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Drug Price Competition and Patent Term Restoration Act

The Drug Price Competition and Patent Term Restoration Act, 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.

Background
This law was formed as a way for congress to balance interests of innovator pharmaceutical companies with generic pharmaceutical companies. Although the Federal Food, Drug, and Cosmetic Act passed in 1938, made it possible for generic companies to get regulatory approval for drugs by filing an Abbreviated New Drug Application (ANDA). In 1962 through the Kefauver–Harris Amendment Congress began requiring that manufacturers prove the safety and effectiveness of their product, through a series of tests, before introducing it to the market. This increased the cost of innovation for new drugs and decreased the value of drug patents for a new drug. Under these regulatory laws the company introducing a new drug must obtain the patent first and then have to prove this efficacy requirement which could take many years, so they were losing years that the product was patent protected, before it even hit the market. The new amendments reduced the potential profits gained from patents for the company introducing a new drug. 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. The Drug Price Competition and Patent Term Restoration Act was created in response to a court case called Roche Products, Inc. v. Bolar Pharmaceutical Co., 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 developing or performing tests on their generic versions required for FDA approval before the innovator companies patent has expired. In 1980 congress introduced the “paper NDA” that allowed generic drugs to be recognized as “generally safe” for public consumption through data that was already publicly available, but did not require them to go through the whole process of testing required for an NDA. ==Provisions==
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). The Act gives drug innovators some protection while facilitating and providing incentives for companies to file ANDAs. 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. 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. ==Consequences==
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. 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. Impact: legal complexities 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. 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. According to a 2025 paper in the Journal of Economic Perspectives, the net result of the Act is "a convoluted and expensive approach to balancing innovation and competition". ==References==
Source: Wikipedia ↗
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