Reforming--Balancing, Ruining, Whatever--Hatch Waxman
Executive Summary
Efforts to fix perceived imbalances in the Hatch-Waxman Act once again are underway in Washington and, for the first time, some of them are likely to have an impact on both the brand-name and generic drug industries. An FDA rule announced in June and implemented in August aims to clear up some of the legal ambiguities that have played a critical role in shaping corporate strategies. A bill pending in Congress would further modify the act, if it passes.
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Authorized Generics: Band-Aid or Strategy?
In the past two years, some Big Pharma companies have revitalized their long-dormant generics activities and launched generic copies of their own drugs. They're doing this to capture business they would otherwise lose completely and to tie up generics competitors in court. While similar strategies failed in the past, a number of changes may make it more feasible. Innovators are behaving more rationally about pricing. And they are going after the most lucrative part of the generics business.
McClellan's Balancing Act: Yes to Generics, No to Imports & Price Controls
It's hard to fault the FDA commissioner for his even-handed treatment of the two drug industries--branded vs. generic--and the competing social imperatives they stand for: new drug research and affordability. In recent speeches, Mark McClellan, MD, PhD, has been making the branded industry's case both for higher drug reimbursement from Europe and against parallel imports from Canada. And he's also been pushing for making it easier for branded generic drugs to hit the market. The only problem with this balancing act: he has far more power to quickly advance the generic agenda than the branded one.
The Battle for IP
Generic firms are increasingly attacking innovators' drug patents before they expire--even, in some cases, the previously invulnerable active ingredient patents--and courts are supporting some of their tactics. The primary means used by generic firms for mounting this offensive campaign: Paragraph IV filings, which claim that the innovator's patent is invalid or won't be infringed. It's a tactic that generic firms are relying on more heavily. While the details of each patent dispute differ widely, one thing is clear: generic firms are finding successful ways to maneuver around existing innovator patents. They are winning in court almost 75% of the time after litigating Paragraph IV challenges. In particular, the Pfizer/Reddy case exposes how generic firms can and will poke holes in an innovator's intellectual property. Notwithstanding that Pfizer had explored and patented the derivative salts of Norvasc, this case highlights how the timing of certain types of patents may be crucial. In addition, it may motivate pharmaceuticals to more comprehensively explore alternative forms and formulations of their compounds. Besides building a portfolio of strong patents, fully exploring the form and formulation space could result in a secondary benefit: discovering a superior product.