Pharmaceutical Patents and Generic Entry Competition: A New View on the Hatch-Waxman Act

Kaz Miyagiwa and Jiangyun(Yunyun) Wan

No 15-18, IIR Working Paper from Institute of Innovation Research, Hitotsubashi University

Abstract: We present a formal analysis that sheds new light on the Hatch-Waxman Act. Hatch-Waxman restores incentives to develop new drugs by extending the patent life for them, but also promotes generic entry by reducing entry costs and by providing 180-day marketing exclusivity to a first challenger to the patent. Although these two objectives appear incompatible, our model shows that marketing exclusivity, with a significant entry cost reduction, contributes to incentive restoration. It finds however that social welfare is lower with marketing exclusivity. Finally, our analysis suggests that marketing exclusivity not be granted in the case of drugs for rare diseases.

Keywords: pharmaceutical innovation and patents; generic entry competition; Hatch-Waxman; marketing exclusivity (search for similar items in EconPapers)
JEL-codes: I18 K23 L13 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2016-07
New Economics Papers: this item is included in nep-com, nep-hea, nep-ino, nep-ipr, nep-pr~ and nep-law
Note: Revised on July 11, 2016
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Persistent link: https://EconPapers.repec.org/RePEc:hit:iirwps:15-18

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