The Hatch-Waxman Act

My last post described the necessity of patents in the pharmaceutical industry. In short, patents grant exclusivity to brand companies for 20 years on new drugs, which helps them make up for the great debt incurred in development.

However, drug exclusivity must be handled with great care. Generic companies are not allowed to manufacture or sell the drug until patent expiration, even though they could offer it to the public for cheaper. Patients have many expenses, it is thus necessary to encourage generic drug development.

The Hatch-Waxman Act (also known as the Drug Price Competition and Patent Term Restoration Act) does just that. It provides the following incentives, as well as the following rewards for brand company innovation:Generic companies are motivated to be the first successful ANDA filer, to get a 180-day exclusivity period (where they are the only generic version available). The ANDA also requires less testing than the NDA; since the brand drug already proved safety and efficacy, the ANDA tests only need to prove bio-equivalence.

On a side note, you will hear a lot about the “Orange Book” in pharmaceutical patent law. This is an FDA publication formally called “Approved Drug Products with Therapeutic Equivalence Evaluations” (it has an orange cover). This book lists the patented brand drug, and then lists the corresponding bio-equivalent generic drugs.

The Hatch-Waxman Act allows four different ways to file an ANDA:

• Paragraph I certification: claims that no relevant patent is listed in the Orange Book.
• Paragraph II certification: claims that the listed patent has expired.
• Paragraph III certification: claims that the patent, plus any other listed exclusivity, will expire before the requested approval.
• Paragraph IV certification: claims that the listed patent is invalid or will not be infringed by the commercialization of the generic drug.

If a paragraph IV certification is filed, the brand company has 45 days to sue the generic. Green, Griffith & Borg-Breen, LLP represents their brand or generic client in the corresponding patent litigation.

In this situation, the brand company (the Plaintiff) argues that the generic company (the Defendant) has infringed their patent. The Defendant usually responds by arguing that the Plaintiff’s patent is invalid (because it was obvious, had been made before, or wasn’t fully disclosed in the patent). The Plaintiff then responds to these accusations and may even mention some secondary considerations (other inventors tried and failed to make it, there was a long-felt need by the public for this invention, or the invention made considerable profits) to further their point. So, P argues that D infringes, but D says that P’s patent is invalid, to which P defends their patent. Then the Court decides if the patent is valid or not. If it is invalid, then the Defendants win. If it is valid, which it usually is, the trial continues. Now, if the patent is valid, the Defendants argue that their generic drug does not infringe the patent. The Plaintiffs argue that it does infringe. The Court hears both sides and then decides.

In summary, the Hatch-Waxman Act balances the incentive for drug innovation and generic development alike. This is important because of already high medical costs. If a generic drug company files an ANDA with a paragraph IV certification, patent litigation is likely to follow, with arguments about validity and infringement.

All the best!     -Shekinah