NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Martha Starr-McCluer

Department of Economics
American University
4400 Massachusetts Ave. NW
Washington, DC 20016
Tel: 202-885-3747

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Institutional Affiliation: American University

NBER Working Papers and Publications

July 2014Do "Reverse Payment" Settlements of Brand-Generic Patent Disputes in the Pharmaceutical Industry Constitute an Anticompetitive Pay for Delay?
with Keith M. Drake, Thomas McGuire: w20292
Brand and generic drug manufacturers frequently settle patent litigation on terms that include a payment to the generic manufacturer along with a specified date at which the generic would enter the market. The Federal Trade Commission contends that these agreements extend the brand's market exclusivity and amount to anticompetitive divisions of the market. The parties involved defend the settlements as normal business agreements that reduce business risk associated with litigation. The anticompetitive hypothesis implies brand stock prices should rise with announcement of the settlement. We classify 68 brand-generic settlements from 1993 to the present into those with and without an indication of a "reverse payment" from the brand to the generic, and conduct an event study of the announ...

Published: Keith M. Drake, Martha A. Starr & Thomas G. McGuire (2015) Do “Reverse Payment” Settlements Constitute an Anticompetitive Pay-for-Delay?, International Journal of the Economics of Business, 22:2, 173-200, DOI: 10.1080/13571516.2015.1045744

 
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