Will the Hatch-Waxman Lock be Sprung in 2012?

By Kurt R. Karst –      

For a few weeks now we’ve been hearing rumors that once the ball gets rolling in Congress with legislation to reauthorize the various user fee statutes (e.g., the  Prescription Drug User Fee Act and the Medical Device User Fee and Modernization Act) and other statutory provisions (e.g., the Best Pharmaceuticals for Children Act and the Pediatric Research Equity Act), along with legislation to create new law (e.g., the Generic Drug User Fee Act), there might be a push to open up and amend the Hatch-Waxman Amendments.  Although the 2003 Medicare Modernization Act made important changes to Hatch-Waxman, and in particular with respect to ANDAs and 180-day exclusivity, the brand-side of the equation concerning 5-year New Chemical Entity (“NCE”) exclusivity, 3-year new clinical investigation exclusivity, and Patent Term Extensions (“PTEs”) has remained largely untouched since 1984.  A new article out this week in Health Affairs might very well be an opening salvo in what could be a battle royal to more broadly open up Hatch-Waxman. 

The article, authored by Duke University professor emeritus of economics Henry G. Grabowski and four other co-authors (Margaret Kyle, Richard Mortimer, Genia Long, and Noam Kirson), is titled “Evolving Brand-Name And Generic Drug Competition May Warrant A Revision Of The Hatch-Waxman Act.”  Professor Grabowski’s research was supported in part by the Pharmaceutical Research and Manufacturers of America.  Professor Grabowski is a familiar face in the drug and biotechnology industries.  He published several papers on biosimilars and exclusivity leading up to the enactment of the Biologics Price Competition and Innovation Act of 2009, which amended the Public Health Service Act to, among other things, create an approval pathway for biosimilar and interchangeable versions of reference products and establish a 12-year exclusivity period for reference products.

The new study analyzes pharmaceutical data from 1995-2008.  According to the authors, the average period of “market exclusivity” (i.e., the time between launch of a brand-name drug and the launch of the first generic) has dipped from 1995-1996 to 2007-2008: “Between 1995 and 2008, the average market exclusivity periods for all new drugs were between 12.4 and 13.7 years.  The average length of exclusivity was 12.4 years in the most recent period in our study (2007-08), compared to 13.5 years in the initial period (1995-96).”  Meanwhile, Paragraph IV patent certification challenges have been on the rise in recent years and are occurring sooner after Reference Listed Drug product launch: “Only 9 percent of new drugs experiencing first generic entry in 1995 also experienced a Paragraph IV challenge at any point, but that share increased to 64 percent for drugs experiencing first generic entry in 2008. . . . For new drugs experiencing first generic entry in 1995 and also experiencing a Paragraph IV challenge, the average time between launch and the first challenge was 18.7 years.  That time fell to 8.2 years in 2008,” according to the authors’ analysis.  Exhibits from the study showing these data are below (used with permission).

So what does this mean in terms of amending Hatch-Waxman?  Well, the study abstract sums it all up:

The evolution of pharmaceutical competition since Congress passed the Hatch-Waxman Act in 1984 raises questions about whether the act’s intended balance of incentives for cost savings and continued innovation has been achieved. Generic drug usage and challenges to brand-name drugs’ patents have increased markedly, resulting in greatly increased cost savings but also potentially reduced incentives for innovators.  Congress should review whether Hatch-Waxman is achieving its intended purpose of balancing incentives for generics and innovation.  It also should consider whether the law should be amended so that some of its provisions are brought more in line with recently enacted legislation governing approval of so-called biosimilars, or the corollary for biologics of generic competition for small-molecule drugs.  

2012 is shaping up to be an exciting year, indeed!

ADDITIONAL READING:

• Generic Pharmaceutical Association Press Release