Policy Option. No Exclusivity. A popular policy option to discourage the pay-for-delay deals is to remove the six month exclusivity clause from the Hatch-Waxmax Act. Here we comment on the effectiveness of such a policy (equivalently, if we relaxed the exclusivity assumption in the model). If the jth challenger wins the court case, then sans the exclusivity period, all the remaining J − j challengers can enter immediately in period one for free (i.e., without any litigation costs). Small changes in the payoffs in subgame Γj,G accommodate this policy option and are given in Appendix (A.3). Figure 3. No Exclusivity Since the expected profit of the challenger reduces from duopoly based rents to a competitive triopoly, this in turn lowers the payment required to keep the challenger out of the market. Similarly, if the branded firm does not launch an AG, its profits also decrease from ΠD0 in period one to ΠT0. 0 However, ΠT0 + δΠT0 ≤ V˜T 1 for all values of κ even if it does not charge a licensing fee since it can coordinate on the price with an AG. Effectively, as before, the brand chooses between having one more firm that produces the drug as the first entrant AG with first mover advantage, or one less firm in an oligopoly but with no option to coordinate on price or charge a licensing fee. Consequently, the threat to launch an AG is credible for all values of κ and it is cheaper to pay off a challenger, making P4D deals still possible. The outcomes with J = 15 challengers and with δ = 0 or δ = 1 are shown in Figure 3. In both cases, P4D deals are still possible and in fact the area of unchallenged monopoly increases.
Policy Option. No AG Against a Winning Challenger. The branded firm’s ability to credibly threaten to launch an AG in case a challenger wins a court case gives rise to the P4D deals. If this option is not available – and hence the threat is never credible – then with enough challengers in the market, a P4D deal will never be reached. In the US, this would mean amending the Xxxxx- Xxxxxx Act so that it also applies to the branded firm: if no other generic firm can enter for 180 days as a reward for invalidating the patent, then the branded firm can also not launch an AG prior to the exhaustion of the 180-day exclusivity by a successful challenger. It is important to note that this policy is not saying that a branded firm cannot launch a generic (indeed prices fall once a generic enters, authorized or independent), only that the exclusivity under the Xxxxx-Xxxxxx Act also applies to branded firm launching own generic, rather than only independent firms. To understand the implications of such a policy, with the same parameters as before, we modified the game imposing that the brand is (legislatively) prevented from launching an AG if a challenger is successful.
Policy Option. Appropriate additional funds for the NM Capacity Building Grant. The Legislature could make an additional appropriation to DFA to increase the funds available for grants to local governments, Tribes, and COGs for hiring federal grant specialists and other technical support staff. To be most effective at capitalizing on IIJA investments, the appropriation would need to be available for DFA to use in FY23 and the agency would need to quickly implement another grant application cycle. Unfortunately, several IIJA funding opportunities passed in the time between when the Legislature appropriated these funds and when DFA created and announced the grant program. Now that DFA has the program infrastructure and award criteria in place, an additional round of funding should be able to reach communities within a shorter time frame than the first appropriation.
Policy Option. Appropriate funds to COGs for regional grants assistance. Using NCNMEDD as a model, the Legislature could appropriate funds directly to COGs to hire grant specialists and technical staff. The COGs could serve many communities with one grants management staff, thus conserving resources by avoiding the duplication of efforts among several entities in one region. This option would also conserve DFA’s Capacity Building Grant funds for local and Tribal governments that either are not served by a COG or find COG assistance unable to meet their needs. Appropriations to COGs could vary based on the size and existing resources of each. Policy Option: Partner with higher education institutions to access labor from the workforce-in-training. Having the funds to hire grant specialists does not guarantee local governments will be able to do so. High demand for workers with this skill set will affect organizations’ ability to fill positions statewide, but sparsely populated areas will struggle even more. One potential solution for policymakers to consider is a collaboration with New Mexico’s colleges and universities to provide technical assistance to communities via grant writing courses. Different formats of grant writing courses and workshops are already offered by several of the state’s higher education institutions. The state could provide funding to small entities such as mutual domestic water associations and irrigation districts to enroll their typically volunteer staff in this type of course. However, an alternative and potentially more efficient option could be to pair these entities with students who enroll in a grant writing class and make the preparation of a real grant application or application template the central assignment. In this way, the class or workshop becomes a practicum that benefits both students by giving them real professional experience and local communities by providing the labor they may otherwise be unable to access. Providing State and Local Matching Funds Most of the IIJA grants available for conservation work require a non-federal cost share of some percentage, ranging from 10 percent to 75 percent, of the total grant project costs. State match dollars are often supplied by special appropriations to agencies receiving federal grants; this allows for flexibility to meet match obligations that can change from year to year. A drawback to this approach, however, is that each request for a special appropriation must compete with the same a...
