Hatch-Waxman Related Provisions of the Medicare Prescription Drug Bills (H.R. 1 and S. 1): A Side-by-Side Comparison

CRS Report for Congress
Hatch-Waxman Related Provisions of the
Medicare Prescription Drug Bills
(H.R. 1 and S. 1):
A Side-by-Side Comparison
Updated September 15, 2003
Wendy H. Schacht
Specialist in Science and Technology
Resources, Science, and Industry Division
John R. Thomas
Visiting Scholar
Resources, Science, and Industry Division


Congressional Research Service ˜ The Library of Congress

Hatch-Waxman Related Provisions of the Medicare
Prescription Drug Bills (H.R. 1 and S. 1): A Side-by-
Side Comparison
Summary
The Congress is currently debating changes to the Medicare program. H.R. 1,
the Medicare Prescription Drug and Modernization Act, and S. 1, the Prescription
Drug and Medicare Improvements Act, as passed by each respective body on June
27, 2003, contain provisions that would amend P.L. 98-417, the Drug Price
Competition and Patent Term Restoration Act of 1984 (commonly known as the
Hatch-Waxman Act). The Hatch-Waxman Act made several significant changes to
the patent laws designed to encourage innovation in the pharmaceutical industry
while facilitating the speedy introduction of lower-cost generic drugs. The two bills
currently under consideration would address Hatch-Waxman related issues of drug
patents listed in the Orange Book, patent challenges by generic firms, and the award
of market exclusivity, among other things. This report provides a thematic side-by-
side comparison of the proposed changes contained in H.R. 1 and S. 1 that would
affect the Hatch-Waxman legislation. The paper will be updated as events warrant.



Contents
In troduction ......................................................1
Side-by-Side Comparison of H.R. 1 and S. 1: Hatch-Waxman
Related Provisions.............................................2



Hatch-Waxman Related Provisions of the
Medicare Prescription Drug Bills (H.R. 1 and
S. 1): A Side-by-Side Comparison
Introduction
The Congress is currently debating changes to the Medicare program.1 H.R. 1,
the Medicare Prescription Drug and Modernization Act, and S. 1, the Prescription
Drug and Medicare Improvements Act, as passed by each respective body on June
27, 2003, contain provisions that would amend P.L. 98-417, the Drug Price
Competition and Patent Term Restoration Act of 1984 (commonly known as the
Hatch-Waxman Act).
The Hatch-Waxman Act made several significant changes to the patent laws
designed to encourage innovation in the pharmaceutical industry while facilitating
the speedy introduction of lower-cost generic drugs. However, over the 18 years
since its passage, concerns have been expressed as to whether or not implementation
of certain portions of the law has led to unintended consequences contrary to the
original intent. Some argue that brand name companies and/or generic firms have
exploited provisions of the Act to prevent the timely marketing of less costly
pharmaceuticals. Other experts maintain that while a few isolated cases of
“misinterpretation” of the law have arisen, these can be addressed through existing
procedures and that legislative changes are not necessary.2
The two bills currently under consideration would address Hatch-Waxman
related issues of drug patents listed in the Orange Book, patent challenges by generic
firms, and the award of market exclusivity, among other things. The following is a
thematic side-by-side comparison of the proposed changes contained in H.R. 1 and
S. 1 that would affect the existing Hatch-Waxman legislation.


1 For a discussion of the relevant bills see CRS Report RL31992, Medicare Prescription
Drug Provision of S. 1, as Passed by the Senate, and H.R. 1, as Passed by the House, by
Jennifer O’Sullivan.
2 For detailed background information on the law and its implementation see CRS Issue
Brief IB10105, The Hatch-Waxman Act: Proposed Legislative Changes Affecting
Pharmaceutical Patents, by Wendy H. Schacht and John R. Thomas; CRS Report RL31379,
The Hatch-Waxman Act: Selected Patent-Related Issues, by Wendy H. Schacht and John
R. Thomas; and CRS Report RL30756, Patent Law and Its Application to the
Pharmaceutical Industry: An Examination of the Drug Price Competition and Patent Term
Restoration Act of 1984, by Wendy H. Schacht and John R. Thomas.

