Drug Price Competition and Patent Term Restoration Act

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Drug Price Competition and Patent Term Restoration Act
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Long titleAn Act to amend the Federal Food, Drug, and Cosmetic Act to revise the procedures for new drug applications, to amend title 35, United States Code, to authorize the extension of the patents for certain regulated products, and for other purposes.
Acronyms (colloquial)Hatch-Waxman amendments
Enacted bythe 98th United States Congress
EffectiveSeptember 24, 1984
Citations
Public law 98-417
Statutes at Large 98  Stat.   1585
Codification
Acts amended Federal Food, Drug, and Cosmetic Act
Titles amended 21 U.S.C.: Food and Drugs
U.S.C. sections amended
Legislative history
  • Introduced in the Senate as S. 1538 by Charles Mathias (RMD) on June 23, 1983
  • Committee consideration by Judiciary
  • Passed the Senate on June 29, 1984 (voice vote agreed)
  • Passed the House on September 6, 1984 (voice vote agreed, with amendments)
  • Reported by the joint conference committee on September 6, 1984; agreed to by the Senate (agreeing to House amendments) on September 12, 1984 (voice vote) and by the Senate on September 19, 1984 (signed)
  • Signed into law by President Ronald Reagan on September 24, 1984

The Drug Price Competition and Patent Term Restoration Act (Public Law 98-417), informally known as the Hatch-Waxman Act, is a 1984 United States federal law that established the modern system of generic drug regulation in the United States. The Act's two main goals are to facilitate entry of generic drugs into the market and to compensate the original drug developers for regulatory delays by the Food and Drug Administration. It is generally believed that the Act accomplished both goals: encouraging development of new medications and accelerating market entry of generics. [1]

Contents

Representative Henry Waxman of California and Senator Orrin Hatch of Utah sponsored the act.

Background

Although the Federal Food, Drug, and Cosmetic Act made it possible for generic companies to get regulatory approval for drugs by filing an Abbreviated New Drug Application (ANDA), in the early 1980s it became clear that very few generics were coming to market. Congress studied the issue and realized that under patent and regulatory law it was easy for innovator companies to make it difficult for generic companies to successfully file ANDAs, and that the regulatory pathway to get ANDAs approved was lengthy, expensive, and uncertain. Part of the problem was the CAFC's decision in Roche Products, Inc. v. Bolar Pharmaceutical Co., which interpreted existing U.S. law as prohibiting generic competitors from performing tests required for FDA approval using patented methods, until the patents expired. [2]

In response, the Hatch-Waxman Act was negotiated and enacted. [3]

Provisions

Hatch-Waxman amended the Federal Food, Drug, and Cosmetic Act. Section 505(j) of the Act, codified as 21 U.S.C. § 355(j), outlines the process for pharmaceutical manufacturers to file an Abbreviated New Drug Application (ANDA) for approval of a generic drug by the Food and Drug Administration (FDA). [4]

The Act gives drug innovators some protection while facilitating and providing incentives for companies to file ANDAs. [3]

Drug innovators were given protections in two ways. First, a new kind of market exclusivity was introduced, by means of a new five-year period of data exclusivity awarded when the FDA approves marketing of a drug that is a new chemical entity; during that period the FDA cannot approve a generic version of the drug. [3] This provides market exclusivity for the drug innovator outside of any patent rights. [5] Second, the Act allows the life of patents covering a drug to be extended by a portion of the time the drug is under regulatory review by the FDA, ensuring that regulatory review will not unduly consume patent life. [5] The Act also requires the drug innovator to give the FDA the numbers of patents it believes cover its drug; the FDA does not evaluate whether the patents cover the drug, but publicly lists them in the Orange Book, and these are the patents the life of which is extended if there are regulatory delays. [5]

The Act facilitates the filing of ANDAs by generic companies by preventing the FDA from asking a generic company to provide anything other than information on how it is going to manufacture the drug, quality assurance, and a study showing that the drug acts the same in a human as the innovator drug; this is called bioequivalence. This part of the Act is one of few pieces of legislation that restricts the powers and reach of a federal agency. [4] The Act also gives generic companies safe harbor from patent infringement lawsuits during the time when the generic company is preparing its ANDA; during that time the generic company needs to learn how to manufacture the drug, manufacture a test batch, and run bioequivalence studies, all activities for which it could be sued for infringement. This protection is called the research exemption. [3] [5]

