Statutory and Regulatory Scheme

• Author: Kenneth Dorsney
• Pages: 1-24

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chapter 1

Statutory and Regulatory

Scheme1

I. The Drug Price Competition and Patent Term

Restoration Act of 1984 (aka The Hatch-Waxman Act)

In 1984 the Drug Price Competition and Patent Term Restoration Act

of 1984, commonly known as the Hatch-Waxman Act, was passed into

law.2 The Act was intended to “strike[] a balance between two potentially

competing policy interests—inducing pioneering development of pharma-

ceutical formulations and methods and facilitating efficient transition to a

market with low-cost, generic copies of those pioneering inventions at the

close of a patent term.”3

A. Impetus for Reform

The U.S. Court of Appeals for the Federal Circuit’s 1984 decision in Roche

Products v. Bolar Pharmaceutical4 is often described as a catalyst for the

passage of the Hatch-Waxman Act. But the circumstances leading to the

decision in Bolar and the passage of the Hatch-Waxman Act shortly there-

after should be recognized as the culmination of many years of tension and

shifting over how best to structure statutory incentives in the pharmaceu-

tical industry.

1. James M. Lennon, Christopher E. Jeffers, Ph.D., Malcolm K. McGowan, Ph.D.,

Bernard A. Brown, II, Ph.D., & John B. Forrest, IV, Patent Agent, Womble Carlyle Sandridge

& Rice, LLP.

2. Pub. L. No. 98-417, 98 Stat. 1585 (1984) (codified at 21 U.S.C. §§ 355, 360cc; 35

U.S.C. §§ 156, 271), as amended by the Medicare Prescription Drug Improvement and

Modernization Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066 (2003).

3. See Novo Nordisk A/S, et al. v. Caraco Pharm. Labs., Ltd., 601 F.3d 1359, 1360 (Fed.

Cir. 2010) (citing Andrx Pharm., Inc. v. Biovail Corp., 276 F.3d 1368, 1371 (Fed. Cir. 2002)),

rev’d on other grounds, 2012 U.S. LEXIS 3106 (U.S. Apr. 17, 2012).

4. 733 F.2d 858 (Fed. Cir. 1984).

CHAPTER 1

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Movement toward the Hatch-Waxman compromise developed over

many years. Notably, in the late 1950s and early 1960s it became known

that the use of Thalidomide, a sedative frequently prescribed to pregnant

women experiencing morning sickness, significantly increased the risk of

birth defects. The Thalidomide scare led to the 1962 amendments to the

Federal Food, Drug, and Cosmetic Act (FDCA), requiring all new drugs to

be proven safe and effective prior to approval by the Food and Drug Admin-

istration (FDA).5 Generic manufacturers saw the new requirements as

discouraging entry.6 Meanwhile, branded pharmaceutical manufacturers

pushed for additional protections against entry by generic manufactur-

ers. In 1978 President Carter recommended patent term restoration for

pharmaceuticals and any other products that required regulatory review,

to compensate for the time lost to the review, by extending a patent’s

term.7 By 1983, debate over the Drug Price Competition Act and Patent

Term Restoration raged in Congress.8 The Bolar decision in 1984 was an

important event leading to the passage of the compromise Hatch-Waxman

Act because the Bolar decision highlighted the public policy tensions for

the pharmaceutical industry that only Congress could properly address.

Roche Products, a brand-name pharmaceutical company, was the

maker of Valium, the formulation for which was protected by patent.

Generic manufacturer Bolar Pharmaceuticals tested the chemical formu-

lation of Valium, before the expiration of Roche’s patent on that formula, to

determine if Bolar’s generic product was bioequivalent to Valium in order

to have an FDA-approved generic ready to market upon the expiration of

Roche’s patent.9 The determination of generic bioequivalence to a previ-

ously approved drug was and is necessary to obtain FDA approval for a

generic version of the drug.10

Roche brought a patent infringement suit against Bolar for this use

of Roche’s patented formulation, because a U.S. patent provides its owner

with the right to exclude not only the unauthorized sale of a product (or

practicing of a method) covered by the patent, but even the manufacture or

5. Pub. L. No. 87-781, 76 Stat. 780 (1962) (codified at 21 U.S.C. §§ 321, 331–32, 348,

351–53, 355, 357–60, 372, 374, 376, 381).

6. G.J. Mossinghoff, Overview of the Hatch-Waxman Act and Its Impact on the Drug

Development Process, 54(2) FOOD & DRUG L.J. 187–94 (1999).

7. Id. at 187.

8. Bolar, 733 F.2d at 865 (citing Drug Price Competition Act of 1983, H.R. 3605,

98th Cong. (1983) (amending 21 U.S.C. § 355(b) to allow faster marketing of new generic

drugs equivalent to approved new drugs); Patent Term Restoration Act of 1983, S. 1306,

98th Cong. (1983) (amending 35 U.S.C. § 155 to add to the patent grant a period of time

equivalent to that lost due to regulatory delay), 129 CONG. REC. S6863 (daily ed. May 17,

1983), 26 Pat. Trademark & Copyright J. (BNA) 87–88 (May 26, 1983)).

9. Bolar, 733 F.2d at 860.

10. 21 U.S.C. § 355.