Improvements in pharmaceutical research and development (R&D) depend on product innovation. But the number of new compounds approved annually by the U.S. Food and Drug Administration (FDA) has fallen from an average of 35 in 1996–2001 to 20 in 2002–07 (1). This decline stems from several factors (2); however, one particular U.S. regulation—the Paragraph IV patent challenge—is increasingly stifling new drug innovation and deserves our attention.

1 College of Management, Georgia Institute of Technology, Atlanta, GA 30308, USA.
2 Berkeley Center for Law and Technology, University of California, Berkeley Law School, Berkeley, CA 94720, USA.

* The authors contributed equally to this work.

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