View source for Drug Price Competition and Patent Term Restoration Act

{{Short description|US law}}
{{Infobox U.S. legislation
| shorttitle= Drug Price Competition and Patent Term Restoration Act
| longtitle= An 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.
| acronym= Hatch-Waxman amendments
| enacted by= 98th
| effective date= September 24, 1984
| public law url= http://www.gpo.gov/fdsys/pkg/STATUTE-98/pdf/STATUTE-98-Pg1585.pdf
| cite public law= 98-417
| cite statutes at large= {{usstat|98|1585}}
| acts amended= [[Federal Food, Drug, and Cosmetic Act]]
| title amended= [[Title 21 of the United States Code|21 U.S.C.: Food and Drugs]]
| sections created=
| sections amended= {{unbulleted list|{{Usc-title-chap|21|9}} § 301|{{Usc-title-chap|21|9|V}} §§ 355 & 360cc}}
| leghisturl= http://thomas.loc.gov/cgi-bin/bdquery/z?d098:SN01538:@@@S
| introducedin= Senate
| introducedbill= {{USBill|98|S.|1538}}
| introducedby= [[Charles Mathias]] ([[Republican Party (United States)|R]]–[[Maryland|MD]])
| introduceddate= June 23, 1983
| committees= [[United States Senate Committee on the Judiciary|Judiciary]]
| passedbody1= Senate
| passeddate1= June 29, 1984
| passedvote1= voice vote agreed
| passedbody2= House
| passeddate2= September 6, 1984
| passedvote2= voice vote agreed, with amendments
| conferencedate= September 6, 1984
| passedbody3= Senate (agreeing to House amendments)
| passeddate3= September 12, 1984
| passedvote3= voice vote
| passedbody4= Senate
| passeddate4= September 19, 1984
| passedvote4= signed
| signedpresident= [[Ronald Reagan]]
| signeddate= September 24, 1984
| amendments=
}}
{{Regulation of therapeutic goods in the United States}}
{{United States patent law}}

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 Code|United States federal law]] that established the modern system of [[Generic drug|generic]] drug regulation in the United States. The Act's two main goals are to facilitate entry of [[generic drug]]s 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.<ref>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/</ref>

[[United States House of Representatives|Representative]] [[Henry Waxman]] of [[California]] and [[United States Senate|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 [[United States Court of Appeals for the Federal Circuit|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.<ref>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. §&nbsp;271(e)(1). 2014. Seton Hall Circuit Review. 10/2, 7. A. Robertson.  https://scholarship.shu.edu/circuit_review/vol10/iss2/7/</ref>

In response, the Hatch-Waxman Act was negotiated and enacted.<ref name=GenericDev>{{cite journal|last1=Boehm|first1=Garth|last2=Yao|first2=Lixin|last3=Han|first3=Liang|last4=Zheng|first4=Qiang|title=Development of the generic drug industry in the US after the Hatch-Waxman Act of 1984|journal=Acta Pharmaceutica Sinica B|date=September 2013|volume=3|issue=5|pages=297–311|doi=10.1016/j.apsb.2013.07.004|doi-access=free}}</ref>

==Provisions==
Hatch-Waxman amended the [[Federal Food, Drug, and Cosmetic Act]]. Section 505(j) of the Act, codified as 21 U.S.C. §&nbsp;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).<ref name=Mossing>{{cite journal | url = http://plg-group.com/wp-content/uploads/2014/03/Overview-of-the-Hatch-Waxman-act-its-impace-on-Drug-Develo.pdf | pmid = 11758572 | volume=54 | issue=2 | title=Overview of the Hatch-Waxman Act and its impact on the drug development process | year=1999 | journal=Food Drug Law J | pages=187–94 | last1 = Mossinghoff | first1 = GJ}}</ref>

The Act gives drug innovators some protection while facilitating and providing incentives for companies to file ANDAs.<ref name=GenericDev/>

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 [[test data exclusivity|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.<ref name=GenericDev/> This provides market exclusivity for the drug innovator outside of any patent rights.<ref name=CRS2004>{{cite web|title=RL32377: The Hatch-Waxman Act: Legislative Changes in the 108th Congress Affecting Pharmaceutical Patents|url=https://ipmall.law.unh.edu/sites/default/files/hosted_resources/crs/RL32377_040430.pdf|publisher=Congressional Research Service|date=April 30, 2004}}</ref> 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.<ref name=CRS2004/> 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 [[Approved Drug Products with Therapeutic Equivalence Evaluations|Orange Book]], and these are the patents the life of which is extended if there are regulatory delays.<ref name=CRS2004/>

