‘Entry limiting agreements for pharmaceuticals: pay-to-delay and authorized generic deals’

The CCP seminar series returns from its Easter break on Friday 17th April. And to kick things off, we have with us the masterful Farasat Bokhari (CCP & ECO) presenting his latest paper entitled, ‘Entry limiting agreements for pharmaceuticals: pay-to-delay and authorized generic deals‘. Farasat is an Associate Professor in the School of Economics at the University of East Anglia. His research specialties lie in health economics, as well as a background in applied microeconomics and industrial organisation. An abstract for his paper can be found below.

Launching of authorized generic products and/or paying off a generic challenger, via a pay-to-delay deal, are two of the more contentious moves by R\&D active drug manufacturers to protect their patented drugs against independent generic entry. Pay-to-delay deals involve a payment from a branded drug manufacturer to a generic maker to delay market entry where, in return for withdrawing the challenge, the generic firm receives a payment and/or an authorized licensed entry at a later date but before the expiration of the patent itself.  In this paper we focus on the incentives involved in reaching such deals and why they are stable. We combine the first mover advantage (for the first generic entrant) with the ability of the branded manufacturer to launch an authorized generic, and describe the conditions under which pay-to-delay deals are an equilibrium outcome.  Our model makes explicit the conditions under which authorized generic launch by a branded firm is a credible threat to later potential generic challengers and works as a device that enables the pay-to delay deal with the first challenger.

The seminar will be held from 13:00-14:00 in the Thomas Paine Study Centre (TPSC), Room 1.03.

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