But you don't know option 2 would have been the outcome. Rather than both companies duking it out in court for a few years, the patient benefits when the generic entry happens quicker than if the patent held.
I guess the concern is that paying a company not to challenge the patent(and start the 6 month clock if the patent is lost) is anti-competitive and collusive.
I can see how that could be the perception. However, if the generic company is certain they could successfully challenge the patent, they'd never enter into such an agreement because there is a far higher payoff to move forward with the patent challenge.
It's the gray area cases that end up in pay for delay deals. The ones that neither party is sure they will win. So they cut their loses and negotiate middle ground where each of them get a piece of the pie.
That depends entirely on how much they are paid to delay. A successful pay to delay settlement can be more profitable for the generic than entering the market. That is to say, it is more profitable to share revenue from a monopoly than race to the bottom.
A classic example is GSK and TEVA with Lamictal. GSK priced the original drug at $465/dose with $1.5 billion in sales. Teva's Generic was $14/dose. TEVA happily agreed to be paid by GSK because if TEVA had won in court, entered the market, and captured 100%, they would only bring in 50 million a year
Do you have another source? The one you shared is light on details.
I'm not sure why TEVA would price at $14/dose at launch - most exclusive generics price at ~95% of the branded therapy, then drop once other generic entries happen. If the TEVA generic were to capture 50% of the market over 6 months, that's $600M+ in revenue, not $50M.