Policy Option. Status Quo. Continuing the current method of funding match requirements means that requests for special appropriations related to IIJA conservation grants will be compared with all non- recurring funding priorities statewide. This necessarily limits the amount of information about natural resources infrastructure requests that appropriators will receive, as they are tasked with reviewing hundreds of one-time appropriations requests. The current approach also does not address the question of providing a source for local matching funds. DFA received an FY23 special appropriation of $1 million for awarding grants to local governments for matching federal infrastructure and other funding. For the programs discussed in this report that are available to local entities, all of which fall under the water conservation category, the average dollar amount of a local match (based on maximum award levels) is $8.8 million; the minimum dollar amount of a local match (based on maximum award levels) is $100 thousand. While this appropriation will undoubtedly help some communities in a very significant way, it will not go very far in helping many local entities fund water management projects. Policy Option: Invest in a fund limited in purpose to financing natural resources infrastructure projects. Building off the work done by a coalition of conservation advocacy groups in recent years, the Legislature could create a state fund dedicated solely to supporting infrastructure projects that improve natural resources conservation, restoration, and accessibility. The revenue surplus anticipated for this year could produce an even greater long-term return for New Mexico if a portion is committed to state and local natural resources infrastructure projects eligible for IIJA funding. Part of the fund could be invested to ensure it is self-sustaining over time, and the rest would be available to support state and local match requirements to leverage federal spending. Project Management and Oversight If communities are successful in securing federal grants, their next challenge is ensuring the funds are administered efficiently and responsibly and the project is implemented with appropriate technical management and oversight. The lack of this type of financial and technical capacity is commonly reported by local entities as a reason they do not pursue federal funds in the first place. Organizations may have staff capable of administering grant funds, but not enough to manage both thei...
Policy Option. Appropriate funds for project managers. Given the wide variety of programs authorized by IIJA, the Legislature should consider funding new project manager positions at both the state and regional level. State agencies can house technical experts such as professional engineers to manage projects that are funded by federal programs the agency administers or that are supported by a substantial state match. For smaller projects and ones that are not funded by federal grants that pass through a state agency, the state can provide COGs with funding to hire project managers that meet the specific needs of their region. Policy Option: Reform state hiring practices to increase the candidate pool and streamline the bureaucratic process. Staff at NMED suggested changes could be made to the existing job classification for project managers so that the candidate pool is not limited to professional engineers. Project managers with expertise in construction more generally would improve the workload distribution among the agency’s infrastructure projects staff and would likely be easier to recruit than engineers. NMED also pointed out that overly bureaucratic processes hinder the ability to quickly fill positions when they become vacant, which increases the strain on other employees as well as the communities relying on their assistance. Exceptions or reforms to the State Personnel Office’s hiring practices could help cut down on extra administrative work that takes time away from programmatic priorities.
Policy Option. No first AG against a winning challenger. The branded firm’s ability to credibly threaten to launch an AG in case a challenger win’s a court case gives rise to the P2D deals. If this option is not available – and hence the threat is never credible, then with enough challengers in the market, a P2D deal will never be reached. In the US, this would mean amending the Xxxxx-Xxxxxx Act so that it also applies to the branded firm: if no other generic firm can enter for 180 days as a reward for invalidating the patent, then the branded firm can also not launch an AG prior to the exhaustion of the 180-day exclusivity by the successful challenger. To understand the implications of such a policy, with the same parameters as before, we modified the tree and resolved where the branded is (legislatively) prevented from launching an AG and there are three or 25 challengers. As shown in Figure (9), with no AG option, the branded firm either has to payoff all the challengers (in this case three firms) or if there are many challengers, fail to reach an agreement with any of them. This is because after paying off the first challenger, the remaining J − 1 challengers never optimally choose to stay out of the market, and hence the region marked as ‘III – P2D Pay only First (Green)’ never occurs. The only exception is when even the first firm does not consider challenging the branded firm’s patent because it it too strong (π ≈ 0) relative to the litigation costs. All in all, removing the AG option for the brand leads to either an unchallenged monopoly for relatively strong patents, or a court decision rather than an out of court settlement if there are enough challengers. Figure 9. No Option to launch AG Other policy options that effectively do the same, i.e., where the brand never launches an AG against a winning challenger will have the same effect. One example is where the licensing fee is regulated so that V˜(T 1) = Π(T1) + ρΠ(T1) (for the branded firm), V˜(T 1) = (1 − ρ)Π(T1) (for generic
