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Implementation of the Drug Price Competition and Patent Term Restoration Act of 1984

Statement of

Lester M. Crawford, D.V.M., Ph.D.
Deputy Commissioner of Food and Drugs


the Subcommittee on Health
House Committee on Energy and Commerce

October 9, 2002


Mr. Chairman and Members of the Subcommittee, I am Dr. Lester M. Crawford, Deputy Commissioner of Food and Drugs. I am pleased to be with you today to discuss the Food and Drug Administration’s (FDA) implementation of the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Amendments.

This testimony will discuss a number of issues which affect the timely introduction of generic drugs into the U.S. marketplace. It will focus in particular, as you requested, on the question of whether certain “later-listed” patent filings by the sponsors or manufacturers of innovator drug products have resulted in the delay of generic drug approvals by the Food and Drug Administration (FDA or the Agency).

The Hatch-Waxman Amendments were intended to balance two important public policy goals. First, Congress wanted to ensure that brand-name drug manufacturers have meaningful market protection to encourage the development of valuable new drugs. Second, once the statutory patent protection and marketing exclusivity for these new drugs has expired, consumers benefit from the rapid availability of lower priced generic versions of innovator drugs.

Since its enactment in 1984, Hatch-Waxman has governed the generic drug approval process. One of its key provisions provides 180 days of marketing exclusivity to certain generic drug applicants. The 180-day generic drug exclusivity provision is one component of the complex patent listing and certification process, which also provides for a 30-month stay on generic drug approvals while certain patent infringement issues are litigated. Both of these provisions are discussed in detail below.


The Hatch-Waxman Amendments amended the Federal Food, Drug, and Cosmetic (FD&C) Act and created section 505(j). Section 505(j) established the abbreviated new drug application (ANDA) approval process, which permits generic versions of previously approved innovator drugs to be approved without submission of a full new drug application (NDA). An ANDA refers to a previously approved NDA (the “listed drug”) and relies upon the Agency’s finding of safety and effectiveness for that drug product.

The timing of an ANDA approval depends in part on patent protections for the innovator drug. Innovator drug applicants must include, in an NDA, information about patents for the drug product that is the subject of the NDA. FDA publishes patent information on approved drug products in the Agency's publication Approved Drug Products with Therapeutic Equivalence Evaluations, also known as the “Orange Book.” The book is printed yearly by the Government Printing Office and is updated monthly and available to the public. It lists all approved drug products with their therapeutic equivalence codes in addition to the products’ patent and exclusivity information (if such information exists). The “Orange Book” is also publicly available on FDA’s website.

The FD&C Act requires that generic drug applicants include, in their ANDAs, a certification for each patent listed in the “Orange Book” for the innovator drug. This certification must state one of the following:

(I) that the required patent information relating to such patent has not been filed;
(II) that such patent has expired;
(III) that the patent will expire on a particular date; or
(IV) that such patent is invalid or will not be infringed by the drug, for which approval is being sought.

A certification under paragraph I or II permits the ANDA to be approved immediately, if it is otherwise eligible. A certification under paragraph III indicates that the ANDA may be approved on the patent expiration date.


A paragraph IV certification, however, begins a process in which the question of whether the listed patent is valid or will be infringed by the proposed generic product may be answered by the courts prior to the expiration of the patent. The ANDA applicant who files a paragraph IV certification to a listed patent must notify the patent owner and the NDA holder for the listed drug that it has filed an ANDA containing a patent challenge. The notice must include a detailed statement of the factual and legal basis for the ANDA applicant’s opinion that the patent is not valid or will not be infringed. The submission of an ANDA for a drug product claimed in a patent is an infringing act if the generic product is intended to be marketed before expiration of the patent, and therefore, the ANDA applicant who submits an application containing a paragraph IV certification may be sued for patent infringement. If the NDA sponsor or patent owner files a patent infringement suit against the ANDA applicant within 45 days of the receipt of notice, FDA may not give final approval to the ANDA for at least 30 months from the date of the notice. This 30-month stay will apply unless the court reaches a decision earlier in the patent infringement case or otherwise orders a longer or shorter period for the stay. A court may modify the length of a stay, under the FD&C Act, “if either party in the action failed to reasonably cooperate in expediting the action.” (21 U.S.C. 335(j)(5)(iii))

The statute provides an incentive of 180 days of market exclusivity to the “first” generic applicant who challenges a listed patent by filing a paragraph IV certification and thereby runs the risk of having to defend a patent infringement suit. The statute provides that the first applicant to file a substantially complete ANDA containing a paragraph IV certification to a listed patent will be eligible for a 180-day period of exclusivity beginning either from the date it begins commercial marketing of the generic drug product, or from the date of a court decision finding the patent invalid, unenforceable or not infringed, whichever is first. These two events -- first commercial marketing and a court decision favorable to the generic -- are often called “triggering” events, because under the statute they can trigger the beginning of the 180-day exclusivity period.

