The Hatch-Waxman Act: Proposed Legislative Changes Affecting Pharmaceutical Patents

Publication Date: January 2004

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Law and ethics; Manufacturing and industry

Type:

Abstract:

Congressional interest in the cost of pharmaceuticals, particularly for the elderly, has focused attention on several areas where the federal government has programs and policies associated with the development and accessibility of drugs in the marketplace. One of the most prominent legislative initiatives in this area is P.L. 98-417, the Drug Price Competition and Patent Term Restoration Act of 1984 (commonly known as the Hatch-Waxman Act) which made several significant changes to the patent laws as they apply to pharmaceutical products. These changes include provisions for extending the term of a patent to reflect regulatory delays encountered in obtaining marketing approval by the Food and Drug Administration (FDA); a statutory exemption from patent infringement for activities associated with regulatory marketing approval; establishment of mechanisms to challenge the validity of a pharmaceutical patent; and a reward for disputing the validity, enforceability, or infringement of a patented and approved drug. The Hatch-Waxman Act also provides the FDA with certain authorities to offer periods of marketing exclusivity for a pharmaceutical independent of the rights conferred by patents.

The provisions contained in the Act were designed to balance the need for innovative new pharmaceuticals and the availability of less expensive generic drugs. Over the 18 years since passage of the Hatch-Waxman Act, questions have been raised as to whether or not implementation of certain portions of the law has led to unintended consequences that have affected this balance.

Some argue that brand name companies and/or generic firms have exploited provisions of the Act to prevent the timely introduction of lower cost drugs. Other observers assert that no such pattern of abuse is evident and that while a few isolated cases of “misinterpretation” of the law have arisen, these can be addressed through existing procedures. Several bills were introduced in the past several years, as well as in the 108th Congress, that would amend the Hatch-Waxman Act. Title XI of P.L. 108-173 (H.R. 1), the Medicare Prescription Drug and Modernization Act of 2003, as signed into law on December 8, 2003, makes changes to the current law to address issues of pharmaceutical patents listed in the Orange Book maintained by the Food and Drug Administration, patent challenges by generic firms, and the award of market exclusivity, among other things.