Introduction to the United States HATCH-WAXMAN Act

Hatch-Waxman bill, also known as the Drug Price Competition and Patent Period Compensation Act, was jointly proposed by U.S. Congressmen Senator Hatch and Rep.Waxman in 1984, so it is often named after both of them. The act has been hailed as a catalyst for the generics, or generic, industry in the United States today, and has had a profound impact on the pharmaceutical industry in the United States and around the world.

1. produce background

The pharmaceutical industry in the United States can be divided into two categories, namely, the original research drug industry (Brand Pharma) and the generic drug industry (Generic Pharma). The former is usually large, its brand is deeply rooted in the hearts of the people, and the annual sales of enterprises are billions or even tens of billions of dollars. The so-called generic drugs generally refer to drugs that are consistent with the original research drug in terms of efficacy after the patent of the original research drug expires, and are listed after approval in the "chemical name" or "generic name" of the original research drug.

As we all know, the development of original research drugs has the characteristics of large investment, high risk, difficulty and long cycle. From the discovery of a new lead compound that may become a drug and the application for a patent, it takes a long time to carry out research work to finally bring a new drug to the market. Often, after a drug is marketed, its compound patents will expire soon. If there is no market monopoly for a certain period of time, the original research and development enterprises will not be able to obtain sufficient return on drug research and development, resulting in the huge investment in research and development costs can not be compensated by the market, this situation will greatly dampen the enthusiasm of the original research and development enterprises to carry out new drug research.

On the other hand, because the original research drugs have obtained market monopoly through patent protection, their prices are too high, resulting in excessive medical expenses. Speeding up the listing of generic drugs as soon as possible will play an extremely important role in controlling drug prices and reducing medical expenses. The contradiction between the two aspects was reflected in the Roche v. Bolar infringement case in 1983.

In 1983, Bolar Company imported the raw material compound of the drug from Canada in order to be able to market Roche Company's sleeping pill flurazepam hydrochloride imitation product as soon as possible. Before the patent of the product expired, Bolar Company carried out bioequivalence tests and other studies required to apply to FDA for the marketing license of the imitation drug. On July 28, 1983, Roche Inc. v. Bolar Pharmaceuticals Inc. for patent infringement. After the second instance, the Federal Circuit Court of Appeals held that the bioequivalence test for drugs had a commercial purpose and was not an experimental study that was not regarded as infringement under the patent law, and finally ruled that Bolar had infringed. However, the court also pointed out that the experimental research on banning generic drugs before the termination of the patent protection period is actually a disguised extension of the patent protection period, and this contradiction should be resolved through legislation. In this way, Bolar's loss prompted the revision of the U.S. drug patent protection system. In order to balance the contradiction between the short patent time of the original research company and the promotion of generic drugs to be listed as soon as possible, the U.S. Congress passed the Drug Price Competition and Patent Period Compensation Act, also known as the Hatch-Waxman Act, in 1984.

Main contents of 2.

The core content of Hatch-Waxman bill is well reflected in the name of the bill, that is, to encourage price competition for drugs by speeding up the listing of generic drugs; and to make up for the loss of effective patent time due to drug development by extending the drug patent period. Its main contents include the following aspects.

1. Extend the patent term of the original research drug manufacturer to make up for the consumption of the patent time limit caused by the approval of new drugs;

2, through the patent infringement exemption provisions, generic drug research and development manufacturers if it is for the purpose of listing applications, in the original research drug patent years, as long as in line with FDA regulations, can carry out generic drug research and development, and will not be considered infringement; (I. e. the famous "Bolar exception" clause)

3. Establish a mechanism to challenge the legality of the original research drug patent, and establish an incentive policy for the behavior of challenging the legality, enforceability, or infringement of the original research drug patent;

Before the passage of the Hatch-Waxman Act of 1984, the approval process for generic drugs was no different from that of the original drug, and it was required to conduct the same safety and effectiveness tests as the original drug manufacturer in order to obtain FDA approval. In addition, patent protection prohibits generic drug manufacturers from using the original drug's data and starting generic drug applications before the patent expires. Therefore, even after the patent of the original research drug expires, it still takes a long time for the generic drug manufacturer to complete the approval process of the generic drug. As a result, the lag in the time to market of generic drugs has actually extended the patent period of the original drug, which greatly limits the commercial motivation to develop generic drugs.

Hatch-Waxman bill greatly simplifies the approval process for generic drugs. Generic drug applicants only need to provide FDA with data to prove that the generic drug is pharmaceutically equivalent to the reference drug, and provide data to prove the bioequivalence between the generic drug and the reference drug, which is called abbreviated new drug application (Abbreviated New Drug Application), usually referred to as ANDA. The Hatch-Waxman Act assumes that bioequivalence is a good proxy for drug safety and efficacy, and while these assumptions have been validated today after hundreds of generic drugs were approved and used effectively in patients, they were a great advance in 1984, when the theory of bioequivalence was not yet perfected.

