Optimal Incentives for Patent Challenges in the Pharmaceutical Industry

Author:

Böhme EnricoORCID,Frank Jonas Severin,Kerber Wolfgang

Abstract

AbstractIn this paper, we show that a provision in antitrust law to allow patent settlements with a later market entry of generics than the date that is expected under patent litigation can increase consumer welfare. We introduce a policy parameter for determining the optimal additional period for collusion that would incentivize the challenging of weak patents and maximize consumer welfare. While in principle, later market entry leads to higher profits and lower consumer welfare, this can be more than compensated for if more patents are challenged as a result.

Funder

Philipps-Universität Marburg

Publisher

Springer Science and Business Media LLC

Subject

Management of Technology and Innovation,Organizational Behavior and Human Resource Management,Strategy and Management,Economics and Econometrics

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