When a company is ready to file its ANDA, the Act requires it to declare how its activities when it begins to market the drug will relate to patents listed in the Orange Book; there are four options, or "certifications": it can state that there never were patents listed, that listed patents have expired, that it will not market the drug until all the patents listed in the Orange Book have expired, or that it believes the patents in the Orange Book are not relevant or are invalid. These four alternatives are called the Paragraph I, II, III, and IV certifications (named after Section 505(j)(2)(A)(vii)(IV)). [4] The Act incentivizes companies to file paragraph IV certifications by rewarding the first company to file an ANDA with such a certification with 180 days of administrative exclusivity if their ANDA is approved; during that period the FDA cannot approve another generic. [5] Because the Act also makes clear that filing an ANDA with a paragraph IV certification is an act of patent infringement, the law actually promotes litigation between private parties; the innovator is prompted to commence patent enforcement litigation against the generic infringer, and the generic company is incentivized to file a countersuit to have the patents listed in the Orange Book declared invalid. [5] [3]

Consequences

Passage of the law prompted a gold rush into the generic industry and a crush of applications, which the FDA was not prepared to handle. [6] A series of scandals soon arose that shook public confidence in generic drugs; there were several instances in which companies obtained bioequivalence data fraudulently, by using the branded drug in their tests instead of their own product, and a congressional investigation found corruption at the FDA, where employees were accepting bribes to approve some generic companies' applications and delaying or denying others. [3] [7] [8] [9]

With time the law became successful in promoting the introduction of generics; in 1983 only 35% of top-selling branded drugs with expired patents had generic competition, and only 13% of prescriptions were for generics but in 2012, 84% of prescriptions in the US were filled with generic drugs. [3]

There have been issues with litigation incentivized by the Act. Once the parties are in litigation, they can choose to fight the litigation to the end, or they may choose to settle the litigation. Some of these settlements have been found to be invalid reverse payment patent settlement agreements and have been struck down in court. [10] [11]

The FDA has been slow to adopt regulations for the introduction of generic versions of biopharmaceutical drugs (known as "biosimilars") because proving biosimilarity and quality control for biopharmaceuticals is much more complicated than for small molecule drugs. Innovator companies have emphasized those complications while generic companies, insurance companies, and consumers have advocated for the FDA to finalize their process. [12] [13] [14]

Related Research Articles

<span class="mw-page-title-main">Food and Drug Administration</span> United States federal agency

The United States Food and Drug Administration is a federal agency of the Department of Health and Human Services. The FDA is responsible for protecting and promoting public health through the control and supervision of food safety, tobacco products, caffeine products, dietary supplements, prescription and over-the-counter pharmaceutical drugs (medications), vaccines, biopharmaceuticals, blood transfusions, medical devices, electromagnetic radiation emitting devices (ERED), cosmetics, animal foods & feed and veterinary products.

<span class="mw-page-title-main">Generic drug</span> Pharmaceutical equivalent to a brand-name product

A generic drug is a pharmaceutical drug that contains the same chemical substance as a drug that was originally protected by chemical patents. Generic drugs are allowed for sale after the patents on the original drugs expire. Because the active chemical substance is the same, the medical profile of generics is equivalent in performance. A generic drug has the same active pharmaceutical ingredient (API) as the original, but it may differ in some characteristics such as the manufacturing process, formulation, excipients, color, taste, and packaging.

Under United States patent law, the term of patent, provided that maintenance fees are paid on time, is 20 years from the filing date of the earliest U.S. or international (PCT) application to which priority is claimed.

<span class="mw-page-title-main">Research exemption</span>

In patent law, the research exemption or safe harbor exemption is an exemption to the rights conferred by patents, which is especially relevant to drugs. According to this exemption, despite the patent rights, performing research and tests for preparing regulatory approval, for instance by the FDA in the United States, does not constitute infringement for a limited term before the end of patent term. This exemption allows generic manufacturers to prepare generic drugs in advance of the patent expiration.

