Pharmaceutical Pricing and Hatch–Waxman Reform: The Right Prescription

Abstract

Pharmaceutical pricing in the USA has been habitually plagued by sizeable discrepancies between brand-name drugs and generic alternatives. Traditional notions of competition and free market enterprise fail to narrow the gap, since drugs cannot be sold in the USA unless they obtain regulatory approval from the US Food and Drug Administration (FDA). As a consequence of the legislation and administrative procedures governing market access for pharmaceuticals, generic drug manufacturers encounter a great deal of difficulty in challenging traditionally patent-protected brand-name drugs during the regulatory approval process. During the past two decades, via a series of legislative manoeuvres and statutory amendments (most notably the Hatch–Waxman Act), Congress has created a number of quid pro quos granting generics greater access to quick market entry while simultaneously protecting important intellectual property rights.

In 2003, Congress amended Hatch–Waxman, in an attempt to close many of the statutory loopholes that had been exploited in ways unintended by the legislators to block generic pharmaceutical approval. The purpose of this paper is not specifically to critique the new legislation, but rather to suggest a different strategy. Instead of further complicating an already intricate and perplexing statutory scheme with myriad ways for ingenious patent experts to circumvent the intended purposes, the authors propose the following: (1) a repeal of unnecessary incentives; (2) a reassignment of esoteric issues of patentability and enforcement inherent in the determination of listability to the exclusive authority of the US Patent and Trademark Office; and (3) return of legitimate patent infringement disputes to courts of competent jurisdiction.