Hatch Waxman Act
In 1984, Congress enacted Hatch Waxman with the intent, inter alia, to open up the market for products
that were previously patent protected. Between 1962 and 1984, approximately 150 drugs went off-patent. However, there were no generic drugs, and the offpatent drugs continued to be sold at high prices. This resulted in a de jure and de facto ability to exclude beyond the exclusivity provided by the patent term. Generics cost less than the branded drugs. The legislative intent of Hatch Waxman was to balance the competing policy interests of manufacturers of brand-name drugs and those of the generic trade group. The intention was to maintain inducements necessary for the brand companies to research and develop new therapies, and enable lower cost generic products to reach the market.
Hatch-Waxman allowed generic manufacturers to file an Abbreviated New Drug Application (ANDA). The ANDA requires the generic company to demonstrate that its product is "bioequivalent" to a referenced NDA’s brand name product. Proof of bio-equivalence for a drug is much easier to establish than the requirements for an NDA: i.e., the active (not inactive) ingredients must be proven "bioequivalent" by performing tests on twentyfour people exhibiting blood absorption rates within twenty percent of such rates exhibited for a "pioneer" brand named drug. Thus, ANDA is a far less expensive process than filing an NDA.
In addition, Hatch-Waxman was a legislative reaction to Roche Products, Inc. v. Bolar Pharmaceutical Co., 733 F.2d 858 (Fed. Cir.1984). In Roche, the Federal Circuit, on appeal from the United States District Court for the Eastern District of New York, (572 F. Supp 255 (E.D.N.Y. 1983)), held that:
"Bolar’s intended ‘experimental’ use is solely for business reasons… Bolar’s intended use of
, to derive FDA required test data, is thus an infringement of the ‘053 patent. Bolar may intend to perform experiments but unlicensed experiments conducted with a view to the adoption of the patented invention to the experimentor’s business was a violation of the rights of the patentee to exclude others from using his patented invention."
In response to Roche, Hatch-Waxman defined the use by a generic manufacturer with the intention to file an ANDA of clinical information already in an NDA as a non-infringing use. The ANDA must reference the NDA of the patented drug listed in the Approved Drug Products with Therapeutic Equivalence Evaluations, which is generally known as the "Orange Book." The Orange Book provides a list of the applicable patents to licensed drugs. In order to reference an NDA, the generic manufacturer must file one of four alternative certifications provided for under Hatch-Waxman:
"Paragraph I certification"- No patent in the NDA. This certification pertains to a drug listed in the "Orange Book" that does not have an accompanying patent as part of the NDA. The FDA shall approve any ANDA making this certification.
"Paragraph II Certification"- Term of patent(s) in NDA has expired. The certification covers an NDA that contains one or more expired patents. Again, FDA shall approve any ANDA making this certification.
"Paragraph III Certification"- Patent(s) in NDA remains extant. This certification indicates that the generic manufacturer seeks ANDA approval after the applicable patent(s) expires. The FDA can only approve an ANDA with a Paragraph III Certification after all patent(s) in the NDA have expired.
"Paragraph IV Certification"- Patent in NDA is alleged to be invalid or the generic equivalent product does not infringe. By using this certification a generic manufacturer can either challenge the validity of applicable patents in the NDA or certify that the generic equivalent product will not infringe any patent held by the pioneer drug company whose patent(s) is part of the NDA. The generic manufacturer contemporaneously with its Paragraph IV Certification must notify the innovator manufacturerthat it is filing a Paragraph IV certification with its ANDA.
Under Hatch-Waxman, as originally enacted, the first generic company that filed an ANDA obtained a period of 180 days during which it could exclude any other prospective generic market entrant from marketing the same generic product based upon the same pioneer drug. The 180-day exclusivity commenced upon a generic manufacturer’s first sale of the generic after receiving the FDA’s approval of its ANDA. However, under the original Hatch Waxman provision, if the generic company holding the exclusivity period never put the drug up for sale, all other generic manufacturers who have filed an ANDA for the same drug would be precluded from marketing another generic version of the same pioneer drug.
The 30-month stay ordered by the FDA upon the filing of a Paragraph IV Certification lawsuit could result in substantially delaying the marketing of a generic drug. The filing of the infringement suit triggered the "30 month stay" period. The 30-month stay results from the filing of an infringement suit by the original patentee within 45 days of the prospective generic manufacturer filing a Paragraph IV Certification. While Hatch-Waxman requires all NDA applicants to list all patents that are part of an NDA for a branded drug in the "Orange Book", it does not provide a mechanism for ascertaining the accuracy of the listing. There is no way for an ANDA filer to challenge an improper listing of a patent in the Orange Book. Some companies developed a strategy for unlimited consecutive 30-month stays, thereby keeping generics from ever receiving ANDA approval.