Generic Entry Before the Agreed-Upon Date in Pharmaceutical Patent Settlements

Keith M Drake and Thomas G McGuire

Journal of Competition Law and Economics, 2020, vol. 16, issue 2, 188-219

Abstract: Drug patent litigation settlements specify a date for generic entry and typically include a so-called acceleration clause allowing the generic to enter earlier in certain circumstances. An agreed-upon date between a brand and a generic with “first-filer” status is particularly salient because this date also affects when other generics may enter. It has been unclear the degree to which acceleration clauses increase competition—by accelerating entry—or decrease competition, by deterring pursuit of entry by potential generic competitors. This paper documents the entry outcome after first-filer-brand settlements by tracking how often acceleration clauses in these settlements in fact accelerate entry. In no case was a first filer’s 180-day exclusivity period accelerated because of a later filing generic winning patent litigation or settling for an earlier entry date. In the cases where early entry occurred, the first filer had lost its right to the exclusivity period, typically by failing to receive tentative FDA approval within 30 months of its filing; or other generics shared first-filer status. An acceleration clause paired with the 180-day exclusivity period appears to effectively deter other generics and, at least in the instances we observed, never to have resulted in an actual “accelerated” entry.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:oup:jcomle:v:16:y:2020:i:2:p:188-219.

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Journal of Competition Law and Economics is currently edited by Nicholas Economides, Amelia Fletcher, Michal Gal, Damien Geradin, Ioannis Lianos and Tommaso Valletti

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