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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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« Fifty Years of Scientific History For You | Main | That Didn't Take Very Long »

November 2, 2009

In Which You Get to Hear the Phrase "Hatch-Waxman" Again

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Posted by Derek

There's a constant running battle in the drug industry between the two kinds of pharmaceutical companies: the ones who discover the drugs first, and the ones who sell the drugs cheaply after the patents have expired. It surprises me still how many people I run into (outside my work) who don't make that distinction, or who don't even realize that there is one.

But the generic industry is a very different place. Their research budgets are far smaller than the ones at the discovery companies, since they're only dealing with drugs that everyone knows to already work. Their own research is directed toward satisfying the regulatory requirements that they're making the equivalent substance, and to finding ways to make it as cheaply as possible. And some of them are very good at it - some ingenious syntheses of marketed drugs have come out of the better generic shops. Of course, some real head-shaking hack work has, too, but that you can find everywhere.

The tension between the two types of company is particularly acute when a big-selling drug is nearing its patent expiration. It's very much in the interest of the generic companies to hurry that process along, so often they challenge the existing patents on whatever grounds they can come up with, figuring that the chances of success jutify the legal expenses. Since the 1984 Hatch-Waxman act, there's been an even greater incentive, the so-called "Paragraph IV" challenge. A recent piece in Science now makes the case that this process has gotten out of control.

After four years of a drug's patent life, a generic company can file an Abbreviated New Drug Application (ANDA) and challenge existing patents on the grounds that they're either invalid or that the ANDA doesn't infringe them. (This, for example, is what happened when Teva broke into Merck's Fosamax patent, taking the drug generic about four years early). If the challenge is successful, which can take two or three years to be resolved, the generic company gets an extra bonus of 180 days of exclusivity. The authors of the Science piece say that this process is tipped too far toward the generic side, and it's cutting too deeply into the research-based companies. (As noted here, that's rather ironic, considering the current debate about such provisions for biologic drugs, where some parties have been citing the Hatch-Waxman regime as a wonderful success story in small molecules).

This all took a while to get rolling, but the big successes (such as the Fosamax example) have bred plenty of new activity. There are now five times as many Paragraph IV challenges as there were at the beginning of the decade. Teva, for example, which is one of the big hitters in the generic world, had 160 pending ANDAs in 2007, of which 92 were running under Paragraph IV. Here's a look at some recent litigation in the area, which has certainly enriched various attorneys, no matter what else it's done.

Under Hatch-Waxman, a new drug starts off with five years of "data exclusivity" during which a generic version can't be marketed. The Science authors argue that the losses from Paragraph IV now well outweigh the gains from this provision, and that the term should be extended (which would put it closer to those found in Europe, Canada, and Japan. They also bring up the possibility of selectively extending data exclusivity case-by-case or for certain therapeutic areas, but I have to say, this makes me nervous. There are too many opportunities for gamesmanship in that sort of system, and I think that one goal of a regulatory regime should be to make it resistant to that sort of thing.

But I do support the article's main point, which is that the whole generic industry depends on someone doing to the work to discover new drugs in the first place, and we want to make sure that this engine continues to run. Politically, though, anything like this will be a very hard sell, since it'll be easy to paint it as a Cynical Giveaway to the Rapacious and Hugely Profitable Drug Companies. But speaking as someone working for the RHPDCs, I can tell you that we are indeed having a tougher time coming up with the new products with which to exploit the helpless masses. . .

Comments (23) + TrackBacks (0) | Category: Business and Markets | Drug Industry History | Drug Prices | Patents and IP | Regulatory Affairs


COMMENTS

1. Mark on November 2, 2009 9:31 AM writes...

Some of the big pharma guys are playing hardball with generics now....

http://www.marketwatch.com/story/teva-shares-slump-on-concerns-over-generic-zocor-pricing

Mark

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2. Rob on November 2, 2009 10:34 AM writes...

The ideal would be a worldwide standard period of 12 to 15 years of data exclusivity for a new chemical entity. That would encourage the development of drugs for niche indications and allow companies to select clinical candidates solely on the basis of performance. Diminishing the importance of patent calculus would definitely foster innovation.

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3. HelicalZz on November 2, 2009 10:37 AM writes...

Speaking as someone who does not work for a RHPDC, but like many more of a wannabe RHPDC (sorry), a huge consequence of Hatch-Waxman has been its effect on young biotechs (non-biopharmaceutical biotechs that is). If you are developing a small molecule drug that you hope to partner, the IP you establish had better be as ironclad as the science, and honestly probably more so. But .. young biotechs are built with science expertise not legal, and while good (expensive) legal advice is available, it is a hard place for startups to spend their initial often modest resources. A question that big pharma will have to ask as they review your work and consider a partnership or purchase is 'can we defend this against Teva?'.

Five years of data exclusivity just doesn't justify an investment in most cases. Good science is hard enough, good protection can be even harder.

Zz

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4. Hap on November 2, 2009 10:41 AM writes...

