How Hatch-Waxman successfully balances affordability and innovation

In a posting on the Pharmaceutical Research and Manufacturers of America website, Tom Wilbur, a director of public affairs at PhRMA, explains the intellectual property scene, taking a look at how Hatch-Waxman successfully streamlined the process for generic medicine approvals while preserving incentives for innovation.

For three decades, the Drug Price Competition and Patent Term Restoration Act, more commonly known as the Hatch-Waxman Act, has fostered innovation, spurred competition and helped the United States remain a leader in biopharmaceutical research and development (R&D).

The development of new medicines is a lengthy, complex, uncertain and expensive process. In fact, from drug discovery through Food and Drug Administration approval, developing a new medicine takes 10 to 15 years and costs an average of $2.6 billion. In order to balance innovation and affordability, Congress enacted the Hatch-Waxman Act, which provides biopharmaceutical companies with time and incentives to develop safe and effective medicines and generate revenues to put back into future R&D. Under the framework, innovator companies are given a five-year exclusivity period for new chemical entities during which generic manufactures generally cannot submit FDA applications for new generic versions. Hatch-Waxman also allows for innovators to seek to restore some of the patent term lost due to the FDA approval process.