In some circumstances, an applicant who obtains 180-day exclusivity may be the sole marketer of a generic competitor to the innovator product for 180 days. But 180-day exclusivity can begin to run -- with a court decision -- even before an applicant has received approval for its ANDA. In that case, some, or all of the 180-day period, could expire without the ANDA applicant marketing its generic drug. Conversely, if there is no court decision and the first applicant does not begin commercial marketing of the generic drug, there may be prolonged or indefinite delays in the beginning of the first applicant's 180-day exclusivity period. Approval of an ANDA has no affect on exclusivity, except if the sponsor begins to market the approved generic drug. Until an eligible ANDA applicant’s 180-day exclusivity period has expired, FDA cannot approve subsequently submitted ANDAs for the same drug, even if the later ANDAs are otherwise ready for approval and the sponsors are willing to immediately begin marketing. Therefore, an ANDA applicant who is eligible for exclusivity is often in the position to delay all generic competition for the innovator product.

Only an ANDA containing a paragraph IV certification may be eligible for exclusivity. If an applicant changes from a paragraph IV certification to a paragraph III certification, for example upon losing its patent infringement litigation, the ANDA will no longer be eligible for exclusivity.


The 180-day exclusivity provision has been the subject of considerable litigation and administrative review in recent years, as the courts, industry, and FDA have sought to interpret it in a way that is consistent both with the statutory text and with the legislative goals underlying the Hatch-Waxman Amendments. A series of Federal court decisions beginning with the 1998 Mova1 case describe acceptable interpretations of the 180-day exclusivity provision, identify potential problems in implementing the statute, and establish certain principles to be used by the Agency in interpreting the statute. As described in a June 1998 guidance for industry, FDA currently is addressing on a case-by-case basis those 180-day exclusivity issues not addressed by existing regulations.

One of the most fundamental changes to the 180-day exclusivity program, resulting from the legal challenges to FDA’s regulations, is the determination by the courts of the meaning of the phrase “court decision.” The courts have determined that the “court decision” that can begin the running of the 180-day exclusivity period may be the decision of the district court, if it finds that the patent at issue is invalid, unenforceable, or will not be infringed by the generic drug product. FDA had interpreted the “court decision” that could begin the running of 180-day exclusivity (and the approval of the ANDA) as the final decision of a court from which no appeal can be or has been taken - generally a decision of the Federal Circuit. FDA’s interpretation had meant that an ANDA applicant could wait until the appeals court had finally resolved the patent infringement or validity question before beginning the marketing of the generic drug.

FDA had taken this position so that the generic manufacturer would not have to run the risk of being subject to potential treble damages for marketing the drug, if the appeals court ruled in favor of the patent holder. The current interpretation means that if the 180-day exclusivity is triggered by a decision favorable to the ANDA applicant in the district court, the ANDA sponsor who begins to market during that exclusivity period now may run the risk of treble damages if the district court decision is reversed on appeal to the Federal Circuit. As a practical matter, it means that many generic applicants may choose not to market the generic and thus the 180-day exclusivity period could run during the pendency of an appeal.


Concerns have been expressed over FDA’s role in the listing of patents in the “Orange Book,” which can have an impact on generic drug approvals by delaying their approval and the initiation of 180-day exclusivity. Under the FD&C Act, pharmaceutical companies seeking to market innovator drugs must submit, as part of an NDA or supplement, information on any patent that 1) claims the pending or approved drug or a method of using the approved drug, and 2) for which a claim of patent infringement could reasonably be asserted against an unauthorized party. Patents that may be submitted are drug substance (active ingredient) patents, drug product (formulation and composition) patents, and method of use patents. Process (or manufacturing) patents may not be submitted to FDA.

When an NDA applicant submits a patent covering the formulation, composition, or method of using an approved drug, the applicant must also submit a signed declaration stating that the patent covers the formulation, composition, or use of the approved product. The required text of the declaration is described in FDA’s regulations.

The process of patent certification, notice to the NDA holder and patent owner, a 45-day waiting period, possible patent infringement litigation and the statutory 30-month stay may result in a considerable delay in the approval of ANDAs when an innovator company submits a new patent listing to FDA. Therefore, ANDA applicants often closely scrutinize these listings. FDA regulations provide that, in the event of a dispute as to the accuracy or relevance of patent information submitted to and subsequently listed by FDA, an ANDA applicant must provide written notification of the grounds for dispute to the Agency. FDA then requests the NDA holder to confirm the correctness of the patent information and listing. Unless the patent information is withdrawn or amended by the NDA holder, FDA will not change the patent information in the “Orange Book.”

