In 1984, the Hatch-Waxman Act made significant changes in U.S. patent laws that were intended to encourage pharmaceutical companies to make the investments necessary to develop new drug products, while simultaneously enabling their competitors to bring lower-cost, generic alternatives to the market. Prior to Hatch-Waxman, it took three to five years for generics to enter the market after the brand-name patent expired. Today, lower-cost generics often enter the market immediately upon the expiration of the patent. As a consequence, consumers are saving anywhere from $8 to $10 billion a year by purchasing generic drugs.
Despite its past success, however, the Hatch-Waxman Act has been subject to abuse. There is mounting evidence that some brand and generic drug manufacturers have exploited loopholes in the system in order to maximize their profits at the expense of consumers.
"The compromise legislation we are considering today will make cost-effective generic drugs more available by restoring the original intent of Hatch-Waxman and closing the loopholes that are delaying competition and slowing generics' entry into the market," said Senator Collins.
"The legislation would limit brand name manufacturers to a single 30-month stay for patents listed at the time of the brand product approval. This will eliminate the brand-name manufacturers' ability to ‘stack' multiple and sequential automatic 30-month stays during patent litigation in order to keep generics off the market and extend their market exclusivity indefinitely. "For subsequent patents for which no automatic 30-month stay is available, a brand name company can still obtain a preliminary injunction based on merit to protect its patent rights.
"Second, the legislation will prevent the current 180-day exclusivity provision of Hatch-Waxman from becoming a bottleneck for subsequent generic competitors. Under Hatch-Waxman, the first generic drug company to file an application with the FDA certifying that the patents on a brand name product are either invalid or will not be infringed is granted 180 days of market exclusivity once its application is approved. Entry to the market for other generics is therefore frozen until the 180-day period runs out on the first-to-file.
This provision has made it attractive for a brand name to pay the first-to-file generic company to stay off the market, which effectively staves off other competition for an extended period. Under this bill, the first generic applicant would forfeit its 180-day exclusivity period if it failed to go to market or entered into an agreement with a brand-name company that the FTC determines to be anti-competitive. If the first generic applicant forfeits its 180-day exclusivity, it would roll to the next generic company in line. If there is no second company in the pipeline with a product ready to go, any generic with an approved application could go to market immediately."
The Greater Access to Affordable Pharmaceuticals Act was introduced originally by Senators John McCain (R-AZ) and Charles Schumer (D-NY). When it became clear that the McCain-Schumer bill did not have enough bi-partisan support to move beyond the Senate Health Committee, Senators Collins and Edwards crafted a bi-partisan compromise that became known as the Edwards-Collins substitute. That bill, which has the full support of Senators McCain and Schumer, was successfully voted out of committee 16-5 and is currently on the Senate floor.
Senator Schumer said on the floor of the Senate that the Greater Access to Affordable Pharmaceuticals Act is "one of the most important ways to reduce [the] cost [of prescription drugs], not just for seniors, but for everyone."
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