This thesis studies the impact of entry agreements in the pharmaceutical industry on competition in the market for generic drugs. Entry agreements between an originator drug producer and one or more potential generic entrants modify the expected entry date of generics and result in anticipated or delayed generic entry. They have become increasingly common and are of concern to competition agencies. In a pay for delay deal for example, an originator and a generic producer settle an ongoing patent litigation by agreeing on a delayed entry of the generic in return of some financial compensation. This deprives consumers of a timely availability of generics and therefore of lower drug prices.
This thesis focuses on a less known but as common type of entry agreement: early entry agreements. Instead of delaying generic entry, these agreements anticipate generic entry. We show that contrary to common belief, the early availability of a generic through an entry agreement is not always procompetitive and can raise antitrust concerns.
In the first chapter of the thesis, we generate a theoretical model designed to study the incentives of firms to enter such an agreement. We find that the originator company may use early entry as a means to circumvent the uncertainty of generic entry at patent expiry. By anticipating some generic entry, the originator firm can eliminate this uncertainty and deter more entry.
The second chapter looks for empirical evidence in support of this theory. We use drug and regulatory data from 11 European countries to study the impact of entry agreements on the level of competition in the generic drug market. Our results suggest that early entry is associated with more generic entry, though we are not able to fully isolate the effect of entry agreements.
The third and last chapter assesses the existing case law concerning entry agreements. The two previous chapters show how entry agreements may be used by the originator in an attempt to deter generic entry and are not solely motivated by a temporary shift in the timeline of generic entry. I therefore advocate for a more comprehensive assessment of entry agreements by competition authorities and courts and the use of the notion of abuse of dominance.
This thesis studies three topics on the fields of trade and development economics.
The first chapter analyzes land markets amid civil conflicts. The empirical results show two economic consequences of violence on land markets during Colombia’s conflict. On the one hand, violence reduces the possibility for owners of selling their land since potential buyers’ valuation of land is more affected by violence than owners’ valuation, lowering the volume of land sales. On the other hand, this need not be true if illegal groups have interests in obtaining land titles. I find a positive effect of paramilitary violence on the volume of land sales in regions suited for palm oil production. Consistent with anecdotal evidence, this suggests a systematic use of violence to obtain rural land for further palm oil production, or violent land grab.
The second chapter identifies the effect of international trade in agricultural commodities on the production of cocaine in Colombia. We find evidence suggesting an increase in coffee prices deterring coca cultivation, especially in the proximity of seaports. This suggests a two-fold effect of international trade on the production of crop-based illegal drugs. While an increase in coffee prices encourages the farmers’ transition from illegal to legal crops, this transition is relatively easier if farmers have more access to international markets. Accordingly, we suggest that public policies aiming to ease market access need to be considered in the fight against the production of illegal drugs.
Lastly, the third chapter identifies the effect of trade policy on market power. Using customs information for 12 developing countries, this chapter identifies market power by observing how exporting firms price discriminate across markets in reaction to variations in exchange rates. The results show that while tariffs reduce market power, non-tariff measures alter market structure and reinforce the market power of non-exiting firms. Therefore, non-tariff measures need to be considered both as a trade policy issues and a competition issue, and not mere surrogates of tariffs.