If a patent is listed in the “Orange Book,” an applicant seeking approval for an ANDA must submit a certification to the patent. Even an applicant whose ANDA is pending when additional patents are submitted for listing by the sponsor must certify to the new patents, unless the additional patents are submitted by the patent holder more than 30-days after issuance by the U.S. Patent and Trademark Office. Moreover, a pending generic drug application may be subject to multiple overlapping 30-month stays if new patents are listed for the innovator drug. A review of FDA’s records indicates that of the 442 active ANDAs that contain paragraph IV certifications, only 17 have had multiple 30-month stays, representing 3.8 percent of all applications with patent challenges. However, we note that a significant number of these products have high dollar value annual sales, and we are aware of some instances where multiple stays have resulted in the delay of a generic drug approval for a number of years.

FDA does not undertake an independent review of the patents submitted by the NDA sponsor. Issues of patent claim and infringement are matters of patent law, and FDA does not have the authority as well as the resources or capability to assess whether a submitted patent claims an approved drug and whether a claim of patent infringement could reasonably be made against an unauthorized use of the patented drug. FDA has implemented the statutory patent listing provisions by informing interested parties of what patent information is to be submitted, who must submit the information, and when and where to submit the information. The statute requires FDA to publish patent information upon approval of the NDA and, therefore, the Agency’s role in the patent-listing process is ministerial. The Agency relies on the NDA holder or patent owner’s signed declaration stating that the patent covers an approved drug product’s formulation, composition or use. Generic and innovator firms may resolve any disputes concerning patents in private litigation.2

The Agency is aware that in the past couple of years there have been new patents submitted to FDA for listing in the “Orange Book” shortly before patents already listed in the “Orange Book” are scheduled to expire. These new patents have been submitted to FDA within the required 30-days of issuance by the Patent and Trademark Office. If the NDA sponsor complies with the requirements of the statute and regulations in submitting a patent for listing in the “Orange Book,” the Agency has no discretion to reject a patent merely on the basis that, but for the filing of the patent, ANDAs would be eligible for final approval.

It has been suggested that FDA should review drug patents to determine if they should be listed in the “Orange Book” as protection for innovator drug products -- that is, FDA should assess whether a submitted patent properly claims the approved drug product and could support a claim of patent infringement. The Agency believes that it should not review drug patents because such a review would be time consuming and would not speed the availability of generic drugs, but instead add a layer of complexity and delay.

Because it is not established that FDA has authority under the FD&C Act to make substantive patent assessments, there would be lengthy litigation before the scope of Agency authority is established. FDA review of patents is unlikely to speed approval and marketing of generic drugs in a meaningful way because even if FDA were to decide not to list a patent, the innovator company could obtain an injunction against approval or marketing of the generic drug until the patent listing question is resolved. In such a case, FDA’s review of the patents would have done nothing to speed approval of generic drugs. Patent reviews would lead to substantial litigation that will impose a new and substantial burden on FDA’s Office of the Chief Counsel and Department of Justice litigation resources. Finally, the Agency does not have the resources or expertise to review patents and, even with additional funding, is unlikely to be able to obtain adequate expert resources to do so.


In response to reports of brand-name and generic drug companies engaging in anti-competitive behavior, the Federal Trade Commission (FTC) conducted a study to determine if the 180-day exclusivity and the 30-month stay provisions of the Hatch-Waxman Amendments are used strategically to delay consumer access to generic drugs. In July 2002, FTC published the findings of their study and provided two primary recommendations.

FTC recommends that only one automatic 30-month stay per drug product per ANDA be permitted to resolve infringement disputes over patents listed in the “Orange Book” prior to the filing date of the generic applicant’s ANDA. FDA is sympathetic to the recommendation for a single 30-month stay. FDA also agrees with FTC that recently, more ANDAs have been subject to 30-month stays than in years past, and that more patents on average are now being litigated per generic drug application than in the past.

FTC’s second recommendation is to pass legislation to require brand-name companies and first generic applicants to provide copies of certain agreements to FTC. This is a response to FTC’s finding that brand-name companies and first generic applicants have on occasion entered into agreements to delay generic competition. FDA has no objection to this recommendation.

FDA agrees with many of the conclusions of the FTC study and has found the factual information provided in the report to be extremely valuable in our own deliberations regarding the generic drug approval process. One example of this is the compilation of information on the disposition of litigation surrounding patents filed after NDA approval. Currently, the Agency is considering a citizen petition submitted by FTC concerning the appropriateness of listing patents that cover polymorphs, which are forms of the active ingredients of approved drugs different from the actual form approved in the NDA.