Test data exclusivity refers to protection of clinical trial data required to be submitted to a regulatory agency to prove safety and efficacy of a new drug, and prevention of generic drug manufacturers from relying on this data in their own applications. It provides a form of market exclusivity outside that provided by patent rights.

<span class="mw-page-title-main">Apotex</span> Canadian pharmaceutical company

Apotex Inc. is a Canadian pharmaceutical corporation. Founded in 1974 by Barry Sherman, the company is the largest producer of generic drugs in Canada, with annual sales exceeding CA$2.5 billion. By 2023, Apotex employed close to 8,000 people as Canada's largest drug manufacturer, with over 300 products selling in over 115 countries. Apotex manufactures and distributes generic medications for a range of diseases and health conditions that include cancer, diabetes, high cholesterol, glaucoma, infections and blood pressure.

<span class="mw-page-title-main">Abbreviated New Drug Application</span> Application for US generic drug approval

An Abbreviated New Drug Application (ANDA) is an application for a U.S. generic drug approval for an existing licensed medication or approved drug.

Roche Products, Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858, was a court case in the United States related to the manufacturing of generic pharmaceuticals.

A biosimilar is a biologic medical product that is almost an identical copy of an original product that is manufactured by a different company. Biosimilars are officially approved versions of original "innovator" products and can be manufactured when the original product's patent expires. Reference to the innovator product is an integral component of the approval.

Evergreening is any of various legal, business, and technological strategies by which producers extend the lifetime of their patents that are about to expire in order to retain revenues from them. Often the practice includes taking out new patents, or by buying out or frustrating competitors, for longer periods of time than would normally be permissible under the law. Robin Feldman, a law professor at UC Law SF and a leading researcher in intellectual property and patents, defines evergreening as "artificially extending the life of a patent or other exclusivity by obtaining additional protections to extend the monopoly period."

Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book, is a publication produced by the United States Food and Drug Administration (FDA), as required by the Drug Price and Competition Act.

<span class="mw-page-title-main">Sarfaraz K. Niazi</span>

Sarfaraz Khan Niazi he migrated to Karachi, Pakistan in 1962, and to the United States in 1970. He is an expert in biopharmaceutical manufacturing and has worked in academia, industry, and as an entrepreneur. He has written books in pharmaceutical sciences, biotechnology, consumer healthcare, and poetry. He has translated ghazals of the Urdu poet Ghalib.

This article is about the history of the United States Food and Drug Administration.

Reverse payment patent settlements, also known as "pay-for-delay" agreements, are a type of agreement that has been used to settle pharmaceutical patent infringement litigation, in which the company that has brought the suit agrees to pay the company it sued. That is, the patent holder pays the alleged infringer to stop its alleged infringing activity for some period of time and to stop disputing the validity of the patent. These agreements are distinct from most patent settlements, which usually involve the alleged infringer paying the patent holder.

<span class="mw-page-title-main">Food and Drug Administration Safety and Innovation Act</span> Piece of American regulatory legislation

The Food and Drug Administration Safety and Innovation Act of 2012 (FDASIA) is a piece of American regulatory legislation signed into law on July 9, 2012. It gives the United States Food and Drug Administration (FDA) the authority to collect user fees from the medical industry to fund reviews of innovator drugs, medical devices, generic drugs and biosimilar biologics. It also creates the breakthrough therapy designation program and extends the priority review voucher program to make eligible rare pediatric diseases. The measure was passed by 96 senators voting for and one voting against.

FTC v. Actavis, Inc., 570 U.S. 136 (2013), was a United States Supreme Court decision in which the Court held that the FTC could make an antitrust challenge under the rule of reason against a so-called pay-for-delay agreement, also referred to as a reverse payment patent settlement. Such an agreement is one in which a drug patentee pays another company, ordinarily a generic drug manufacturer, to stay out of the market, thus avoiding generic competition and a challenge to patent validity. The FTC sought to establish a rule that such agreements were presumptively illegal, but the Court ruled only that the FTC could bring a case under more general antitrust principles permitting a defendant to assert justifications for its actions under the rule of reason.

