The 1984 Drug Price Competition and Patent Term Restoration Act, commonly referred to as the Hatch-Waxman Act (named after Congressman Henry Waxman and Senator Orin Hatch) gave rise to a strong generic drug industry. The Hatch-Waxman Act provided a rapid way of generic drug approval process by permitting generic drug manufacturers to file an Abbreviated New Drug Application (ANDA). The Abbreviated New Drug Application (ANDA) allowed approval of generic drug products by a shorter and less expensive route than for innovator drugs. Before Hatch-Waxman, only 35% of innovator drugs faced generic competition after expiry of patents; now almost all innovator drugs face such competition. In spite of the legal framework created by the Hatch-Waxman Act, it continues to raise debate. There are a lot of discussions among various pharmaceutical research companies, generic manufacturers and consumers on how to bring a compromise between the diverse conflicting interests.
According to the law, a generic applicant is required to give one of the following four certifications for each patent listed in the Orange Book for the innovator drug:
(I) Paragraph I: that there are no patents listed in the Orange Book for the drug; (II) Paragraph II: that the relevant patents have expired;
(III) Paragraph III: that the generic manufacturer will not seek approval of the ANDA until after expiration of the relevant patent; or
(IV) Paragraph IV: that such a patent is invalid or will not be infringed by the manufacture, use, or sale of the new generic drug for which the ANDA is submitted.
Under the current Patent Act, the term for exclusivity is 20 years from the date of filing of patent. Hatch Waxman Act provides innovator drug manufacturers with increased market exclusivity periods to reimburse for the time lost while the drugs are under regulatory approval by the FDA. Dr Reddys was the first Indian company to get the 180-day exclusivity for marketing Fluoxetine (Eli Lillys Prozac) 40 mg capsule in August 2001. Besides the 180-day exclusivity, one particular vulnerable condition under the Hatch-Waxman Act is the 30-month stay. The stay was planned to allow time to resolve all patent disputes and infringement issues prior to the generic drug entering the market. Under the Act, the innovator drug manufacturer can list additional patents for the same brand-name drug in the Orange Book even after a generic company has already filed an ANDA. As a result, the generic applicant is required to submit a new paragraph IV certification for the later listed patents. The consequence of the later patent listings is that if the brand-name company sues for this ANDA re-certification within 45 days, then another 30-month stay is generated for the same drug. The Federal Trade Commission (FTC) study has identified that some big pharmaceutical companies have deliberately misused this loophole. The FTC study found that during 1992 to 2000, 104 NDAs were the question of paragraph IV certification patent challenges. An example for this is GlaxoSmithKlines attempt to protect the antidepressant medication Paxil (paroxetine hydrochloride) from generic competition. Apotex, a generic manufacturer, filed a Paragraph IV ANDA for a generic version of Paxil in March 1998. GSK sued for infringement, triggering an initial 30-month stay, which expired in November 2000. However, GSK afterward listed additional patents in the Orange Book and filed more infringement suits against Apotex. In all, GSK obtained five lengths of stays (total 65 months).
Another example is Bristol Mayer Squibb (BMS) which had patented buspirone as an anxiolytic agent. This patent expired on July 21, 2000 and Mylan Pharmaceuticals filed a Para III certification and obtained a tentative approval to market the generic version of the drug not before July 22, 2000. However, BMS obtained another patent just 12 hours before the expiry of its first patent claiming the active metabolite of buspirone as responsible for the anxiolytic effect. The patent was listed in the Orange Book and Mylan was informed that the ANDA was incomplete and needed justification that its generic version of buspirone would not infringe upon the new patent. In response to this, Mylan filed a Para IV certification under the Hatch Waxman Act which led to the patent infringement lawsuit against Mylan immediately halting the final market approval of the generic drug. This is also known as Evergreening or Warehousing of patents.
In many cases, additional patents are deliberately being added based on modifications and irrelevant to safety and efficacy such as change in a medications shape or color. This forces the generic to wait for the patents to expire or file a Para IV certification which brings along the risks of litigation. The main drawback is that FDA simply lists the patents and has no right to evaluate them. Once a patent is listed, it cannot be unlisted, unless it's done voluntarily by the listing company.
Another misuse of the law being currently practiced is that the first generic manufacturer and the innovator enter into an agreement to have a control when to introduce the generic. This would not trigger the 180 days generic exclusivity period offered to the first generic and the FDA is bound not to approve another generic until the 180 day generic exclusivity period expires. This will delay the competition for an indefinite time period by keeping other generic competitors in an indeterminate state. This will further extend the brand name monopoly and allows the brand name and the generic manufacturer to share the financial awards. In FTC's view, some of these agreements violate antitrust laws and in those cases the agency takes legal action against the parties involved.
For example, in April 2001, FTC sued Schering-Plough, Upsher-Smith Laboratories, and American Home Products (AHP) for entering into anticompetitive agreements related to K-Dur 20 which is Schering-Ploughs prescription potassium chloride supplement whose patent protection was to expire in September 2006. In August 1995, Upsher-Smith filed a Paragraph IV ANDA for a generic version and in December 1995, AHP also filed a Paragraph IV ANDA. Schering-Plough rapidly sued both, but it settled with Upsher-Smith in 1997 and with AHP in 1998. Upsher-Smith agreed to delay launching its generic product until September 2001 in exchange for $60 million. AHP agreed to delay its generic version until January 2004 in exchange for $15 million. FTC sued, stating that the agreements are unreasonable restraints of trade and that the companies have conspired to monopolize the market for potassium chloride supplements.
