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The effect of Paragraph IV decisions and generic entry before patent expiration on brand pharmaceutical firms

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  • Panattoni, Laura E.

Abstract

This purpose of this paper is to investigate the impact of Paragraph IV patent infringement decisions on brand drug pharmaceutical firms. Paragraph IV decisions determine whether a generic firm can enter before the period of exclusivity ends. I construct a novel dataset of all Paragraph IV decisions and find that they disproportionately involve the highest revenue drugs, significant periods of patent protection, and a non-trivial portion of all brand drugs facing generic entry. I also estimate the impact of Paragraph IV decisions on brand firm profitability and find they have large value consequences.

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  • Panattoni, Laura E., 2011. "The effect of Paragraph IV decisions and generic entry before patent expiration on brand pharmaceutical firms," Journal of Health Economics, Elsevier, vol. 30(1), pages 126-145, January.
    • Handle: RePEc:eee:jhecon:v:30:y:2011:i:1:p:126-145
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    Cited by:

    1. Branstetter, Lee & Chatterjee, Chirantan & Higgins, Matthew J., 2022. "Generic competition and the incentives for early-stage pharmaceutical innovation," Research Policy, Elsevier, vol. 51(10).
    2. Murray L. Aitken & Ernst R. Berndt & Barry Bosworth & Iain M. Cockburn & Richard Frank & Michael Kleinrock & Bradley T. Shapiro, 2013. "The Regulation of Prescription Drug Competition and Market Responses: Patterns in Prices and Sales following Loss of Exclusivity," NBER Chapters, in: Measuring and Modeling Health Care Costs, pages 243-271, National Bureau of Economic Research, Inc.
    3. Eric Helland & Seth A. Seabury, 2016. "Are Settlements in Patent Litigation Collusive? Evidence from Paragraph IV Challenges," NBER Working Papers 22194, National Bureau of Economic Research, Inc.
    4. Thomas J Hwang, 2013. "Stock Market Returns and Clinical Trial Results of Investigational Compounds: An Event Study Analysis of Large Biopharmaceutical Companies," PLOS ONE, Public Library of Science, vol. 8(8), pages 1-8, August.
    5. Michael D. Frakes & Melissa F. Wasserman, 2020. "Investing in Ex Ante Regulation: Evidence from Pharmaceutical Patent Examination," NBER Working Papers 27579, National Bureau of Economic Research, Inc.
    6. Ahn, Kiefer & Trujillo, Antonio & Gibbons, Jason & Bennett, Charles L. & Anderson, Gerard, 2023. "Settled: Patent characteristics and litigation outcomes in the pharmaceutical industry," International Review of Law and Economics, Elsevier, vol. 76(C).
    7. Hemphill, C. Scott & Sampat, Bhaven N., 2012. "Evergreening, patent challenges, and effective market life in pharmaceuticals," Journal of Health Economics, Elsevier, vol. 31(2), pages 327-339.
    8. Anton‐Giulio Manganelli, 2021. "Reverse payments, patent strength, and asymmetric information," Health Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 20-35, January.
    9. Diestre, Luis & Lumineau, Fabrice & Durand, Rodolphe, 2023. "Litigate or let it go? Multi-market contact and IP infringement-litigation dynamics," Research Policy, Elsevier, vol. 52(6).
    10. Hu, Mei-Ying & Lu, You-Xun & Lai, Ching-chong, 2023. "Patent term extensions and commercialization lags in the pharmaceutical industry: A growth-theoretic analysis," Journal of Macroeconomics, Elsevier, vol. 76(C).
    11. MIYAGIWA, Kaz & WAN, Yunyun, 2015. "Pharmaceutical patents and generic entry competition: the role of marketing exclusivity," Discussion paper series 2015-05, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    12. Henry Grabowski & Carlos Brain & Anna Taub & Rahul Guha, 2017. "Pharmaceutical Patent Challenges: Company Strategies and Litigation Outcomes," American Journal of Health Economics, MIT Press, vol. 3(1), pages 33-59, Winter.
    13. Matthew J. Higgins & Mathias J. Kronlund & Ji Min Park & Joshua Pollet, 2020. "The Role of Assets In Place: Loss of Market Exclusivity and Investment," NBER Working Papers 27588, National Bureau of Economic Research, Inc.
    14. Lee Branstetter & Chirantan Chatterjee & Matthew J. Higgins, 2016. "Regulation and welfare: evidence from paragraph IV generic entry in the pharmaceutical industry," RAND Journal of Economics, RAND Corporation, vol. 47(4), pages 857-890, November.
    15. Luke M. Olson & Brett W. Wendling, 2018. "Estimating the Causal Effect of Entry on Generic Drug Prices Using Hatch–Waxman Exclusivity," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 53(1), pages 139-172, August.
    16. Bessen, James & Neuhäusler, Peter & Turner, John L. & Williams, Jonathan, 2018. "Trends in private patent costs and rents for publicly-traded United States firms," International Review of Law and Economics, Elsevier, vol. 56(C), pages 53-69.
    17. Keith M. Drake & Martha A. Starr & Thomas G. McGuire, 2015. "Do "Reverse Payment" Settlements Constitute an Anticompetitive Pay-for-Delay?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 22(2), pages 173-200, July.
    18. Kyle, Margaret K., 2022. "Incentives for pharmaceutical innovation: What’s working, what’s lacking," International Journal of Industrial Organization, Elsevier, vol. 84(C).
    19. Keith M. Drake & Martha A. Starr & Thomas McGuire, 2014. "Do "Reverse Payment" Settlements of Brand-Generic Patent Disputes in the Pharmaceutical Industry Constitute an Anticompetitive Pay for Delay?," NBER Working Papers 20292, National Bureau of Economic Research, Inc.
    20. Rabbani, Maysam, 2023. "Mergers with future rivals can boost prices, bar entry, and intensify market concentration," International Journal of Industrial Organization, Elsevier, vol. 88(C).

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