Sunday, 1 September 2013

Hatch-Waxman Act And Exclusivities For Patent Holders and ANDA Applicants

Hatch-Waxman Act
and Exclusivities for Patent Holders and ANDA Applicants
 (Drug Price Competition and Patent Term Restoration Act- 1984)
(Hatch – Waxman Act: Balancing incentives to innovators & ensuring the availability of low cost generics)


Drug Price Competition and Patent Term Restoration Act of 1984 is usually referred as Hatch-Waxman Act (HWA). The purpose of the Act was “to make available more low cost generic drugs by establishing a generic drug approval process for pioneer drugs first approved after 1962.”The HWA intended to balance between two potentially competing policy interests 

1.  Ensure the additional protection to the inventors (innovator) of new drugs, both by lengthening patent terms and by providing guaranteed periods of data exclusivity, which enables them to recoup their investments in the development of valuable new drugs.   

2.Ensure the availability of low cost generics to US market either by waiting until patent expiration or by challenging weak patents. 

Historical Background

Prior to the year 1962, USFDA used to give marketing approval for a new drug on the basis of safety profile alone. In 1962, Kefauver-Harris Amendments made a compulsory requirement of “proof-of-efficacy” for obtaining marketing approval for a new drug. As a result, all drug products approved before 1962 by the USFDA were reviewed again for efficacy through the Drug Efficacy Study Implementation (DESI) program. DESI program established safety and efficacy requirements for approval of new drugs. To prove safety and efficacy of the drug, new drugs manufacturers were required to conduct clinical trials on a limited number of human individuals and submit the results of the same to the USFDA along with their New Drug Application (NDA).

Up to 1984 companies seeking to market generic version of an innovator drug (branded drug) faced so many problems. 

1.          Generic companies were also required to carry out their own safety and efficacy studies i.e. clinical trials, much like the innovator drugs companies. Due to the high costs involved in conducting clinical trials, only a few generic companies showed interest in launching products in the US. This indirectly maintained the monopoly of the patent holders of the innovator drugs as no other competitors were there in the market.

2.        Another constrain, that complicated generic drugs entry in the market was the timing of USFDA approval. A generic drugs company was not allowed to begin the required USFDA approval process for a generic drug until the patents on the corresponding innovator drug had expired. Procuring active ingredients and batch inputs, execution of exhibit batches and performing stability and bio-equivalence studies, assuring quality, filing a dossier, establishing patient information leaflets and going through the regulatory review process can take two to three years. Commercialization of the product after dossier approval needs another three to six months. Consequently, patent protection for the innovator drugs get extended by two to three years before the generics manufacturers could come up with the approved generic versions for those innovator drugs. This discouraged the entry of generic drugs in the market.


To overcome the above mentioned problems in the pharmaceutical regulatory system, the Drug Price Competition and Patent Term Restoration Act was passed by the Congress in 1984.


        Under HWA, the marketing approval process for generic drug products streamlined. HWA allows to “free ride” on the patent holder’s clinical data by showing only that the generic drug is bioequivalent to the patented drug. This reduce the cost associated with the approval of generic drug.

        HWA allows generic companies to develop and test the product before patent expiration, without fear of an infringement action by the patent holder.

        Patent term restoration to offset lengthy regulatory approval process

        Non-patent exclusivity for innovators and generics

        Framework for patent notification and  litigation


1.          HWA streamlined approval process of generic drug products

     HWA created an abbreviated process  
     for generic drug approval without
     conducting costly and duplicative clinical
     trials. (Under the new legislation, generic
     entrants needs to establish the bio  
     equivalence of its drugs to the original). 

2.  HWA allows generic companies to develop and test the product before patent expiration

     Before the HWA even the experimental use
     of a patented drug was considered to be
     infringement. The generic drug   
     manufacturers had to wait until the expiry
     of the innovator drug patents before
     starting to prepare for marketing approval
     of the generic version  of that innovator

   3. Patent term restoration to offset lengthy 
       regulatory approval process

       Hatch – Waxman act changed certain  
       aspects of the new drug application process
       and new drugs patent term. The brand-
       name companies (innovator) can apply for up
       to five additional years longer patent
       protection  for the new medicines they
       developed  to make up for time lost while
       their products were going through FDA's
       approval process. 

4. Non-patent exclusivity for innovators  
          - Exclusivity Regardless of Existence
         of Patent

         HWA provides certain market exclusivity
          periods for new drugs applicants.

§  NCE (New Chemical Entity) Exclusivity

This is granted if the FDA has not previously approved the “active drug moiety”. The active drug moiety is the molecules active portion and not its variations such as salts or esters.NCE exclusivity bars a generic drug company from filing an application for approval of a generic drug five years from the first approval of the relevant NDA. However, a generic drug company may file an ANDA with a Para-IV certification, four years after first approval. 

