Hatch-Waxman Act — US Laws, Litigations and Benefits
Hatch-Waxman is a comprehensive legal framework enacted by Congress in 1984 to streamline the process for generic pharmaceutical approvals and preserve incentives for innovation, including the creation of a procedure for generic pharmaceutical patent litigation.
The Hatch-Waxman Act (formally known as the Drug Price Competition and Patent Term Restoration Act) was enacted on September 24, 1984, and is credited with establishing the generic drug industry in the United States as we know it today. Hatch-Waxman replaced the Federal Food, Drug, and Cosmetic Act. The method for pharmaceutical manufacturers to file an Abbreviated New Drug Application (ANDA) for approval of a generic drug by the Food and Drug Administration is outlined in Section 505(j) of the Act, which is codified as 21 U.S.C. § 355(j) (FDA). The new statute later included titles 15, 21, 28, and 35 of the United States Code.
What is the Hatch-Waxman Act?
It is a comprehensive legal framework enacted by Congress in 1984 to streamline the process for generic pharmaceutical approvals and preserve incentives for innovation, including the creation of a procedure for generic pharmaceutical patent litigation. The Hatch-Waxman Act laid the legal and economic groundwork for the current generic pharmaceutical business.
In general, the Hatch-Waxman Act encourages generic drug companies to challenge innovators’ patents, and it grants generics a research exemption that allows them to develop generic drugs while the brand’s patents are still active — without risk of infringement. Another feature of the act was to encourage a race to market by providing up to 180 days of market exclusivity to the first generic approval that challenges a patent listed in the “Orange Book” (a database of patents covering approved pharmaceuticals).
Why was the Hatch Waxman Act passed?
The Hatch-Waxman Act was enacted in reaction to a court case involving the drug flurazepam called Roche Products, Inc. v. Bolar Pharmaceutical Co. Hence, this act is also called ‘Bolar Exemption.’
Bolar was attempting to sell a duplicate of flurazepam after Roche’s patents lapsed. Bolar hoped to get the permission before the patents expired. Therefore, he started working on medication development while Roche’s patents were still active. Bolar’s dilemma was that he was breaking the law by doing so. Roche filed a patent infringement lawsuit against them, which they won.
After Roche’s decision, Congress moved rapidly to pass the Hatch-Waxman Act. In terms of public policy, this effectively extended the patent’s term. That is, if another manufacturer is unable to work on a drug while the patent is still active, it will be able to do so only after the patent has expired — and because the approval process for a drug takes two to three years, this will effectively extend the patent life.
Enactment of the Hatch-Waxman Act
The ruling in Roche v. Bolar was generally credited with spurring Congress to pass the Drug Price Competition and Patent Term Restoration Act of 1984.
The Hatch-Waxman Act has complicated requirements that control how a potential generic producer can acquire marketing permission for a drug that has been patented by someone else. Although the Hatch-Waxman Act is a complicated piece of legislation, it does present a fundamental trade-off: in exchange for allowing generic drug manufacturers to obtain FDA marketing approval based on the brand-name firm’s NDA’s safety and efficacy data, the brand-name firm receives a period of regulatory exclusivity and a patent term extension. Following is a summary of the legislation’s key provisions.
The Exception for Statutory Experimental Use
The Hatch-Waxman Act established a statutory exception to some patent infringement claims. “It shall not be an infringement to make, use, offer to sell, or sell within the United States a patented invention… solely for uses reasonably related to the development and submission of information under a Federal Law which regulates the manufacture, use, or sale of drugs or veterinary biological products,” according to 35 U.S.C. 271(e)(1). The Roche v. Bolar ruling was effectively reversed by this provision. As a result, generic manufacturers may begin work on a generic version of an approved drug at any point during the patent lifetime, as long as the work advances FDA requirements.
Abbreviated New Drug Applications (ANDA)
Prior to the Hatch-Waxman Act, there were no specific provisions in the federal food and drug legislation that addressed generic copies of previously approved pharmaceuticals. As a result, a potential generic medication producer would have to file its own NDA in order to commercialise its product. Some generic producers may be able to rely on public scientific material to prove the drug’s safety and efficacy. Because such studies were not accessible for all medications, not all generic companies were able to file these so-called paper NDAs. Furthermore, the FDA has requested additional studies to address safety and efficacy concerns that have arisen following the drug’s first clearance.
