ARTICLE : Intellectual property (patents) - Generic drugs - pharmaceutical companies è defensive strategies - Brand image - Legal monopoly - Legal market exclusivity period - Launch of second generation products - Barriers to entry - Scrutiny by antitrust authorities (US case law) - Abuse of the patent system and other regulatory procedures - Agreements with competitors - Assessment of restrictive business practices

Generic drugs: Which strategies for pharmaceutical companies?

Facing patent expiry and competition from generic drugs, pharmaceutical companies rely on a wide array of defensive strategies, building on the innovator’s brand image, the extension of the legal market exclusivity period, or the launch of second generation products. While all of these strategies share the common purpose of limiting the impact of generic competition, their anticompetitive effects remain difficult to gauge. Some of these methods have nevertheless recently come under scrutiny by antitrust authorities, especially in the United States. Several cases have thus unveiled that drug makers had abused the patent system and other regulatory procedures to obtain an unsubstantiated extension of their legal monopoly. Likewise, several brand name companies sought to delay market entry of generic drugs by entering into agreements with their generic competitors. However, as we will show, the assessment of such restrictive business practices is not without ambiguity.

*This article is an automatic translation of the original article, provided here for your convenience. Read the original article. 1. Long considered a model industry with stable and above-average growth rates, the pharmaceutical sector today faces several challenges, both technological and competitive. 2. On the one hand, R&D costs are experiencing real inflation, while major therapeutic breakthroughs are becoming rarer. DiMasi, Hansen and Grabowski (2003) put the average cost of developing a new drug at $802 million and this expenditure has been rising steadily for 30 years. In the case of the United States, the share of R&D expenditure in laboratory sales has risen from an average of 12% at the beginning of the 1970s to more than 20% at the end of the 1990s. Moreover,

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Authors

  • French Competition Authority (Paris)
  • University of Paris I Panthéon-Sorbonne

Quotation

Emmanuel Combe, Heiner Haug, Generic drugs: Which strategies for pharmaceutical companies?, February 2006, Concurrences N° 1-2006, Art. N° 460, pp. 47-62

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