CRS-2
Side-by-Side Comparison of H.R. 1 and S. 1: Hatch-Waxman Related Provisions
ProvisionCurrent LawH.R. 1S. 1
Patents and genericP.L. 98-417Title XI Subtitle ATitle VII
pharmaceuticals
P.L. 98-417, commonly known as the
“Hatch-Waxman Act,” modified the
1952 Patent Act by creating a statutory
exemption from certain claims of
patent infringement. Generic
manufacturers may commence work
iki/CRS-RL32003on a generic version of an approved
g/wbrand name drug during the life of the
s.orpatent, so long as that work furthers
leakcompliance with Food and Drug
://wikiAdministration (FDA) regulations.
httpAlthough the Hatch-Waxman Act
provides a safe harbor from patent
infringement, it also requires would-be
manufacturers of generic drugs to
engage in a specialized certification
procedure. The core feature of this
process is that a request for FDA
marketing approval is treated as an
“artificial” act of patent infringement.
This feature was intended to allow
judicial resolution of the validity,
enforceability and infringement of
patent rights afforded by the Patent
and Trademark Office.



CRS-3
ProvisionCurrent LawH.R. 1S. 1
Under PL 98-417, each holder of an
approved new drug application (NDA)
must list pertinent patents it believes
would be infringed if a generic drug
were marketed before the expiration of
these patents. The FDA publishes this
list of patents in its list of approved
products, the “Orange Book.”
A generic firm must certify its
intentions with regard to each patent
iki/CRS-RL32003associated with the generic drug it
g/wseeks to market. Four possibilities
s.orexist under the 1984 Act: (1) that
leakpatent information on the drug has not
been filed; (2) that the patent has
://wikialready expired; (3) the date on which
httpthe patent will expire; or (4) that the
patent is invalid or will not be
infringed by the manufacture, use or
sale of the drug for which the
“abbreviated new drug application”
(ANDA) is submitted.
These certifications are respectivelyRequires the ANDA applicant toRequires the ANDA applicant to
termed paragraph I, II, III, and IVsubmit a more detailed statement whensubmit a more detailed statement when
certifications. An ANDA certifiedfiling a paragraph IV certification thanfiling a paragraph IV certification than
under paragraphs I or II is approvedcurrently mandated.currently mandated.


immediately after meeting all
applicable regulatory and scientific
requirements. An ANDA certified

CRS-4
ProvisionCurrent LawH.R. 1S. 1
under paragraph III must, even after
meeting pertinent regulatory and
scientific requirements, wait for
approval until the drug’s listed patent
expires.
If the ANDA applicant files aRequires the ANDA applicant to notifyRequires the ANDA applicant to notify
paragraph IV certification, it mustthe patent holder and the brand namethe patent holder and the brand name
notify the proprietor of the patent. Thecompany (if different) of a paragraphcompany (if different) of a paragraph
patent owner may bring a patentIV certification within 20 days.IV certification within 20 days.
infringement suit within 45 days of
receiving such notification. If theThe FDA may approve the ANDA onThe FDA may approve the ANDA on
iki/CRS-RL32003patent owner brings a patentthe date of an appeals court decision,the date of an appeals court decision,
g/winfringement charge against thethe date of a settlement order orthe date of a settlement order or
s.orANDA applicant in a timely manner,consent decree, or when a district courtconsent decree, or when a district court
leakthen the FDA must suspend approvaldecision is not appealed.decision is not appealed.
of the ANDA until: (1) the date of the
://wikicourt's decision that the listed drug'sAllows modifications to the defaultAllows modifications to the default
httppatent is either invalid or not infringed;30-month stay based on district court30-month stay based on district court
(2) the date the listed drug's patentjudgments.judgments.
expires, if the court finds the listed
drug's patent infringed; or (3) subjectThe ANDA applicant may not amendNo comparable provision.
to modification by the court, the datethe certification to include a drug
that is 30 months from the date thedifferent from that approved by the
owner of the listed drug's patentFDA, but may amend the application if
received notice of the filing of aseeking approval for a different
Paragraph IV certification.strength of the same drug.
Once the brand name companyPermits only one automatic 30-monthPermits only one automatic 30-month
indicates an intent to bring a patentstay for those patents listed in thestay for those patents listed in the
infringement suit against the genericOrange Book at the time of the filingOrange Book at the time of the filing
company as a result of the paragraphof a paragraph IV ANDA.of a paragraph IV ANDA.



