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The Hatch-Waxman Act: An Opposition

The high cost of prescription drugs and the lack of access to affordable medication affects millions of Americans every year. The Hatch-Waxman Act, also known as the Drug Price Competition and Patent Term Restoration Act of 1984, was implemented to help address this problem by providing a framework for the approval and sale of generic drugs. The Hatch-Waxman Act permits manufacturers of generic medications to submit an Abbreviated New Drug Application (ANDA) to the American Food and Drug Administration. This kind of application enables generic producers to accelerate the time it takes them to bring their product to market by avoiding the need to repeat pricey clinical studies already carried out by the brand name manufacturer. The ANDA must show that the product is bioequivalent to the brand-name equivalent, which means it has the same active components, potency, dosage form, safety profile, and efficacy profile as its rival, to reduce drug prices. Furthermore, the act offers a way for pharmaceutical firms to get a lengthy exclusivity period for their brand-name medications, usually 20 years from the date of filing, in exchange for giving the FDA the drug’s active ingredients and clinical information, in hopes of promoting innovations. However, over the ensuing decades, the effectiveness of this legislation in achieving its original goals has been called into question. The Hatch-Waxman Act is ineffective and should be amended as it perpetuates the high cost of prescription drugs, while not doing enough to address the problem of drug shortages, or enough to protect consumers from unsafe or ineffective drugs, therefore alternative solutions should be considered to address these issues.

Although the Hatch-Waxman has been praised for increasing the availability of affordable medication, the act actually perpetuates the high cost of drug prices. On the surface, the Act’s provisions supposedly led to a significant increase in the number of generic drugs available in the market. However, the law has contributed to the problem it was intended to solve by perpetuating the high cost of certain medications. During lengthy exclusivity period for brand-name drugs, the Act limits competition and allows pharmaceutical companies to charge high prices for new products (M. Sokal and A. Gerstenblith). This can be particularly problematic for drugs that are expensive to develop, have no generic alternative, or have a small market size. For example, AbbVie received a period of commercial exclusivity for Humira under the terms of the Hatch-Waxman Act, which meant that the FDA could not approve generic copies of the medication for a specific amount of time (Walker). Because of this, AbbVie was able to control the market and set high prices for the medication. The FDA granted the first generic versions of Humira approval in 2016, ending the drug’s tenure of commercial exclusivity. Nevertheless, AbbVie has been successful in extending the exclusivity period by a number of legal and regulatory measures, including as acquiring additional patents and bringing legal action against producers of generic medications. Humira is still one of the most expensive medications available, with a one-month supply expected to cost over $5,000. This practical illustration shows how the Hatch-Waxman Act negatively affects patients’ access to and cost of prescription medications. 

Additionally, the Act allows loopholes where brand-name drug manufacturers to make slight changes to their drugs, known as “evergreening,” which allows them to extend their patent protection and maintain their market exclusivity period. This method, also performed by AbbVie, enables businesses to postpone the release of biosimilars and preserve a monopoly on the product, maintaining high drug prices. Evergreening methods are permitted by the Hatch-Waxman Act’s provisions, including as the 180-day exclusivity period for first-to-file generic drug applications that may be prolonged by further patents acquired by the brand-name drug producer. The evergreening of brand-name medications, in accordance with a study by the AARP Public Policy Institute, significantly raises medicine prices. According to this study, the average price of a brand-name drug that had generic competition rose by 18.6% in the year before the generic version became available, while the average price increase for drugs without generic competition was only 2.6%. This means that pharmaceutical firms can raise prices of their drugs without receiving any backlash or repercussions. Evergreening brand-name medications hinders the potential of generic medications to lower drug prices by extending the exclusive term of the brand-name medication and delaying the launch of generic medications. Patients and the healthcare system as a whole bear a heavy financial burden when long-term high prescription prices persist. This makes the issue of access to affordable medication worse and makes things more difficult for patients and healthcare professionals. Thus, the act must be changed to mitigate this issue. 

The Hatch-Waxman Act also causes drug shortages. Drug shortages are a major problem in the healthcare industry since they can have a detrimental effect on patients, healthcare professionals, and the pharmaceutical sector. For instance, shortages might result in greater health risks, higher costs, discomfort for patients, and the suspension of therapies that could otherwise save their lives. This act is largely at fault for many reasons. Firstly, as mentioned prior, the Hatch-Waxman Act limit competition and increase prices. As a result, the number of suppliers for certain drugs may decrease, making the drug supply more vulnerable to disruptions, and increasing the risk of shortages. According to the FDA, there were 178 drug shortages in 2020, up from 121 in 2019. This is primarily due to the fact that the supply chain for drugs is complex and involves many different players, such as manufacturers, distributors, and pharmacies. This act fails to address this aspect because instead of emphasizing the stability of the drug supply chain, it largely concentrates on the development of generic medications. The act gives generic medicine producers incentives to create and sell medications that are interchangeable with name-brand medications, but it ignores the underlying issues that can result in drug shortages. These issues can include difficulty with production and quality control, disruptions in the supply chain, and challenges locating raw materials and active pharmaceutical components. According to a report by the Pew Charitable Trusts, “drug shortages often result from problems at the manufacturing stage, including quality control issues, increased demand, and production delays.” However, the lack of transparency in the drug supply chain can make it difficult to identify and address the root causes of shortages. Thus, the Hatch-Waxman act should be amended to remedy these issues. 

