aSchool of Economics, University of East Anglia, Norwich NR4 7TJ, UKEntry Limiting Agreements • November 14th, 2021
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.
aSchool of Economics, University of East Anglia, Norwich NR4 7TJ, UKEntry Limiting Agreements • May 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