CRS-5
ProvisionCurrent LawH.R. 1S. 1
IV filing, the FDA is prohibited fromThe FDA may approve the ANDA onThe FDA may approve the ANDA on
approving the drug in question for 30the date of an appeals court decision,the date of an appeals court decision,
months or until that time that thethe date of a settlement order orthe date of a settlement order or
patent is found to be invalid or notconsent decree, or when a district courtconsent decree, or when a district court
infringed. If, prior to the expiration ofdecision is not appealed.decision is not appealed.
30 months, the court holds that the
patent is invalid or would not beAllows the paragraph IV ANDAIf a patent owner does not file an
infringed, then the FDA will approveapplicant to request a declaratoryinfringement suit within 45 days of
the ANDA when that decision occurs.judgment regarding the validity of thenotification of a paragraph IV ANDA,
Conversely, if the court holds thepatent if an infringement suit is notthe ANDA applicant may request a
patent is not invalid and would befiled within 45 days of notification.declaratory judgment regarding the
infringed by the product proposed inHowever, if sued, the generic firm mayvalidity of the patent. However, if
iki/CRS-RL32003the ANDA prior to the expiration of 30file a counter claim to require thesued, the generic firm may file a
g/wmonths, then the FDA will not approvepatent holder make changes to thecounter claim to require the patent
s.orthe ANDA until the patent expires.Orange Book listings. No damages areholder make changes to the Orange
leakto be awarded in either case.Book listings. No damages are to be
awarded in either case.
://wiki
httpIf a declaratory judgment is pursued,No comparable provision.
the action is to be brought in the
judicial district where the defendant
(the NDA holder) has its principal
place of business.
In a declaratory judgment action, theNo comparable provision.
NDA holder may obtain access to
confidential information contained in
the ANDA application.
No comparable provision.If the NDA holder does not file all the
required information in the Orange
Book, the court may decide not to



CRS-6
ProvisionCurrent LawH.R. 1S. 1
award treble damages if the ANDA
applicant is found to have infringed on
the patent.
The first generic applicant to file aThe 180-day exclusivity period is toThe 180-day exclusivity period is to
paragraph IV certification is awardedbegin on the date of the firstbegin on the date of the first
a 180-day market exclusivity period bycommercial marketing of the genericcommercial marketing of the generic
the FDA. The 180-day marketdrug by the first ANDA applicant(s).drug by the first ANDA applicant(s).
iki/CRS-RL32003exclusivity period ordinarily begins onA first ANDA applicant(s) is requiredA first ANDA applicant(s) is required
g/wthe earliest of two dates: (1) the dayto forfeit the 180-day exclusivity underto forfeit the 180-day exclusivity under
s.orthe drug is first commerciallycertain circumstances including failurecertain circumstances including failure
leakmarketed; or (2) the day a courtto market within a specified timeto market within a specified time
decision holds that the patent which isframe, withdrawal of the application,frame, withdrawal of the application,
://wikithe subject of the certification isamendment of the certification, failureamendment of the certification, failure
httpinvalid or not infringed. Theto obtain tentative marketing approvalto obtain tentative marketing approval
interpretation of a “court decision”from the FDA, a Federal Tradefrom the FDA, a Federal Trade
includes the decision of a U.S. districtCommission (FTC) or AttorneyCommission or Attorney General
court. A successful defense of a patentGeneral determination that andetermination that an agreement with
infringement suit is not necessary toagreement with a patent holdera patent holder violates antitrust laws,
obtain this exclusivity period.violates antitrust laws, or theor the expiration of all patents. No
expiration of all patents. No otherother subsequent ANDA applicants
subsequent ANDA applicants wouldwould be permitted the 180-day
be permitted the 180-day exclusivity ifexclusivity if all first ANDA
all first ANDA applicants forfeit.applicants forfeit.



CRS-7
ProvisionCurrent LawH.R. 1S. 1
otification of agreements affecting
the sale or marketing of genericTitle XI Subtitle BTitle IX
drugs
No provisionsAgreements between brand nameAgreements between brand name
companies and generic firms regardingcompanies and generic firms regarding
the sale or manufacture of a genericthe sale or manufacture of a generic
drug that is equivalent to thedrug that is equivalent to the
pharmaceutical marketed by the patentpharmaceutical marketed by the patent
owner must be submitted to theowner must be submitted to the
Federal Trade Commission and theFederal Trade Commission and the
Assistant Attorney General for reviewAssistant Attorney General for review
iki/CRS-RL32003within 10 days of completion. Partieswithin 10 days of completion. Parties
g/wthat fail to file such agreements arethat fail to file such agreements are
s.orsubject to civil penalties. The FTCsubject to civil penalties. The FTC
leakmay engage in rule making to carry outmay engage in rule making to carry out
these provisions. The effective date isthese provisions. The effective date is
://wiki30 days after enactment.30 days after enactment.


http