§  New clinical study exclusivity

This applies when new clinical studies lead to new or changed formulations, dosing regimens or patent population. The applicant is entitled to this exclusivity if an application or supplement contains reports of new clinical investigations conducted or sponsored by the applicant that were essential for approval. This exclusivity, sometimes called data exclusivity, prohibits the FDA from approving a generic drug application for the new dosage form or use for three years after the first NDA approval.

§  Pediatric Exclusivity

This applies if the FDA requested that the NDA holder conduct studies with the drug in pediatric populations. Pediatric exclusivity adds six months of exclusivity to any marketing or patent exclusivity.

§  New Orphan Drug

     If FDA approval is for disease affecting less 
     than 200,000 U.S. citizens, the applicant
     gets 7 years exclusivity.

    FDA is not permitted to approve an ANDA
    that relies upon clinical trials during the NDA
    holder’s Data Exclusivity period. Applicants
    permitted  to file ANDAs one-year prior to 
    expiration of Data Exclusivity period (NCE-1). 

5.Framework for patent notification and 
         Litigation (Para – IV filing)

     The HWA added two provisions to the  
      Federal Food, Drug and Cosmetics Act
      namely Section 505(b)(2) and Section
      505(j). Section 505(b)(2) was added with
      respect to Hybrid New Drug Application and
      Section 505 (j) was added with respect to
          ANDA. ANDA has four types of

Para I: A Para I filing for the launch of generic drug is made when the innovator has not made the required information in the Orange book.

Para II: A Para II filing is made when the drug is already off patent.

Para III: A Para III filing is made when the applicant does not have any plans to sell the generic drug until the original drug is off patent.

Para IV: A Para IV filing for the launch of generic drug is made when the applicant believes its product or the use of its product does not infringe on the innovator's patents or where the applicant believes such patents are not valid or enforceable.

PARA – IV Filing &  180 days exclusivity
By making a Paragraph IV filing, the generic drug maker says the patent is at least one of the following: (1) invalid; (2) not infringed; or (3) unenforceable.

An ANDA applicant filing a paragraph IV certification must notify the proprietor of the
patent. The patent holder may bring a patent infringement suit within 45 days of receiving such notification. If the patent owner timely brings a patent infringement charge against the ANDA applicant, then the 30 month stay would be given to the FDA by the court.

·      FDA is banded from approving the application for 30 months.
·      Or until court holds that the patent is invalid or would not be infringed, FDA can approve the ANDA application.
·      If the court gives decision in favor of patentee, FDA will not approve ANDA.
·      Once 30 months have passed, allows the FDA to approve the ANDA application, even though litigation is ongoing and after approval both parties can market their product until the decision would be given by the court with in the patent expiration period.

Basic Structure of PARA –IV Filing
        CTD submission to USFDA by generic drug manufacturer.
        Notice Letter to Patent Owner - Applicant has to notify the patent holder within 20 days of ANDA application.
        45-Days for Patent Owner to Sue - If patentee files infringement suit against ANDA applicant with 45 days from receiving of notification in the court, litigation starts in court.
        30-Month Stay of FDA Approval of ANDA - When court gets the infringement suit, gives 30 months stay to FDA for approval of the ANDA application, otherwise FDA can approve or disapprove the application; no stay would be given to the FDA.
        180-Day Marketing Exclusivity for Successful First-Filer – If Court decision in respect to ANDA applicant, applicant gets the 180 days market exclusivity, or if not, then ANDA can submit application in Para-II/III.
180-day Exclusivity

        180-day Marketing Exclusivity created to encourage Paragraph IV challenges by rewarding First Filers for undertaking the costs and risks of patent litigation, to challenge weak or improperly obtained patents, or to defend non-infringing generic products.

        At one time, “very valuable to generic manufacturers, as they can sell product at a price significantly higher than they could if multiple generics were on the market.”

·      The 180 day exclusivity provides leverage for the branded manufacturer to block multiple generics while negotiating with only one

·      The 30 month stay allows for creative delaying tactics

·      By negotiating to delay the entry of the first filer, the brand effectively delays entry by all filers.


The HWA strives to strike a balance between the interests of branded drug manufacturers, generic drug manufacturers and the consumers. It strives to provide optimum term of protection for the innovator to get back the returns from his innovation. Further, the HWA also allows the generic manufacturers to carry out the pre-marketing approval studies on the patented drugs so that they can come up with the generic versions of the drug as soon as the term of protection of the patented drug gets over.

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