Finally, we note that FTC’s report recognized that FDA does not have the capacity to review the appropriateness of patent listings.


Although patent-related challenges have delayed approval of generic drugs in a number of high-profile cases, there are a number of other important barriers to generic competition. These barriers, which usually result from insufficient scientific knowledge and standards, are likely to become even more significant as scientific advances in drug development lead to new forms of therapy.

Currently, some classes of drug products entirely lack generic versions because scientific methods for evaluating their bioequivalence are not available. Examples include the nasal and inhaled corticosteroids used for allergy and asthma treatment. Prospective manufacturers of inhaled or topical generic drugs face uncertainty and high development costs, and thus few such products have been developed. Other widely used drugs, such as conjugated estrogens (available since the 1940’s), lack generic competition due to scientific uncertainty about the composition of the active ingredient (s). Disputes over composition and bioequivalence standards also have caused delays in approval of many generic drugs while innovator challenges to the standards are evaluated. Scientific research to support the development of additional standards in these areas would enable FDA to approve drugs in additional classes, and also to deal with scientific challenges to pending generic drug approvals more expeditiously.

Innovations in drug therapy are leading to new methods of drug delivery, including via liposomes, implantable systems, transcutaneous or transmucosal products, and inhalation methods. At the same time, due to innovations in chemistry, drugs with very complex molecular structures are possible.

If generic copies of such innovative therapies are eventually to be made available, standards must be developed to accommodate these products within the Hatch-Waxman framework. This includes work on issues of composition, formulation and bioequivalence. Scientific research in each of these areas is needed to support new standards.


On July 31, the Senate passed S. 812, the Greater Access to Affordable Pharmaceuticals Act, sponsored by Senators Schumer (D-NY) and McCain (R-AZ). The Administration is opposed to this bill on the grounds that it would 1) harm innovation and investment in new medicines; 2) encourage litigation around the initial approval of new drugs and the filing of patents; 3) reduce patent protections for drug developers; and 4) delay availability of generic drugs and reduce price competition. The Senate also attached provisions to allow the importation of drugs from Canada that we believe would jeopardize the health and safety of the nation’s consumers. The Administration supports the approach to drug price relief taken by the House of Representatives earlier this year, in passing legislation to provide a prescription drug benefit under Medicare.

Provisions of S. 812 require sponsors to file patent information for “Orange Book” listings no later than 30 days after NDA approval, or 30 days after patents are issued for drugs already having NDA approval. Failure to file within these timeframes will permanently bar patent holders from bringing suits for patent infringement. The Administration believes this would be an unacceptable rollback in the rights of patent holders. Provisions to allow generic manufacturers to sue sponsors to correct or delete patent listings would encourage lawsuits.

The Administration also opposes provisions that would allow innovators to protect their patents filed more than 30 days after NDA approval only by filing an infringement lawsuit and obtaining a preliminary injunction within 45-days of receiving notification of a paragraph IV challenge. If no lawsuit has been filed after 45 days have elapsed, the innovator would be permanently barred from filing future infringement suits to protect the patent.

In addition, provisions for “rolling” 180-day exclusivity will actually reduce access to affordable pharmaceuticals, as consumers would have to wait longer for the second or third generic approvals after the expiration of exclusivity, which is when significant price reduction occurs. These provisions would also generate extensive litigation over the timing and validity of triggering events.

Finally, we note that provisions to allow the importation of drugs from Canada by individuals, pharmacists and wholesalers, would open up the current “closed” drug distribution system to drugs of unknown quality, authenticity and origin. These provisions create opportunities for counterfeiting, drug diversion, and fraud.


FDA has been actively engaged in addressing the issues that have been raised by brand name and generics companies concerning the operation of the statute. We held a symposium in January 2002 where the generic and innovator industries engaged FDA in a discussion and debate on the issues each side wanted to bring to the Agency’s attention. Issues included the 30-month stay, 180-day exclusivity, and patent listing, as well as other questions such as the use of citizen petitions and their role in approval of generic drugs.

FDA continues to implement the Hatch-Waxman Amendments exclusivity provisions in the best manner possible given the text of the legislation, the history of the legislation and the numerous court challenges. In doing so, FDA has tried to maintain a balance between innovation in drug development and expediting the approval of lower-cost generic drugs, as Congress sought to do in enacting this statute.

Thank you for the opportunity to discuss these important issues with you, and I will be happy to answer any questions you may have.

1Mova Pharmaceutical Corp. v. Shalala, 140 F.3d 1060, 1065 (D.C. Cir. 1998).

2 Mylan v. Thompson, 268 F.3d 1323 (Fed Cir. 2001)—A generic’s claim of improper listing “Is not a recognized defense to patent infringement.”