Drug Price Competition and Patent Term Restoration Act - Impact of The New Bill

Impact of The New Bill

The Hatch-Waxman Act had a significant impact on the U.S. healthcare system in many respects. The primary being the robust generic drug industry that only began to flourish as a result of the policies enacted through the Act, and the patent term extensions or restorations that make up a very important part of the research based pharmaceutical industry. However, the act makes many assumptions that since being proved invalid or inappropriate have caused the act to come under scrutiny.

A major assumption within the Hatch-Waxman Act concerns the sameness of a generic drug to the pioneer. Currently the FDA’s method of determining similarity between drugs is through a comparison of the bioavailability, the amount of active ingredient in the blood over a period of time. The FDA holds that if the proposed generic comes within plus-or-minus twenty percent of the bioavailability of the pioneer drug, then the drugs are sufficiently similar. Similarly many medical professionals believe twenty percent is a fairly good margin in many cases, however, there are instances with drugs where there is a very narrow therapeutic band where plus-or-minus twenty percent may not be appropriate and in fact dangerous. The FDA has not altered this particular aspect of the regulation, despite the advances in modern pharmaceutics which would allow these standards to be tightened.

A second assumption was that establishing similarity using the above means was an effective substitute for the previous safety and efficacy requirements. This said that products associated with an approved ANDA would meet the same regulatory standards as the initial brand name version. It may seem like a good assumption, but that there is more leniency in the approval process for generics that could be symbolic of some bias within the FDA. However the Hatch-Waxman Act, made it so that ANDA applicants need not meet additional requirements, and that bioavailability is the only test FDA can require.

Another assumption was that drugs that were under FDA review during the time the Act was passed would be approved shortly after the Act’s enactment, and that two-year extensions were adequate. However this was not the case, in fact there was one famous case where the drug was not approved for eight years. In addition to making this it was also assumed that five years of extension and fourteen years of market exclusivity were sufficient to stimulate research and development within the research based drug industry.