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The Gaming of Pharmaceutical Patents

Author

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  • Bulow, Jeremy I.

    (Stanford U)

Abstract

Paragraph IV of the Hatch-Waxman Act provides a mechanism for the litigation of pharmaceutical patent infringement disputes. Many of these cases have been settled with "reverse payments" by the brand to the generic in return for delayed generic entry. The FTC has contested a number of these settlements with good but not complete success. This paper argues for per se illegality of settlements that include side payments or deals which are beneficial to the generic. Further, the paper shows a number of additional strategies beyond side payments, some highly questionable from an antitrust perspective, that brands have used to keep out generics.

Suggested Citation

  • Bulow, Jeremy I., 2003. "The Gaming of Pharmaceutical Patents," Research Papers 1804, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:1804
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    File URL: http://gsbapps.stanford.edu/researchpapers/library/RP1804.pdf
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    References listed on IDEAS

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    1. Richard G. Frank & David S. Salkever, 1997. "Generic Entry and the Pricing of Pharmaceuticals," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 75-90, March.
    2. Jonathan Levin & Richard Levin, "undated". "Patent Oppositions," Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy Working Paper Series yale_lepp-1005, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy.
    3. Aidan Hollis, 2003. "The Anti-Competitive Effects of Brand-Controlled "Pseudo- Generics" in the Canadian Pharmaceutical Market," Canadian Public Policy, University of Toronto Press, vol. 29(1), pages 21-31, March.
    4. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
    5. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    6. David Reiffen & Michael R. Ward, 2005. "Generic Drug Industry Dynamics," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 37-49, February.
    7. Grabowski, Henry & Vernon, John, 1986. "Longer Patents for Lower Imitation Barriers: The 1984 Drug Act," American Economic Review, American Economic Association, vol. 76(2), pages 195-198, May.
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    Cited by:

    1. Gratz, Linda, 2012. "Economic Analysis of Pay-for-delay Settlements and Their Legal Ruling," Discussion Papers in Economics 12734, University of Munich, Department of Economics.
    2. Higgins, Matthew J. & Rodriguez, Daniel, 2006. "The outsourcing of R&D through acquisitions in the pharmaceutical industry," Journal of Financial Economics, Elsevier, vol. 80(2), pages 351-383, May.
    3. 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.

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