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.<ref name=Mossing/> The Act also gives generic companies [[Safe harbor (law)|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]].<ref name=GenericDev/><ref name=CRS2004/>

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 [[Patent#Patent invalidity|invalid]]. These four alternatives are called the Paragraph I, II, III, and IV certifications (named after Section 505(j)(2)(A)(vii)(IV)).<ref name=Mossing/> 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.<ref name=CRS2004/> 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.<ref name=CRS2004/><ref name=GenericDev/>

==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.<ref>{{cite journal|last1=Lewis|first1=Ralph A.|title=The Emerging Effects of the Drug Price Competition and Patent Term Restoration Act of 1984|journal=Journal of Contemporary Health Law & Policy|date=1992|volume=8|issue=1|pages=361–378|pmid=10118987 |url=http://scholarship.law.edu/cgi/viewcontent.cgi?article=1539&context=jchlp}}</ref>  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.<ref name=GenericDev/><ref>{{cite news|last1=Strickland|first1=Carol|title=Bolar: A Drug Company Under Siege|url=https://www.nytimes.com/1989/10/15/nyregion/bolar-a-drug-company-under-siege.html?pagewanted=all|work=The New York Times|date=15 October 1989}}</ref><ref name=NYTexpose1989>{{Cite news|url = https://www.nytimes.com/1989/09/10/business/exposing-the-fda.html?pagewanted=all|title = Exposing the F.D.A.|last = Freudenheim|first = Milt|date = 10 September 1989|work = New York Times}}</ref><ref>{{cite news|last1=Andrews|first1=Edmund L.|title=F.D.A. Inquiry on Generic Drugs Focuses on Changes in Ingredients|url=https://www.nytimes.com/1989/07/31/us/fda-inquiry-on-generic-drugs-focuses-on-changes-in-ingredients.html|work=The New York Times|date=31 July 1989}}</ref>

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.<ref name=GenericDev/>

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.<ref>{{cite journal|last1=Wang|first1=Zhenghui|title=Reanalyzing Reverse-Payment Settlements: A Solution to the Patentee 's Dilemma|journal=Cornell Law Review|date=July 2014|volume=99|issue=5|pages=1227–1258|pmid=25112001 |url=http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=4638&context=clr}}</ref><ref>{{cite news|last1=Saul|first1=Stephanie|title=Release of generic Lipitor is delayed|url=https://www.nytimes.com/2008/06/18/business/worldbusiness/18iht-19drug.13813132.html|work=The New York Times|date=18 June 2008}}</ref>

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.<ref>{{cite news|last1=Pollack|first1=Andrew|title=Biotechnology Companies Try to Ward Off Generic Drugs|url=https://www.nytimes.com/2000/12/28/business/biotechnology-companies-try-to-ward-off-generic-drugs-183148.html|work=The New York Times|date=28 December 2000}}</ref><ref>{{cite news|last1=Pollack|first1=Andrew|title=Biologic Drugs May Get Less Protection|url=http://prescriptions.blogs.nytimes.com/2010/01/14/biologic-drugs-may-get-less-protection/}}</ref><ref>{{cite journal|last1=Epstein|first1=MS|last2=Ehrenpreis|first2=ED|last3=Kulkarni|first3=PM|last4=FDA-Related Matters Committee of the American College of|first4=Gastroenterology|title=Biosimilars: the need, the challenge, the future: the FDA perspective.|journal=The American Journal of Gastroenterology|date=December 2014|volume=109|issue=12|pages=1856–9|pmid=24957160|url=http://gi.org/wp-content/uploads/2015/01/FDA_Biosimilars_December_2014.pdf|doi=10.1038/ajg.2014.151|s2cid=19274464 |access-date=2016-09-25|archive-url=https://web.archive.org/web/20161006151227/http://gi.org/wp-content/uploads/2015/01/FDA_Biosimilars_December_2014.pdf|archive-date=2016-10-06|url-status=dead}}</ref>

==References==
{{Reflist}}

==External links==
* [https://www.fda.gov/Drugs/informationondrugs/ucm079436.htm FDA Glossary of Term in Relation to Drugs]

{{Authority control}}

[[Category:1984 in American law]]
[[Category:United States federal patent legislation]]
[[Category:United States federal health legislation]]
[[Category:United States biotechnology law]]
[[Category:Drug pricing]]