Hatch-Waxman Act

The Drug Price Competition and Patent Term Restoration Act of 1984 (commonly called Hatch-Waxman after its sponsors, Senator Orrin Hatch and Representative Henry Waxman) is the foundational statute governing pharmaceutical patent protection and generic drug market entry in the United States: THE PROBLEM HATCH-WAXMAN SOLVED: before 1984, there was no clear legal pathway for generic drugs to enter the market; the FDA required generic drugs to repeat full safety and efficacy clinical trials, even though the brand drug had already proven these for an identical chemical entity; this created enormous barriers to generic entry even after patents expired, artificially extending brand monopolies; simultaneously, the patent term for pharmaceutical products was effectively shorter than 20 years because a drug patent is often filed long before FDA approval is received; the pre-approval period (typically 7-12 years) consumed patent term without any commercial benefit; THE DUAL BARGAIN: Hatch-Waxman struck a bargain between generic manufacturers and brand drug companies: FOR GENERIC MANUFACTURERS: created the Abbreviated New Drug Application (ANDA) pathway, allowing generics to rely on the brand drug's safety and efficacy data; generics only need to show BIOEQUIVALENCE (same active ingredient; same rate and extent of absorption); dramatically reduced the cost and time for generic drug development; FOR BRAND DRUG COMPANIES: created patent term extension (PTE) to restore years of patent term lost during FDA review; created the Orange Book system to protect listed patents from generic entry without patent dispute resolution; created data exclusivity (preventing FDA from using brand drug safety/efficacy data to approve a generic for a fixed period, even if no patents are listed); THE HISTORIC IMPACT: before Hatch-Waxman, generics represented about 19% of prescriptions filled; today, generics represent about 90% of prescriptions filled in the US; Hatch-Waxman dramatically reduced pharmaceutical costs; at the same time, patent term extensions and data exclusivity protected innovator revenue; THE 1984 POLITICAL COMPROMISE: Hatch-Waxman was a landmark bipartisan compromise; the interests of generic manufacturers (who wanted cheap market entry), brand companies (who wanted exclusivity protection), and consumers (who wanted affordable drugs) were all addressed.

The ANDA pathway created by Hatch-Waxman allows generic drugs to be approved without repeating full safety and efficacy trials: THE ANDA REGULATORY PATHWAY: an ANDA is filed under 21 U.S.C. § 505(j) (section 505(j) of the Federal Food, Drug, and Cosmetic Act); WHAT AN ANDA MUST SHOW: same active ingredient(s) as the reference listed drug (RLD); same dosage form (tablet, capsule, injection, etc.); same route of administration; same strength; same labeling as the RLD (with certain permitted differences); BIOEQUIVALENCE: the ANDA must show bioequivalence — that the generic drug has the same rate and extent of absorption (pharmacokinetic profile) as the RLD; bioequivalence is typically demonstrated by: in vivo studies in healthy volunteers; measuring AUC (area under the plasma concentration-time curve) and Cmax (peak plasma concentration); the generic must fall within the 80-125% confidence interval compared to the reference drug; in some cases, in vitro dissolution tests suffice (for BCS Class I highly soluble/permeable drugs); REFERENCE LISTED DRUG (RLD): the FDA-approved brand drug that the ANDA references; the ANDA approval process relies entirely on the safety and efficacy record of the RLD; this is the 'abbreviated' nature of the process; PATENT CERTIFICATIONS — THE PATENT COMPONENT: each ANDA must certify with respect to each patent listed in the Orange Book for the RLD; Para I: no patent has been filed for the listed drug; Para II: the patent has expired; Para III: the generic applicant does not seek to market the drug before the patent expires; Para IV: the listed patent is invalid, unenforceable, or will not be infringed; FDA REVIEW TIMELINE: the FDA has a statutory 10-month review timeline for standard ANDAs; 6-month priority review for ANDAs with a first Para IV certification; the FDA can approve an ANDA at any time, but must wait for any stay periods to expire; FIRST APPROVAL STATUS: the ANDA with the highest priority (typically the first filer with the same drug/strength/dosage) receives tentative approval first; when the 30-month stay expires or the patent issue resolves, the FDA can grant full approval; CITIZEN PETITIONS: brand companies often file citizen petitions with the FDA asking the FDA to delay generic approval; the FDA is required to respond to citizen petitions before approving the generic ANDA; the FDA has implemented policies to prevent citizen petitions from being used solely as delay tactics.

