Generic Competition and Strategic Delegation: An Empirical Study in Drug Patent Licensing

Matthew Bloomfield, Accounting, The Wharton School, and Jessica Kim-Gina, UCLA Anderson School of Management

Abstract: We plan to study the role of strategic delegation in the patent licensing process. In particular, we will examine the contractual terms of a large database of pharmaceutical drug license arrangements (royalty rates, contingencies, royalty bases, etc…), as well as which contractual terms were redacted versus non-redacted. We will then use the theory of strategic delegation to explore the use of disclosed licensing terms (e.g., non-redacted royalty reductions in the event of generic entry) as strategic devices, designed to discourage generic entrants. We expect our work will shed light on the recent dearth in generic drug entry, and be of interest to academics and policy-makers alike.