Drug Price Competition and Patent Term Restoration Act - Relevant Pharmaceutical Industry Background

Relevant Pharmaceutical Industry Background

There is not much legislative history on the Hatch-Waxman Act. However, because the bill was hard fought, there is much written about it after the fact. Below is a brief history of the condition surrounding the pharmaceutical industry and the prevalence of generic drugs that tie into goals and significance of this act.

Prior to 1962, drugs were approved for safety only. It wasn’t until there was found to be a Thalidomide problem in infants that an efficacy requirement was added. This reconciliation came in the form of the 1962 drug amendments to the Federal Food, Drug, and Cosmetic Act, which added a proof-of-efficacy requirement to new drug approval. Thus requiring that new drugs be proven safe and effective prior to the Food and Drug Administration’s (FDA’s) approval. It is also important to note that for drugs approved prior to 1962, generic versions could be approved with a “paper” new drug application (NDA). The NDA was based solely on published scientific or medical literature. Therefore, a generic manufacturer could get its drug approved by presenting academic articles about the chemical demonstrating that it was safe. Despite this fact, it was found that in the years after 1962 there were 150 drugs that were off-patent, but for which there were no generics because generic companies simply would not spend the time and money doing the clinical trials to get to market, and that there were only fifteen “paper NDAs,” for post-1962 generics.