sold at a considerably lower cost (70–90% below is
typical) than the brand product. The above descrip-
tion was painted with a broad brush; many varia-
tions and exceptions exist. Some companies have
both generic and branded businesses; some
branded companies sell primarily off-patent
drugs. However, it is accurate enough for the pur-
poses herein.
In the late 1970s and early 1980s, these two sides
of the pharmaceutical industry petitioned the US
Congress for relief from two perceived injustices.
Big Pharma complained that what the govern-
ment gave with one hand it took away with the
other. Specifically, although an innovator company
could get a patent on a new pharmaceutical inven-
tion, it was unable to profit from the invention and
the patent because sales of the product were barred
until regulatory approval was first obtained. The
company had to file a New Drug Application
(NDA) which contained proof in the form of the
results of large-scale human studies that the new
drug was both safe and efficacious for its intended
use. The approval process could be quite lengthy,
often taking many years. The regulatory agency
involved is the Food and Drug Administration
(FDA), which is under no legal obligation to
clear new drugs under a rigid timetable. Thus,
after the innovator company had complied with
all demands for data from the FDA, it then waited
for the bureaucratic process to decide on approval,
rejection or a request for more data. All the while
the life of the patent was ticking away. There was a
solution to this ‘injustice’, albeit not a satisfactory
one. After FDA approval, innovator companies
could petition the civil courts for relief and argue
about their lost sales. In some cases this actually
resulted in patent term extension. However, it was
an uncertain process as the court was not always
convinced that any actual harm had befallen the
company or, if relief was appropriate, how long the
patent term extension should be.
Generics had a totally different complaint.
Before they could bring their drugs to market,
they also had to obtain FDA approval. Unfortu-
nately for them, virtually none of the experimental
work needed to file an NDA could be done prior to
the expiration of the innovator’s patent. Quite sim-
ply, they could not manufacture the compound
needed for all the required testing because such
manufacture would be an act of patent infringe-
ment. Thus, they argued, the patent owner was
de factogetting a period of exclusivity far beyond
that provided by the patent because of the need for
FDA approval. Also, it seemed unnecessary to
regenerate all the safety and efficacy data, as
these had already been obtained by the innovator
and was already in the hands of the FDA.
The result of these competing petitions for relief
was the Drug Price Competition & Patent Term
Restoration Act of 1984, known simply as Hatch-
Waxman.
Under Hatch-Waxman Big Pharma received a
guaranteed extension for its pharmaceutical
patents if it could demonstrate that there were
FDA delays in approving a new drug, that is the
FDAwould have certain time constraints put upon
it and if these were exceeded the innovator was
granted an extension on its patent term. The term of
extension was fact-dependent for each drug
approval, but could be as long as five years. The
procedure was administrative; no civil court action
was necessary.
Generics also received significant relief. Under
Hatch-Waxman, a generics company now files an
abbreviated NDA (ANDA). The ANDA requires
no safety and efficacy data; it relies on the data
already in the FDA’s possession. What is required,
however, are bioequivalence data, that is proof that
when the brand drug and the proposed generic drug
are administered,thesame amountsof active ingre-
dient are available to the patient. These data are
much less costly and time-consuming to generate
than safety and efficacy data. The last major hurdle
for a generics company is the ‘Certification’.
Part of the ANDA is a certification of one of four
things; the first three of which are easy. The first
three certifications are that: (a) there was never a
patent on the drug; (b) there was a patent but it has
expired and (c) the date on which the patent will
expire and a request that the approval be given for
the day after patent expiration.
It is the Paragraph IV certification that is the
most problematic. The generics company may cer-
tify that there is a patent but that either the proposed
drug will not infringe the patentor that the patent is
invalid. This certification is defined as an act of382 CH29 GENERICS