As a result, even if their goods were chemically identical to previously approved drugs, some generic producers were compelled to prove independently that the drugs were safe and effective.
Given that the release of generic equivalents frequently results in price reductions, the interests of consumers were arguably not served by the observed expenses and delays.
The Hatch-Waxman Act established a new type of application for pharmaceutical market approval. The FDA may accept this submission, known as an “Abbreviated New Drug Application” (ANDA). An ANDA permits a generic medication manufacturer to depend on the original drug’s safety and efficacy data. If the active ingredient of the generic drug is bioequivalent to the approved drug, an ANDA may be submitted.
ANDAs and Section 505(b)(2) applications may allow a generic manufacturer to bypass the expense and delays of a full-fledged NDA submission. In many circumstances, these two expedited marketing clearance paths enable a generic producer to launch an FDA-approved bioequivalent medication as soon as any relevant patents expire.
Certifications for Orange Book-Listed Patents
The FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations list all approved drug products, including brand name and generic. Due to the colour of its cover, this periodical is widely referred to as the “Orange Book,” albeit today’s readers are more likely to access its contents via the Internet or the smartphone app “Orange Book Express.” The FDA deems approved medications therapeutically comparable, and the Orange Book uses a coded writing scheme to distinguish them. Drugs with an “A” code are considered therapeutically equal by the FDA, whereas those with a “B” code have a known bioequivalence concern. Physicians, pharmacists, and patients can use the Orange Book to determine when therapeutically equivalent generic medications can be replaced by brand-name drugs.
The Orange Book is also helpful in resolving patent issues. According to the Hatch-Waxman Act, each holder of an approved NDA must mention any patents that it believes would be infringed if a generic medication were to be released before the patents expired. Then, with respect to patents included in the Orange Book, would-be generic medication makers must go through a unique certification process. An ANDA applicant must express their opinions on each patent included in the Orange Book that is related to the medicine they want to market.
The generic applicant must file a so-called section viii statement or a patent certification. When the applicant is seeking clearance for a method-of-use that is not claimed in a patent listed in the Orange Book, section viii statements are suitable.
- The generic candidate, on the other hand, must present one of four certifications:
- The brand-name company has not filed any patent information for that drug;
- The patent has already expired;
- The patent’s expiration date; or
- The patent is invalid or will not be infringed by the manufacture, use, or sale of the drug for which the ANDA is filed.
Paragraphs I, II, III, and IV certificates are the four types of certifications. After completing all applicable regulatory and scientific standards, an ANDA certified under paragraphs I or II is approved immediately. Even if it meets all regulatory and scientific standards, a generic company that files an ANDA with a Paragraph III certification must wait for approval until the drug’s patent expires. A paragraph IV certification opens up a slew of new possibilities, which we’ll go through next.
Proceedings for Patent Infringement
The filing of an ANDA with a paragraph IV certification is considered a “somewhat artificial” act of patent infringement under 35 U.S.C. 271(e)(2). The ANDA applicant is required by the Hatch-Waxman Act to notify the patent owner of patents subject to a Paragraph IV certification. The patent owner may then file a patent infringement lawsuit in federal district court against the ANDA applicant. This infringement charge under 35 U.S.C. 271(e)(2) is of a technical character. The generic producer has done nothing more than ask the FDA for permission to market a medicine at this point. However, if the patentee’s infringement claim is successful, it may prevent the generic counterpart from being marketed until the patent expires.
The Hatch-Waxman Act significantly benefits the patentee if the patent owner files a patent infringement charge against the ANDA application within 45 days of receiving notification from the ANDA applicant. In certain cases, the FDA must postpone the ANDA’s approval until one of the following dates:
If the court deems the listed drug’s patent infringed, the date the listed drug’s patent expires; or, if the court modifies the date, the date that is 30 months from the date the owner of the listed drug’s patent got notice of filing a Paragraph IV certification.
As we can interpret from the graph the number of cases filed is declining at a steady rate. One of the most important factors responsible for these indications and patterns is that most companies and business giants now resolve their disputes by alternative dispute resolution methods instead of going for the traditional court and judicial setup.
The new cases filed have been on a gradual decline as stated earlier, but the number of Abbreviated new drug application (ANDAs) show dynamism in the initial years. When compared to other types of patent litigation, ANDA proceedings are less likely to result in a settlement. It’s worth noting that the vast majority of ANDA lawsuits are rejected for one reason or another, with just a small percentage ending in a verdict. According to the analysis of these judgement decisions, the claimant in an ANDA case has a better chance of winning than in other patent litigation cases. These can be some reasons for the decline of cases and applications.
