Common Contracts
1 similar null contracts
aSchool of Economics, University of East Anglia, Norwich NR4 7TJ, UKMay 18th, 2015
Launching of authorized generic products and/or paying off a generic challenger via a pay-to-delay deal, are two of the more contentious moves by R&D active drug manufacturers to protect their patented drugs against independent generic entry. Pay-to-delay deals involve a payment from a branded drug manufacturer to a generic maker to delay market entry where, in return for withdrawing the challenge, the generic firm receives a payment and/or an authorized licensed entry at a later date but before the expiration of the patent itself. In this paper we focus on the incentives involved in reaching such deals and why they are stable. We combine the first mover advantage (for the first generic entrant) with the ability of the branded manufacturer to launch an authorized generic, and describe the conditions under which pay-to-delay deals are an equilibrium outcome. Our model makes explicit the conditions under which authorized generic launch by a branded firm is a credible threat to later pote
