Evolving brand-name and generic drug competition may warrant a revision of the Hatch-Waxman Act.

The evolution of pharmaceutical competition since Congress passed the Hatch-Waxman Act in 1984 raises questions about whether the act's intended balance of incentives for cost savings and continued innovation has been achieved. Generic drug usage and challenges to brand-name drugs' patents have increased markedly, resulting in greatly increased cost savings but also potentially reduced incentives for innovators. Congress should review whether Hatch-Waxman is achieving its intended purpose of balancing incentives for generics and innovation. It also should consider whether the law should be amended so that some of its provisions are brought more in line with recently enacted legislation governing approval of so-called biosimilars, or the corollary for biologics of generic competition for small-molecule drugs.

Essays on Competition in the Pharmaceutical Industry

Chapter 1: Patents and Entry Competition in the Pharmaceutical Industry: The Role of Marketing Exclusivity Effective patent length for innovation drugs is severely curtailed because of extensive efficacy and safety tests required for FDA approval, raising concern over adequacy of incentives for new drug development. The Hatch-Waxman Act extends patent length for new drugs by five years, but also promotes generic entry by simplifying approval procedures and granting 180-day marketing exclusivity to a first generic entrant before the patent expires. In this paper we present a dynamic model to examine the effect of marketing exclusivity. We find that marketing exclusivity may be redundant and its removal may increase generic firms' profits and social welfare. Chapter 2: Why Authorized Generics?: Theoretical and Empirical Investigations Facing generic competition, the brand-name companies some-times launch generic versions themselves called authorized generics. This practice is puzzling. If it is cannibalization, it cannot be profitable. If it is divisionalization, it should be practiced always instead of sometimes. I explain this phenomenon in terms of switching costs in a model in which the incumbent first develops a customer base to ready itself against generic competition later. I show that only sufficiently low switching costs or large market size justifies launch of AGs. I then use prescription drug data to test those results and find support. Chapter 3: The Merger Paradox and R&D Oligopoly theory says that merger is unprofitable, unless a majority of firms in industry merge. Here, we introduce R&D opportunities to resolve this so-called merger paradox. We have three results. First, when there is one R&D firm, that firm can profitably merge with any number of non-R&D firms. Second, with multiple R&D firms and multiple non-R&D firms, all R&D firms can profitably merge. Third, with two R&D firms and two non-R&D firms, each R&D firms prefer to merge with a non-R&D firm. With three or more than non-R&D firms, however, the R&D firms prefer to merge with each other.

Essays on competition in the pharmaceutical industry

Chapter 1: Patents and Entry Competition in the Pharmaceutical Industry: The Role of Marketing Exclusivity. Effective patent length for innovation drugs is severely curtailed because of extensive efficacy and safety tests required for FDA approval, raising concern over adequacy of incentives for new drug development. The Hatch-Waxman Act extends patent length for new drugs by five years, but also promotes generic entry by simplifying approval procedures and granting 180-day marketing exclusivity to a first generic entrant before the patent expires. In this paper we present a dynamic model to examine the effect of marketing exclusivity. We find that marketing exclusivity may be redundant and its removal may increase generic firms' profits and social welfare. ^ Chapter 2: Why Authorized Generics?: Theoretical and Empirical Investigations Facing generic competition, the brand-name companies some-times launch generic versions themselves called authorized generics. This practice is puzzling. If it is cannibalization, it cannot be profitable. If it is divisionalization, it should be practiced always instead of sometimes. I explain this phenomenon in terms of switching costs in a model in which the incumbent first develops a customer base to ready itself against generic competition later. I show that only sufficiently low switching costs or large market size justifies launch of AGs. I then use prescription drug data to test those results and find support. ^ Chapter 3: The Merger Paradox and R&D Oligopoly theory says that merger is unprofitable, unless a majority of firms in industry merge. Here, we introduce R&D opportunities to resolve this so-called merger paradox. We have three results. First, when there is one R&D firm, that firm can profitably merge with any number of non-R&D firms. Second, with multiple R&D firms and multiple non-R&D firms, all R&D firms can profitably merge. Third, with two R&D firms and two non-R&D firms, each R&D firms prefer to merge with a non-R&D firm. With three or more than non-R&D firms, however, the R&D firms prefer to merge with each other.^

Rules of practice in Hatch act cases.

Mode of access: Internet.

Administrative manual for the Hatch (Experiment Station) Act as amended and Section 204(b) of the Agricultural Marketing Act.

"August 1964."

Interpretations of the Hatch act and regulations on political activity (as developed to November, 1940)

Cover title.

Resale price maintenance. Hearing before a subcommittee of the Committee on the Judiciary, United States Senate, Seventy-fourth Congress, second sesion, on S. 3822, to amend the act entitled "An act to protect trade and commerce against unlawful restraints and monopolies", approved July 2, 1890. March 13, 1936.

Carl A. Hatch, Chairman of Subcommittee.

Universities, SMEs and innovation frameworks : think global, act local?

Universities are increasingly encouraged to take a leading role in economic development, particularly through innovation. Simultaneously, economic development policy itself is increasingly focused on small and medium-sized enterprises (SMEs), creating overlapping interactions in the roles of government policy, universities and SMEs and the processes of innovation creation and dissemination. This paper examines issues arising from these developments and relating to the key stakeholders (industry, government and universities in particular), the enabling mechanisms (network governance, relevant education, training and learning, and suitable structures), and local and cross-local links. The authors then use quantitative analysis of 450 SMEs in the UK to begin to evaluate the roles of universities and highlight areas for further theoretical development.