Abstract
Using an event study approach, and unique data on Paragraph (iv) pharmaceutical patent litigation decisions, we estimate that brand rms value deterrence at $4.6 billion on average while generic entrants value the right to enter, on average, at $236.8 million. These estimates account for probabilistic district court decisions and an appellate process. In 2002, the Schering-Plough vs. FTC decision led to a surge in pay-for-delay settlements. We estimate that surpluses at stake in decided cases are 73% lower after this decision, reducing the direct (per-case) consumer surplus gains anticipated by the 1984 Hatch-Waxman Act's procedures for early generic entry.
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