The Hatch-Waxman Act, while intended to protect consumers from unsafe or ineffective drugs, falls short in several areas that make it less effective. The primary goals of the Hatch-Waxman Act are to promote innovation and competition in the pharmaceutical sector by rewarding generic medicine producers and accelerating the approval of generic medications. The effectiveness and safety of the pharmaceuticals that are authorized for use and released onto the market are not always guaranteed, however, by the emphasis on fostering competition and accessibility. The Hatch-Waxman Act’s approval procedure for generic medications is predicated on the original brand-name medication’s approval and makes the assumption that the generic medication is as safe and effective. Clinical trials are not necessary during this approval procedure, known as abbreviated new drug applications (ANDA), which demonstrates the safety and efficacy of the generic medicine. As a result, there is a dearth of thorough information about the efficacy and safety of generic medications. Generic medications approved through the accelerated new drug application (ANDA) procedure had a higher likelihood of safety recalls than those approved through the standard new drug application process, according to a study published in JAMA Internal Medicine. According to the study, the recall rate for generic pharmaceuticals approved through the ANDA procedure was 1.7% between 2007 and 2010, compared to 0.2% for drugs approved through the NDA process (Shrank). Furthermore, the Hatch-Waxman Act does not contain measures for generic pharmaceuticals’ post-market surveillance and monitoring to guarantee their continued efficacy and safety. Consumers are at risk of receiving unsafe or ineffective medications due to the lack of post-market monitoring since adverse effects may not be noticed for a significant amount of time after a drug has been put on the market. Overall, the Hatch-Waxman Act’s emphasis on fostering innovation and affordability in the pharmaceutical sector has not effectively addressed the safety and efficacy of pharmaceuticals introduced to the market. Consumers are put at risk due to a lack of comprehensive data and post-market monitoring, which emphasizes the need for more restrictions to guarantee the security and effectiveness of pharmaceuticals made available to the general public.

Many critics will argue that patent laws, such as the Hatch-Waxman Act promote innovation by providing incentives for investing in companies to develop drugs as they do not need to worry about their drug being stolen and sold for cheaper. However, the provisions of this act have had unforeseen effects that actually hindered innovation and decreased the production of new pharmaceuticals. The Hatch-Waxman Act’s creation of a market environment that encourages corporations to concentrate on promoting and marketing existing pharmaceuticals rather than studying and creating new drugs is one of the reasons why it has not fostered innovation. As a result of the act’s provisions, such as the 180-day exclusivity period for first-to-file generic drug applicants, generic drug development and evergreening have taken precedence over the creation of new pharmaceuticals. The effect has been a decrease in the production of new pharmaceuticals and a hindrance to innovation as many pharmaceutical companies have diverted their resources from research and development and toward marketing and litigation(Glickman). Furthermore, the Hatch-Waxman Act has produced a hostile legal and regulatory landscape for innovation. The terms of the legislation have made obtaining clearance for new pharmaceuticals more expensive and difficult, which has deterred businesses from making research and development investments. Due to the significant clinical testing, regulatory clearances, and legal requirements, the approval process for new medications can be drawn out and challenging. This procedure may take a long time and be expensive, which may discourage businesses from making new drug investments and stifle innovation. The price of creating a new treatment and bringing it to market has climbed dramatically in recent years, hitting an average of $2.6 billion in 2018, according to a recent report by the Tufts Center for the Study of Drug Development. Innovation in the pharmaceutical industry has been hampered by this cost growth, which has made it harder for businesses to invest in the creation of new drugs. The Hatch-Waxman Act’s regulatory and legislative framework, which has raised the expense and complexity of acquiring clearance for new pharmaceuticals, is cited in the report as a contributing factor to this trend. This lends credence to the claim that the provisions of the act have not successfully encouraged innovation in the pharmaceutical sector. 

In conclusion, the Hatch-Waxman Act has maintained the high cost of prescription pharmaceuticals and led to drug shortages despite its intention to promote the accessibility of cheap treatment. Since there is no competition due to the extended brand-name medicine exclusivity term and the evergreening loophole, drug prices are high. Additionally, the act does not address the underlying problems that lead to medicine shortages, leaving the healthcare sector exposed to supply chain disruptions. Patients as well as the healthcare system as a whole are thus financially burdened. The Hatch-Waxman Act must be changed to solve these problems, or alternate solutions must be found to guarantee that patients have access to reasonably priced, secure, and efficient pharmaceuticals.


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