OBJECTIVES: The FDA Modernization Act of 1997 created a six-month of market exclusivity extension in exchange for pharmaceutical companies' pediatric studies for the drugs of potential benefits to the pediatric population. This study examines how the voluntary incentive structure of the exclusivity has impacted on the pharmaceutical industry's efforts to obtain the exclusivity and how the rule has been used to delay generic entries for the exclusivity period. METHODS: By using 63 drugs whose patent expired between 1999 and 2003, obtained from the FDA, several descriptive analyses were performed. The percentage of drugs with pediatric exclusivity was described by several important factors, especially focusing on main use of the drugs. Next, all the drugs were divided into two groups – drugs with exclusivity vs. no exclusivity - and then generic competition degree was presented by each group for two years following the initial patent expiration of each drug. RESULTS: A bigger firm was good at filing the exclusivity that needs additional clinical study (p<0.05). The competition level in each drug's therapeutic class was positively associated with having the exclusivity. The drugs with exclusivities were more likely to treat chronic conditions that include many blockbuster drugs. The firms have applied for pediatric extension over the drugs with larger market size (p<0.01). For pediatric exclusivity group, there were no generic competitors until six months and then there was a dramatic increase of generic entries after the exclusivity expired whereas no-pediatric group didn't show notable increasing trend during the observation period. CONCLUSION: The market size of a drug was the most important factor to acquire the pediatric exclusivity that has been a tool for an originator firm to delay generic competition. It implies the incentive structure based on willingness of industry has not always achieved the primary goal of “safety of children”.