Patent term extension (PTE) under Hatch-Waxman restores some of the patent term that a pharmaceutical patent loses during the FDA regulatory review process: THE PATENT TERM PROBLEM: a pharmaceutical patent is often filed many years before the FDA approves the drug; clinical trials take 7-12 years; by the time a drug is approved and can be marketed, much of the 20-year patent term has already been consumed; a drug with 20 years of patent term from filing but taking 10 years to get FDA approval has only 10 years of commercial exclusivity under the unmodified patent term; PTE STATUTORY BASIS: 35 U.S.C. § 156; WHAT PTE EXTENDS: PTE restores patent term lost during the regulatory review period; PTE CAN APPLY TO: human drug products; medical devices; animal drug products; food additives; color additives; biological products; HOW PTE IS CALCULATED: regulatory review period = time from IND (Investigational New Drug application) to NDA approval; one-half of the clinical testing period (Phase I-III trials) + all of the NDA review period; maximum PTE = 5 years; the remaining patent term after PTE CANNOT EXCEED 14 years from the date of FDA product approval; example: if the patent has 3 years remaining at FDA approval and the regulatory review period was 12 years, the PTE would be 5 years (the maximum); the post-approval patent term with PTE = 3 + 5 = 8 years (under the 14-year cap); APPLICATION REQUIREMENTS: the patent holder must apply for PTE within 60 days of the date of approval of the drug; only ONE patent can receive PTE per drug product; the application is filed with the USPTO; the FDA certifies the regulatory review period; WHO CAN RECEIVE PTE: the applicant must be the patent holder; the patent must claim the approved drug or a method of use of the approved drug; the patent must not have already received an extension under § 156; PTE AND GENERIC ANDA: the PTE extends the patent term as to the approved drug only — the PTE patent is listed in the Orange Book and triggers ANDA certifications; SEPARATE FROM DATA EXCLUSIVITY: PTE is separate from the FDA's data exclusivity periods; both can apply simultaneously (the longer one determines the effective exclusivity period).

Data exclusivity is a regulatory protection separate from and complementary to patent protection in pharmaceutical law: WHAT DATA EXCLUSIVITY IS: data exclusivity prevents the FDA from USING the brand drug company's safety and efficacy data to approve a generic drug for a fixed period; even if the drug has no patents or all patents have expired, data exclusivity prevents generic approval by blocking the FDA from relying on the NDA data; HOW DATA EXCLUSIVITY DIFFERS FROM PATENTS: PATENT: creates a legal right to EXCLUDE others from making, using, or selling the patented invention; can be challenged for invalidity; ANDA filer can submit Para IV certification; DATA EXCLUSIVITY: prevents the FDA from acting on a generic application — the ANDA simply cannot be approved (not even filed in some cases) during the exclusivity period; not challengeable on validity grounds; no certification mechanism; DATA EXCLUSIVITY PERIODS UNDER HATCH-WAXMAN: (1) FIVE-YEAR NEW CHEMICAL ENTITY (NCE) EXCLUSIVITY: drugs approved under 505(b) of the FDCA with a new chemical entity (active moiety not previously approved by FDA) receive 5-year data exclusivity; during the 5-year period, no ANDA can be submitted; EXCEPTION: an ANDA with a Paragraph IV certification can be submitted after 4 years (the 5-year exclusivity triggers a 30-month stay measured from year 4 of the exclusivity, potentially extending protection); (2) THREE-YEAR CLINICAL STUDY EXCLUSIVITY: drugs approved for new clinical studies essential to approval (new indication; new dosage form; new route; new combination) receive 3-year exclusivity for that specific approved use; less protective than 5-year NCE; (3) SEVEN-YEAR ORPHAN DRUG EXCLUSIVITY: drugs designated as orphan drugs (for rare diseases affecting fewer than 200,000 US patients) receive 7-year marketing exclusivity from FDA approval; (4) SIX-MONTH PEDIATRIC EXCLUSIVITY EXTENSION: if the brand company conducts pediatric studies at the FDA's request, it receives an additional 6 months of exclusivity added to any existing patents and exclusivity periods; this 6-month addition applies to ALL listed Orange Book patents for the drug; THE STACKING EFFECT: brand companies can stack multiple exclusivities; NCE exclusivity (5 years) + pediatric extension (6 months) + PTE on the API patent + listed formulation patents; effectively extending exclusivity well beyond 5 years for a commercially successful drug; BPCIA BIOLOGICS ANALOGY: the Biologics Price Competition and Innovation Act (BPCIA, 2010) created a 12-year data exclusivity period for reference biological products (the biosimilar exclusivity is much longer than the small molecule Hatch-Waxman period).