Extension of Patent Term
The Hatch-Waxman Act also allows for patent term extensions. Patents can often last up to 20 years from the day the application is filed. According to the Hatch-Waxman Act, a pharmaceutical patent’s term can be extended for a portion of the time lost during clinical testing. If a patent owner has multiple patents covering the same drug, he or she must choose one to be eligible for a term extension.
The patent holder is entitled to have one-half of the time between the IND application and the submission of an NDA and the whole period spent by the FDA approving the NDA, restored to the patent term. The statute imposes some limitations on the length of the repair period. The total length of the restored patent cannot exceed five years. Furthermore, the restored patent’s remaining term following FDA acceptance of the NDA cannot exceed 14 years. The Hatch-Waxman Act additionally stipulates that the patentee must use reasonable diligence in seeking patent term restoration from the USPTO. Otherwise, the period of indifference would be deducted from the enlarged patent term.
Assume that four years transpired between the submission of the IND and the submission of the NDA and that another two years passed between the submission of the NDA and its approval. The extended period would be 42 + 2 = 4 years.
The Hatch-Waxman Act does not automatically extend the term of a patent. Within 60 days of receiving FDA marketing approval, the patent owner must apply with the USPTO requesting a term extension.
The Hatch-Waxman Act has provisions that give certain FDA-approved medications regulatory exclusivity. The FDA enforces these provisions by approving the marketing of a medicine to a single entity. To put it another way, the FDA protects an approved medicine against competing applications for the period of time specified by law. The existence of patent protection is not required for regulatory exclusivity to be granted. Indeed, two wholly separate corporations may control USPTO-granted patent rights on the one hand and FDA-issued regulatory exclusivity on the other.
The Hatch-Waxman Act also rewarded potential generic pharmaceutical producers who challenged a patent linked with an approved drug. The prize is a 180-day period of generic drug exclusivity for the first generic applicant who files a paragraph IV certification. Congress thought that allowing generic applicants to dispute a listed patent for an approved drug product would motivate them to do so.
Is the Hatch Waxman Act beneficial to the inventors?
There are various provisions in Hatch-Waxman that are beneficial to innovators. The FDA now grants innovator drug companies a term of regulatory exclusivity, usually five years for a new medicine, during which time a generic will not be approved. In addition, Hatch-Waxman allows for a five-year patent term extension for innovators. These moments of inclusion have been worth billions of dollars for a number of big medications.
Hatch- Waxman’s true legacy
Hatch-Waxman, the Biologics Price Competition and Innovation Act, and other regulations implemented over the last 40 years that have given pharmaceutical companies unprecedented monopoly strength have resulted in higher drug prices and less innovation. Longer monopolies yield higher dug prices, but they do not ensure increased investment in innovation, as I predicted in 1982. The claim that Hatch-Waxman was a consumer victory is debunked by the fact that low-cost generic drugs now fill 90% of all prescriptions in the United States, despite the fact that Americans still spend two to three times more per capita on prescription drugs than citizens of other developed countries.
Though the Hatch-Waxman Act has succeeded in establishing a clear path to market for generic medications, it has loopholes that allow both brand name and generic businesses to engage in actions targeted at increasing monopoly profits, thereby depriving consumers of a generic option. Reverse payments, citizen petitions, product hopping, and drug misclassification are just a few of these tactics. This note contends that pharmaceutical firms have engaged in some of these tactics and that the Hatch-Waxman Act should be changed to prevent them from continuing to defy the Act’s genuine goal.
Several latent side effects of the Hatch-Waxman Act have lately surfaced, given the fact that it was passed more than thirty years ago. These issues underscore unresolved conflicts between the goals of encouraging innovation, assuring pharmaceutical quality, and keeping healthcare prices stable. Hatch-concentration Waxman’s premarket medication approval left unsolved questions concerning risk regulation after generics hit the market. Furthermore, the Act’s drafters overlooked the complicated set of incentives established by the Act’s patent and exclusivity requirements. The unexpected implications of Hatch-Waxman serve as cautionary markers for the development of a biosimilars regulatory approval pathway. The FDA and politicians should be aware of these potential dangers and address the inescapable tradeoffs between safety, cost, and access to therapeutic biologics as soon as possible.