The effect of Paragraph IV decisions and generic entry before patent expiration on brand pharmaceutical firms

This purpose of this paper is to investigate the impact of Paragraph IV patent infringement decisions on brand drug pharmaceutical firms. Paragraph IV decisions determine whether a generic firm can enter before the period of exclusivity ends. I construct a novel dataset of all Paragraph IV decisions and find that they disproportionately involve the highest revenue drugs, significant periods of patent protection, and a non-trivial portion of all brand drugs facing generic entry. I also estimate the impact of Paragraph IV decisions on brand firm profitability and find they have large value consequences. (C) 2010 Elsevier B.V. All rights reserved.