Essays on the U.S. pharmaceutical industry (1984-2013)

Abstract

The pharmaceutical industry in the U.S. has changed since the introduction of the 1984 Hatch-Waxman Act. At first look, it seems generic firms are benefiting greatly from the Act, while brand firms are not. In this dissertation, I study the evolution of the industry during the entire life-span of the Act using public, but unique data. In Chapter 1, I study the regulatory background of brand and generic drug approvals. I focus on particular issues to brand firms' attempts at expanding their monopoly protection in light of more generic competition. In Chapter 2, I study the large gap between increasing R&D and flat New Chemical Entity approvals. In particular, I show incremental innovation explains a large part of this gap. In Chapter 3, I study generic firms' challenges on brand patents and the resulting lawsuits that determine generic entry or deterrence. These findings on patent litigation show a large asymmetry between values of entry and deterrence helping explain settlements. My goal with this dissertation is to expand the understanding of the Act's main effects on the U.S. pharmaceutical industry along with its side effects.