to earn ΠD0 (duopoly with no AG) or to earn ΠT1 (triopoly with an AG launched via G1) plus a licensing fee. We set licensing fee as a take-it or leave-it offer. Specifically, we compute the fee as a solution to an asymmetric ▇▇▇▇ bargaining problem, but set the bargaining parameter equal to one for the branded firm (ρ = 1). Thus they reach a fee schedule by giving the entire surplus from the launch to the branded firm (i.e., the branded firm has full bargaining power). Then by launching an AG (T1 configuration), the profits due to the sales of the branded drug are V T1 = ΠT1 + δΠT0, where the second part is from sales in the post-patent period, and similarly, those due to sales of the authorized generic are V T1 = ΠT1 + δΠT0 (post patent profits are δΠT0 instead of δΠT1 as there