One more such example is that of Hytrin (terazosin hydrochloride) which is a drug manufactured by Abbott Laboratories for the treatment of high blood pressure and enlarged prostate. The Hytrin litigation involves agreements between Abbott and Geneva Pharmaceuticals and between Abbott and Zenith Goldline Pharmaceuticals. The agreement between Abbott and Geneva was a short-term settlement agreement and as part of this agreement, Geneva and Abbott allegedly agreed to continue the patent infringement litigation on Geneva’s generic tablet. Geneva purportedly agreed to accept $4.5 million per month from Abbott to refrain from marketing any generic Hytrin product until another drug maker sold a generic version of Hytrin in the United States or Geneva received a final judgment that its proposed generic tablet did not infringe Abbott’s patents.
Another agreement was between Watson and Halsey Drug Co., in which Watson acquired Halseys ANDA for generic Monodox (doxycycline monohydrate) which is an antibiotic manufactured by Watson Pharmaceuticals. Nolvadex (tamoxifen citrate) is a drug sold by AstraZeneca that is used to treat breast cancer. This litigation involves an agreement between Imperial Chemical Industries (an affiliate of AstraZeneca) and Barr Laboratories to settle patent infringement litigation related to tamoxifen.
One more strategy is the at risk product launch by generic companies which mainly involves launching the product prior to a district court decision and order. In Sanofi- Synthelabo and Apotex case, 3 months prior to the FDA’s approving the ANDA, Apotex notified Sanofi that it would launch the generic product at risk. The generic was launched and Sanofi then filed for a preliminary injunction. Three weeks later, an injunction was granted with Apotex being at risk that it would lose some of the 180-day exclusivity period and the market share associated with it. The court however denied Sanofis request to recall the product that had already been distributed prior to the injunction, resulting in Apotexs domination of the US generic market.
One more example is the at risk launch of amoxicillin clavulanate potassium by Geneva Pharmaceuticals. The company began shipping the drug, which is a generic version of the GSK antibiotic Augmentin. Geneva Pharmaceuticals and two other generic companies challenged three U.S. patents protecting Augmentin until 2017. A federal district court ruled that those patents were invalid, leaving GSK to appeal that decision. In future, more generic companies might follow Geneva Pharmaceuticals' example.
Citizen petitions are another topic of concern. Brand-name companies sometimes use these to delay the approval of generic drugs. Most petitions request that FDA requires additional bioequivalence studies before approving an ANDA. However, FTC found that such petitions were usually quickly resolved by FDA and they do not delay the launch of generic drugs based on Paragraph IV ANDAs.
FDA finalized new rules in June 2003 in order to tighten the loopholes in the Hatch-Waxman Act. The new FDA regulations make two major changes in the Hatch-Waxman Act. First of all, the regulation clearly clarifies the types of patents that are appropriate to be listed in the Orange Book. Such patents include the patents that claim the drug product (formulation and composition), product by process patents, and those that claim a method of use. Process patents, patents claiming packaging, intermediates and metabolites are not covered under this section and information on these patents may not be submitted to the FDA. Second, the new FDA regulation limits pharmaceutical companies to only one thirty month stay per ANDA.
The Greater Access to Affordable Pharmaceuticals Act (GAAP) limits the number of 30-month stays to one, depending on the recommendation of the FTC.
The Medicare Prescription Drug Improvement and Modernization Act, which also implements important changes to the Hatch-Waxman Act was signed into law on December 8, 2003.
Safe Harbor rule allows generics to perform bioequivalence and other testing related to regulatory approval without the risk of patent infringement.
On July 2013, A Massachusetts federal judge ruled that Teva Pharmaceuticals Inc. and Amphastar Pharmaceuticals Inc. cannot be held liable for patent infringement for using a patented quality-control method in the production of their generic versions of Lovenox. Momenta had filed suit against Teva and Amphastar in December 2010 and September 2011, respectively, accusing both companies of infringing its patented quality-control methods in manufacturing their generic versions of Lovenox. Teva and Amphastar argued that their activities are protected under the safe harbor provision. The provision applies to Teva and Amphastar as they used Momenta's patented test method to ensure their generic versions of Lovenox met U.S. Food and Drug Administration requirements.
Additionally, a new provision of the Hatch-Waxman Act amendments requires an ANDA applicant to give notice of its application to the NDA holder and the patent holder within 20 days of receiving notice from the FDA that its application has been filed, whereas previously there was no such law as to when the notice could be given.
In addition, an ANDA applicant can claim to seek an order requiring the NDA holder to correct or delete patents listed in the Orange Book, on the basis that the patent does not claim the approved drug or an approved method of using the drug. This can be claimed only when the ANDA applicant has been sued for infringement.
Another important amendment clarifies that the 180-day exclusivity period does not begin until the date of first commercial marketing. However, under the Forfeiture clause, a First Applicant may forfeit its 180-day exclusivity if it fails to market its product within 75 days after it receives FDA approval or 30 months after ANDA submission whichever is earlier; or 75 days after a non-appealed favorable district court or favorable Federal Circuit court decision has been rendered; or 75 days after a favorable settlement has been entered; or 75 days after the patent expires or is withdrawn. In the past, there was no such condition in the law. So, the new law plans to be in favor of generic drug manufacturers and to overcome some of the loopholes of the Hatch-Waxman Act.
Current legal reforms are to a reasonable extent addressing the problems but further attempts to fix the provisions of the Act have to be taken into account. The generic manufacturers still find many hindrances to market their products due to the anti-competitive practices of the innovator drug companies. In this process, the consumers are ultimately at a loss as they have to pay heavy prices for the drugs.