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The Hatch-Waxman Act, which is formally named the Drug Price Competition and Patent Term Restoration Act of 1984, was enacted to encourage competition between brand and generic pharmaceutical companies. It accomplished this through the creation of a faster approval process for generic drugs, called the Abbreviated New Drug Application (ANDA). At the same time it strove to protect brand pharmaceuticals by extending their patent protection. Overall, the act has been successful in bringing more generic drugs onto the market.
A generic drug is quite similar to, if not exactly the same as, a brand-name drug. It should be equivalent in dosage, intended use, form of administration, quality, and performance. Generic drugs can be produced by anyone after the patent on the brand-name drug expires. They are often sought after because they are more affordable.
One way the Hatch-Waxman Act influences the process of expediting generic drugs onto the market is through the ANDA process. The application provides the FDA with all necessary information for the review and approval of a generic drug. It must prove that the generic is the bio-equivalent of the brand-name drug, meaning it acts the same as the brand name drug and has the same active ingredients.
The application is said to be abbreviated because, unlike non-generic drugs, the generic does not have to go through animal or human trials. That testing has already been completed for the brand-name version. The application has greatly reduced the time period for producing generic drugs. Before the Act became law, it typically took two to three years for a generic to come on the market once a drug patent had expired. After the act, this time was reduced to several months.
Another component of the Hatch-Waxman Act was the extension of the term of patent protection for brand name drugs. Since the legislation encouraged the production and consumption of generics, there was a chance that brand-name drug producers would be threatened by competition with generic pharmaceuticals. As a measure of protection for band-name drug companies, procedures were provided for companies to extend the patent on a drug for an additional five years. Before the Act, most drug patents lasted about nine years, while they now last 11-12 years on average.
Since the passing of the Hatch-Waxman Act in 1984, the number of generic drugs on the market has risen significantly. Before the Act, only 35% of drugs that were no longer under patent protection had generic equivalents, and even when generics were available, they were not often purchased. Today most major drugs that are no longer under patent protection have generic equivalents, and they are widely consumed.