Impact of the Waxman-Hatch Act of 1984 on Generic Competition in the U.S. Pharmaceutical Market

OBJECTIVES: The Drug Price Competition and Patent Term Restoration Act of 1984 (Waxman -Hatch Act-WHA) defined an abbreviated new drugs application (ANDA) process for generic drug approval; provided for market exclusivity for certain new drugs; and established a mechanism that extended the statutory term of patents by restoring part of the time spent by the company fulfilling the FDA regulatory requirements. The objective of this study was to assess the effect of the WHA on generic entry of drug products approved by the FDA after the implementation of the Act.

METHODS: All drugs approved by the FDA and listed in the FDA's Orange Book (OB) were included in the study. Data derived from OB versions 1980-2009. Comparison of generic entry was performed for drugs without patent protection that were approved pre and post implementation of the WHA. The effective drug patent life was conservatively set at 14 years counted from NDA approval. Descriptive statistics were calculated for all the variables included in the analysis. Differences in proportions were evaluated using chi-square and Fisher's exact tests. Differences between group means were assessed using t-tests.

RESULTS: The OB listed 2190 products approved by the FDA, 15 products were excluded because were tentatively approved, resulting in 2175 products, including 1724 single molecular entities and 451 combinations. Overall, 1324 products were approved before and 851 after the WHA. The study identified 270 products approved in the pre-WHA group and 420 products approved in the post-WHA group that could have generic competition. Generic competition occurred in 24 (8.9%) of the products in the pre-WHA group and 174 (41.4%) in the post-WHA group (p<0.001). The average number of generic approvals per product was 1.88 ± 1.04 in the pre-WHA group and 12.48±15.56 in the post-WHA group (p<0.01)

CONCLUSIONS: The WHA implemented a system for approval of generic drugs and also allowed generic companies to prepare and file an ANDA before the patent expiration. After the WHA the proportion of drug products with generic competition and the number of generic competitors per drug product increased significantly. The increase in generic competition occurred in spite of the increase in patent and exclusivity restrictions to generic entry also established by the WHA. Other factors also explain the increase in generic competition in the study period, including the implementation of cost-containment measures in the health care system and the implementation by the FDA of strict generic bioequivalence and quality standards.