The contribution of the Hatch-Waxman bill is also to standardize the process of generic drug companies' challenge to the original research drug patent. The original research drug industry generally has set up a lot of patent protection for its original research drugs. Some of these patents are the crystallization of long-term high-quality research and development work, while others are closer to word games played to prevent generic drugs from entering the market, and there are many loopholes in their patentability. Hatch-Waxman bill provides a mechanism for the generic drug industry to challenge the latter category of patents. It stipulates that a generic drug application must simultaneously make one of the following four declarations about the patent status of the original drug.

Statement I: The drug has no patent.

Statement II: The drug has a patent, but the patent has lapsed.

Statement III: FDA is not required to approve the generic drug before the relevant patent expires.

Statement IV: The patent related to the generic drug is invalid or the generic drug is not infringing.

Generic drug applications based on statements I or II will be approved after all regulatory and scientific requirements have been met. Generic drug applications based on the third declaration will not be approved until the patent expires. The applicant for a generic drug application based on the fourth statement, the challenge patent statement, must first notify the patentee. The patentee may file a patent infringement action within 45 days of receipt of the notice. Once the patent owner has filed a lawsuit, the FDA cannot approve the drug for 30 months unless the court determines that the original drug patent is invalid or does not infringe.

In order to encourage generic drug companies to challenge the legality of the original research drug patent, the Hatch-Waxman Act stipulates that the first enterprise to submit a simplified new drug application to the FDA on the basis of the IV statement can be granted 180 days of market exclusivity after approval. During periods of market exclusivity, the company was able to recover costs and establish its position before the market was flooded with other generic drugs. This provision has a huge incentive effect on the generic drug industry, because in general, due to price competition, whether to obtain a 180-day market monopoly period can make a five to ten times difference in revenue.

However, if the generic drug company is approved by the FDA before the legal battle begins, the original research drug company will have no recourse, and even if the court determines that the patent is valid, it may not be able to obtain compensation from the underfunded generic drug company. As a result, the Hatch-Waxman Act establishes the aforementioned 30-month delay period for final FDA approval of an ANDA.

Hatch-Waxman bill has been highly praised. It balances the interests of the public and the interests of drug manufacturers, as well as the interests of original drug manufacturers and generic drug manufacturers, that is, it encourages the research and development of new drugs, and also encourages The listing of generic drugs as soon as possible. In the 10 to 15 years after its implementation, this system has played a huge role. Statistics show that the proportion of generic drug sales in total drug sales has risen from 19% before the implementation of the bill to 55%, and consumers save at least $8 billion to $10 billion a year on average.

3. Development and Revision

However, by the end of the 1990 s, pharmaceutical companies gradually adopted some shrewd methods, taking advantage of some loopholes in the Hatch-Waxman Act to try their best to fight the challenge of generic drugs. One strategy is to apply for new patents of little value in order to trigger multiple 30-month deferrals, plunging generic drug companies into years of legal wrangling. Another way is to sign an agreement with the first generic drug company to propose ANDA, that is, the original research drug company pays millions of dollars to the generic drug company that has obtained the exclusive right of 180 days, and the generic drug company promises not to list its competing generic drugs, thus preventing the generic drugs of other companies from entering the market.

In response to these circumstances, the Health Care Modernization Act of 2003 (Medicare Modernization Act) amended Hatch-Waxman Act to prevent the further development of anti-competitive practices. According to the new legislation, the original research drug company can only apply for a 30-month delay period for each product. If the court finds that the original research drug company's patent is invalid before the end of the 30-month delay period, generic drugs will be allowed to go on the market.

For the "180-day exclusive period", it is also clarified that it allows multiple companies that raise ANDA on the same day to share the exclusive period benefit. In addition, if a company fails to market its generic drug within 75 days of court approval, the company loses its rightful exclusive rights. These measures effectively fill the loopholes in the original Hatch-Waxman Act.

4. future and thinking

Although the revised Hatch-Waxman method has been strengthened, the original research and development drug company quickly found a new way to deal with it. The most lethal strategy for generic drug companies is the "authorized imitation" that has recently emerged ". According to this new strategy, once the original drug company believes that a generic drug company is about to launch a generic drug that will pose a threat to it, they will authorize another generic drug company, sometimes even through their own generic drug subsidiary. Sales of authorized generic drugs, thereby eliminating the 180-day market exclusivity enjoyed by the first generic drug company to challenge the drug's patent, instead of competing for market share, which often leads to price drops, the market profitability of generic drug companies will be greatly reduced, or even insufficient to make up for their early development capital investment. This is a great pressure on those generic drug companies that have developed and sold similar generic drugs, and may even make them gain nothing, thus affecting the development and even survival of the company. The existence of authorized imitation undoubtedly makes generic drug enterprises and original drug research enterprises stand on the situation of unfair competition again.

It is not difficult to see that the U.S. pharmaceutical industry has maintained a pivotal world leading position in scientific research, development and marketing for nearly half a century. It is closely related to the regulation and balance of various conflicts of interest in the pharmaceutical market by a series of institutional arrangements and policies and regulations of the U.S. government. A few days ago, health care reform in the United States is imperative, and the increase in medical expenses caused by high drug prices is undoubtedly a crucial factor. In the face of the growing generic drug market, we will wait and see how the law will make a posture between the powerful original research drug companies and the rising generic drug companies.