Publication Title: 
Journal of Health Economics
Publication Date: 
Thursday, March 1, 2012

Observers worry that generic patent challenges are on the rise and reduce the effective market life of drugs. A related concern is that challenges disproportionately target high-sales drugs, reducing market life for these “blockbusters.” To study these questions, this study examines new data on generic entry over the past decade. The results show that challenges are more common for higher sales drugs. The study also demonstrates a slight increase in challenges over this period, and a sharper increase for early challenges. Despite this, effective market life is stable across drug sales categories, and has hardly changed over the decade.

To better understand these results, the study examines which patents are challenged on each drug, and shows that lower quality and later expiring patents disproportionately draw challenges. Overall, this evidence suggests that challenges serve to maintain, not reduce, the historical baseline of effective market life, thereby limiting the effectiveness of “evergreening” by branded firms.

Hemphill SC, Sampat BN. Evergreening, patent challenges, and effective market life in pharmaceuticals. Journal of Health Economics. 2012; 31(2): 327-339.