Authorized Generic Entry prior to Patent Expiry: Reassessing Incentives for Independent Generic Entry

Arbeitspapier

Patent holders frequently attempt to mitigate the loss of monopoly power by authorizing generic entry prior to patent expiry (early entry). Competition in off-patent pharmaceutical markets may be adversely affected if early entry substantially impairs the attractiveness of subsequent market entry. I examine generic entry decisions made in the course of recent patent expiries to quantify the impact of early entry on incentives for generic entry. Using unique micro data and accounting for the endogeneity of early entry, I estimate recursive bivariate probit models of entry. Drug markets' pre-entry revenues largely determine both independent generic entry and early entry decisions. Early entry in turn has no significant impact on the likelihood of generic entry. Original drug producers appear to authorize generic entry prior to loss of exclusivity primarily fueled by rent-seeking rather than strategic entry-deterrence motives.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Munich Discussion Paper ; No. 2010-23

Classification and Topics

• Classification: Wirtschaft ; Monopolization; Horizontal Anticompetitive Practices ; Analysis of Health Care Markets ; Intellectual Property and Intellectual Capital ; Multiple or Simultaneous Equation Models: Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
• Subject: Generic Entry ; Early Entry ; Anticompetitive Practices ; Pharmazeutische Industrie ; Lizenz ; Generika ; Markteintritt ; Wettbewerbsbeschränkung ; Rent-Seeking ; Schätzung ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Appelt, Silvia
• Event: Veröffentlichung
• (who): Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
• (where): München
• (when): 2010

Further information

• DOI: doi:10.5282/ubm/epub.11476
• Handle: http://hdl.handle.net/10419/104324
• URN: urn:nbn:de:bvb:19-epub-11476-2
• Last update: 10.03.2025, 11:45 AM CET