Generic Entry Before the Agreed-Upon Date in Pharmaceutical Patent Settlements

Drug patent litigation settlements specify a date for generic entry and typically include so-called “acceleration clauses” allowing the settling generic to enter earlier in certain circumstances, such as a third party winning the patent litigation. Agreed-upon dates in settlements between a brand and a generic with “first-filer” status affect the entire market because this date affects the date other generics may enter as well. This paper documents the entry outcome after a first filer-brand settlement by tracking how often the “acceleration clauses” in these settlements in fact accelerate entry. In total, the first filer entered prior to the original settlement date ten times in the 99 settlements included in our data. In four of these ten, the first filer failed to retain its 180-day exclusivity period — awarded by the FDA to the first generic to challenge the brand’s patents — which allowed other later filing generics to enter and trigger the acceleration clause. In two cases, the first filer’s entry was accelerated by another first-filer generic with shared rights to the 180-day exclusivity period. In the other four cases, the first filer’s earlier entry was due to some special clause in the settlement (e.g., because of a shrinking brand market). In no case was a first filer’s intact 180-day exclusivity period accelerated because of a later filing generic winning the patent litigation or settling for an earlier entry date.