Mutual Pharmaceutical Co. v. Bartlett, 570 U.S. 472 (2013), is a decision by the Supreme Court of the United States holding that generic drug manufactures cannot be held liable under state law for not adequately labeling medication when federal law prohibits them from changing the label from the original brand name drug.

The Association for Accessible Medicines (AAM), Washington, D.C., is a trade association representing the manufacturers and distributors of generic prescription drugs, manufacturers and distributors of bulk pharmaceutical chemicals, and suppliers of other goods and services to the U.S. generic drug industry. As the primary lobby for makers of generic drugs, AAM's stated mission is to advocate for public policies that facilitate timely access to lower-cost, FDA-approved generic and biosimilar medicines by consumers and patients. Over the 10-year period 2008 through 2018, the use of generic drugs generated $2 trillion in U.S. healthcare savings.

The US carries out 46% of global research and development (R&D) in the life sciences, making it the world leader in medical research.

An FDA citizen petition is a process provided by the United States Food and Drug Administration (FDA) for individuals and community organizations to make requests to the FDA for changes to health policy. It is described in Title 21 of the Code of Federal Regulations.

References

  1. The Future of Patent Protection for Post-FDA-Approved Generics: A Look at the Federal Circuit’s Incongruous Interpretations of the “Safe Harbor” Provision in 35 U.S.C. § 271(e)(1). 2014. Seton Hall Circuit Review. 10/2, 7. A. Robertson. https://scholarship.shu.edu/circuit_review/vol10/iss2/7/
  2. The Future of Patent Protection for Post-FDA-Approved Generics: A Look at the Federal Circuit’s Incongruous Interpretations of the “Safe Harbor” Provision in 35 U.S.C. § 271(e)(1). 2014. Seton Hall Circuit Review. 10/2, 7. A. Robertson. https://scholarship.shu.edu/circuit_review/vol10/iss2/7/
  3. 1 2 3 4 5 6 7 Boehm, Garth; Yao, Lixin; Han, Liang; Zheng, Qiang (September 2013). "Development of the generic drug industry in the US after the Hatch-Waxman Act of 1984". Acta Pharmaceutica Sinica B. 3 (5): 297–311. doi: 10.1016/j.apsb.2013.07.004 .
  4. 1 2 3 Mossinghoff, GJ (1999). "Overview of the Hatch-Waxman Act and its impact on the drug development process" (PDF). Food Drug Law J. 54 (2): 187–94. PMID   11758572.
  5. 1 2 3 4 5 6 "RL32377: The Hatch-Waxman Act: Legislative Changes in the 108th Congress Affecting Pharmaceutical Patents" (PDF). Congressional Research Service. April 30, 2004.
  6. Lewis, Ralph A. (1992). "The Emerging Effects of the Drug Price Competition and Patent Term Restoration Act of 1984". Journal of Contemporary Health Law & Policy. 8 (1): 361–378. PMID   10118987.
  7. Strickland, Carol (15 October 1989). "Bolar: A Drug Company Under Siege". The New York Times.
  8. Freudenheim, Milt (10 September 1989). "Exposing the F.D.A." New York Times.
  9. Andrews, Edmund L. (31 July 1989). "F.D.A. Inquiry on Generic Drugs Focuses on Changes in Ingredients". The New York Times.
  10. Wang, Zhenghui (July 2014). "Reanalyzing Reverse-Payment Settlements: A Solution to the Patentee 's Dilemma". Cornell Law Review. 99 (5): 1227–1258. PMID   25112001.
  11. Saul, Stephanie (18 June 2008). "Release of generic Lipitor is delayed". The New York Times.
  12. Pollack, Andrew (28 December 2000). "Biotechnology Companies Try to Ward Off Generic Drugs". The New York Times.
  13. Pollack, Andrew. "Biologic Drugs May Get Less Protection".
  14. Epstein, MS; Ehrenpreis, ED; Kulkarni, PM; FDA-Related Matters Committee of the American College of, Gastroenterology (December 2014). "Biosimilars: the need, the challenge, the future: the FDA perspective" (PDF). The American Journal of Gastroenterology. 109 (12): 1856–9. doi:10.1038/ajg.2014.151. PMID   24957160. S2CID   19274464. Archived from the original (PDF) on 2016-10-06. Retrieved 2016-09-25.