Hatch-Waxman Turns 30 – A Stroll Down Memory Lane

Happy Birthday, Hatch-Waxman! You’re a mature 30-year old now, a regular adult. Some personal musings on my stroll down the Hatch-Waxman Memory Lane over the past 30-plus years follow.

A small background digression: For those of you in the FDA regulatory arena who are real newbies or who have been in a Rip Van Winkleoid state in recent times, the Hatch-Waxman Amendments to the Federal Food, Drug, and Cosmetic Act (formally known as the Drug Price Competition and Patent Term Restoration Act of 1984) are the statutory basis for generic drug products sold in the United States today. FDA can approve a generic drug based on an “abbreviated application” that demonstrates that the generic product is equivalent to the brand or innovator drug product being copied, without repetition of laboratory animal safety studies and human clinical trials that support the approval of the brand drug. Before Hatch-Waxman, FDA would consider an abbreviated application only for a copy of a brand drug product first approved before 1962. As a result, very few “generic” versions of most newer brand name prescription drugs were available.

I was working in FDA’s Office of Chief Counsel as a young attorney during the latter part of Hatch-Waxman’s long gestation period. Although not designated a “drugs” attorney, I was quite familiar with the pre-Hatch-Waxman regulatory landscape by virtue of having worked on several court cases involving “generic” drugs. This included United States v. Generix Drug Corporation, 460 U.S. 453 (1983), where the Supreme Court in essence upheld FDA’s policy that each “generic” copy of a brand drug had to be approved in its own drug application, rather than being able to take advantage of “old” drug status based on “general recognition” of the active ingredient’s safety and effectiveness.

I joined OFW Law not long after Hatch-Waxman became law. Our first generic drug client of any consequence appeared soon thereafter. It was a true shoestring startup operation with perhaps 50 employees, financed by credit card cash advances and operating out of a set of very modest, adjacent buildings of a type typically associated with, say, independent car repair shops.

Despite its limitations and seemingly tenuous hold on life, our erstwhile client had remarkable success in getting its generic drug applications reviewed and approved by FDA very quickly. It all seemed too good to be true, and it was. Subsequent FDA investigation revealed that our client (and others of similar mindset) had given items of substantial value to key FDA staff to have their applications reviewed out of sequence. Some less-than-honorable firms also submitted fraudulent data to FDA in their applications, helping ensure approval in the first review cycle.

Suffice to say, both such practices are highly disfavored under federal criminal and regulatory law. These activities, often called the “generic drug scandal” of the late 1980s and early 1990s, were a sad chapter in the histories of both the generic drug industry and FDA. Hatch-Waxman, let’s just attribute that to the growing-up process during your early years.

In the days before the 1995 Oklahoma City Federal Building bombing and 9/11, the Parklawn Building, FDA’s then-headquarters in Rockville, Maryland, was wide open to all members of the public, just like most other federal buildings. It was a common practice for pharmaceutical company (whether brand, generic, human, or animal) regulatory affairs personnel to make periodic visits to FDA, roaming the halls and visiting with reviewers of their firm’s applications. In that climate, it was relatively easy for unscrupulous company personnel to surreptitiously offer unlawful things of value (like a wad of cash sticking out of a drug application that a company rep was personally delivering to an FDA staffer). The old days of open federal buildings are gone forever, needless to say.

As FDA’s investigation of our former client unfolded, FDA summarily “rescinded” its recent approval of one of our client’s drug applications. Patently illegal, I thought, because FDA has to follow the statutory procedure for withdrawing approval. So, we sued FDA over its purported rescission. We lost, soundly. See American Therapeutics, Inc. v. Sullivan, 755 F. Supp. 1 (D.D.C. 1990). That experience gave personal meaning to the often-heard lawyers’ adage, “bad facts make bad law.” It was also my first (and last) experience with moving for judgment on the pleadings, a procedure resurrected from my inactive memory of first year law school civil procedure class. Never again!

In response to the “scandal,” debarment, civil penalty, and additional withdrawal of approval provisions were added to the FDC Act in 1993. In its wisdom, Congress decided that, for the most part, these additional provisions would apply only to abbreviated applications for generic drugs, not to full drug applications for brand drug products.

Following the “scandal,” a number of waves of administrative and judicial activity regarding the approval of generic drug products washed ashore during Hatch-Waxman’s teenage and young adulthood years. In the 1990s, most activity centered on the substantive conditions of FDA approval, such as whether the generic product and its brand counterpart have the “same” active ingredient, dosage form, or labeling or whether the generic is bioequivalent to its brand counterpart. Hatch-Waxman provides for 180-day exclusivity, under which the first generic drug applicant to challenge a patent on the brand product being copied gets a statutory 180-day “head start” over its generic competition. Until 1998, 180-day exclusivity was very seldom rewarded. In that year, however, the D.C. Circuit rejected FDA’s former “successful defense” regulation, under which a “first” generic applicant had to have prevailed in patent litigation to be eligible for 180-day exclusivity. See Mova Pharmaceutical Corp. v. Shalala, 162 F.3d 1201 (D.C. Cir. 1998). Post-Mova, a 180-day exclusivity period was likely to be associated with generic versions of every brand drug product for which there was an associated patent challenge. Thus, after Mova opened the flood gates, the generic drug regulatory world was awash with 180-day exclusivity disputes and litigation during much of the first decade of this century. Congress made fundamental changes to 180-day exclusivity in the Medicare Modernization Act of 2003, but that only led to more disputes and litigation.

I am pleased and honored to have represented a number of different clients in these administrative and judicial battles that helped shaped the current regulatory landscape for generic drugs, although I wish my win-loss record were better.

Today, the generic drug industry has grown and matured from its humble beginnings. For example, the five largest suppliers of generic drugs in the United States (by prescription volume, according to the internet) – Teva, Mylan, Actavis (nee Watson), Sandoz, and Lupin – are all global, publicly traded companies with tens of thousands of employees. Generic drugs account for the substantial majority of all prescriptions filled, but only a much smaller portion of total prescription drug spending. Annual U.S. savings from generic prescription drugs are many billions of dollars.

Hatch-Waxman also provides countervailing benefits for brand drug companies, such as non-patent data exclusivity and patent term restoration to compensate for patent life lost during product development and FDA review. Nothing indicates to me that brand drug companies have suffered as a result of Hatch-Waxman.

The current frontier for “generic” pharmaceutical competition is drug products of biological, rather than synthetic chemical, origin. The Biologics Price Competition and Innovation Act, modeled loosely on Hatch-Waxman in many respects, became federal law in 2010 and created a regulatory pathway for FDA approval of “biosimilars.” The top two selling prescription drugs in the world are AbbVie’s Humira (adalimumab) and Johnson & Johnson’s Remicade (infliximab), both of which are very expensive drugs indicated for the treatment of Crohn’s Disease, arthritis, and similar conditions. A biosimilar version of Remicade has been approved in Europe, and biosimilar versions of Humira appear to be the subject of substantial effort by a number of companies. According to public reports, the first biosimilar applications were submitted to FDA last month, including one for a biosimilar version of Remicade. Scientific, medical, and legal arguments in opposition to the approval of specific biosimilars have been raised in the U.S., similar to arguments that were raised in opposition to the approval of generic drugs under Hatch-Waxman. Perhaps the first biosimilar will be approved in the U.S. soon. If so, only time will tell whether it will gain widespread marketplace and prescriber acceptance. Stay tuned as history unfolds! Hatch-Waxman, we will be watching to see if your progeny does at least as well as you have as it grows up.

Hatch-Waxman, it’s been a good 30 years. May the next 30 be even better.

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