Assignment: Drug Companies and Patents: The Games they Play
Module discusses patents and how they create a barrier to entry. A U.S. Supreme Court case was brought by the US Federal Trade Commission to halt the "pay-for-delay" tactics sometimes used by pharmaceutical companies to contractually extend the effective patent period of pharmaceutical drugs.
The pay-for-delay tactics are more fully described in Federal Trade Commission, Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions. Staff Study, January 2010.
A recent Supreme Court outcome is discussed in Edward Wyatt, Supreme Court Lets Regulators Sue Over Generic Drug Deals, New York Times, June 17, 2013.
After reading these articles:
1. Explain how a patent creates a kind of monopoly and what benefits a patent conveys to the owner.
2. Explain what happens in a market when patent protection for a technology runs out.
3. Explain the effects of pay-for-delay actions on producers and consumers.
4. Discuss whether pay-for-delay tactics should no longer be allowed, or should continue. Be sure to support your conclusion using economic arguments.