The Generic Exclusivity Period and the Market Life of Drugs

Generic drug sellers are relied on to challenge brand drug patents, but invalidation allows other sellers to enter. The 180-day exclusivity period, awarded to the first challenger of a brand drug’s patent(s), was created to address this potential free-rider problem. The exclusivity period incentivizes challenges but also delays entry by later-filing firms so could harm competition overall. This paper examines whether a drug’s market life (time between brand and generic entry) is longer when the value of the exclusivity period is diminished, which happens when it is shared (by firms filing simultaneously) or forfeited. Among 141 drugs with a new molecule experiencing generic entry during 2015–2025, the average market life was over three years shorter when the exclusivity period was shared and unrelated to forfeiture, even after controlling for drug and patent characteristics. These results challenge the notion that a lucrative exclusivity period is necessary to encourage drug patent challenges.