Patents, Data Exclusivity and the Development of New Drugs

Firms in the pharmaceutical industry typically rely on a period of market exclusivity derived from patent protection and data exclusivity to recoup their investments in R&D. The invalidation of patent rights during drug development renders data exclusivity the sole source of protection and shifts the period of market exclusivity at the drug project level. Our findings highlight that shorter durations of market exclusivity reduce the likelihood of successful drug commercialization.