I think I'm completely confused as to what the period of exclusivity being discussed for biologics is for - I had assumed that the exclusivity period was on top of that given by the patent itself, but the above makes that appear to be incorrect. If I spend the time working on a drug through Phase 3 only to find that my patent is invalid and my drug would take somewhere near forever to make the money I spent on it back, I can see how that would put a crimp in my willingness to discover drugs.

Certain companies in India seem to need to learn this lesson in the worst way (*cough* Cipla *cough*)- maybe by the time the market is big enough that generic companies enter discovery en masse, they'll figure it out.

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5. Tok on November 2, 2009 11:43 AM writes...

The drug companies should find a way to protect their compounds through copyright. Infinite exclusivity! Just sue the pants off any patient who uses your drug without paying the license fee.

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6. Lucifer on November 2, 2009 11:45 AM writes...

The argument would sound so much better if big pharma still discovered innovative drugs, as opposed to make more 'me toos'

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7. Mark on November 2, 2009 12:43 PM writes...

#6

The "me toos" don't exist. If you've got a stomach ulcer and you can't take cimetidine, then ranitidine is not a me too, it a useful drug that fill an unmet need.

Mark

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8. anchor on November 2, 2009 1:16 PM writes...

Mark : Nice article on Teva. Teva is one of the most aggressive generic pharma out there and they have Global presence. It is my understanding that many of their generic products are manufactured in China and India(for pittence). If the price of generic version of Zocor would cost more, where is the saving for the consumers? I guess congress is asleep (again) while driving.

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9. morph on November 2, 2009 1:31 PM writes...

"After four years of a drug's patent life, a generic company can file an Abbreviated New Drug Application (ANDA) and challenge existing patents on the grounds that they're either invalid or that the ANDA doesn't infringe them."

Not exactly. Restrictions on when an ANDA can be filed have nothing to do with patents. It is data exclusivity (NCE exclusivity) that you are talking about. It should read "Not less than four years after the date of first commercial marketing of an NCE, a generic company can file...". It is 4 years only if there is a paragraph IV patent certification (the sort that you have mentioned). Otherwise, it is 5 years. If pediatric exclusivity is granted during the term of the NCE exclusivity, 6 months get added to the NCE exclusivity.

"Under Hatch-Waxman, a new drug starts off with five years of "data exclusivity" during which a generic version can't be marketed." Again, this is not exactly correct. A generic company cannot even file its ANDA during the NCE exclusivity period. Naturally, there will be no approval or marketing. A "virtual exclusivity", during the time FDA takes for approving the first generic - normally about 12-18 months - is possible. Because the basic patent (plus the Hatch-Waxman term extension of up to 5-years) almost always expires after the NCE exclusivity period, this "virtual exclusivity" is relatively rare.

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10. Mark on November 2, 2009 3:51 PM writes...

Anchor:

The story with Teva and Merck is really interesting. Merck went one step further and negotiated a price with a bunch of providers that severely undercut Teva's market.

What makes me laugh is that Teva is up in arms about it, but they are only getting a taste of their own medicine.

Merck is actually in a better position than Teva because they've recouped as much revenue from the drug as they can. The only variable cost they've got now is manufacturing the drug. Teva, on the other hand, is counting on the 6-month exclusivity on generics to cover all the legal and development costs they've had to incur so far.

This actually went to court I believe and the decision was that the purpose of the Hatch-Waxman legislation was to provide lower drug prices for consumers. So whether Merck does it or Teva, it doesn't matter. Teva was basically told to take a hike.

Mark

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11. PIV on November 2, 2009 4:03 PM writes...

Morph is correct, but doesn't go far enough. Once an ANDA is accepted for filing by FDA (some time after submission), the filer must notify the NDA holder of its challenge. If the NDA holder then sues for infringement within 45 days of notification, there is an automatic 30 month stay of FDA approval. However, if there is an NCE exclusivity, the 30-month clock doesn't begin until that stay expires, so you've got a minimum of 7.5 years. Since the litigation typically takes longer than 30 months and "at-risk" launches (launches after approval but before the patent litigation is resolved) are the exception, the reality is typically longer than that. Of course, if the patent is actually valid and infringed, the product remains protected for the life of the patent.

Anchor: You are mistaken in your notion that Teva's products are made in India or China. It's true that many generic products are produced in India, but not those marketed by Teva. AS for China, there is a lot of API and intermediate mfg in China, but mfg of finished dose products for the US market is nonexistent.

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12. Anonymous on November 2, 2009 5:56 PM writes...

J&J layoffs announced tomorrow.

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13. Lucifer on November 2, 2009 7:35 PM writes...

Anonymous,

Layoffs are too common nowadays.. if J&J started hiring people- that would be news.

Having said that, I cannot feel any sympathy for people who once defended their now ex-employer. They thought that appeasing evil would keep them going forever.

Guess it did not.

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14. FME on November 3, 2009 4:08 AM writes...

@8, so anchor, and you seriously believe, that the other pharmaceutical companies, like Merck, Pfizer, Glaxo etc do not outsource work to China and/or India, also for a pittance?

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15. petros on November 3, 2009 8:28 AM writes...

Hap

Biologics currently have a clear run anway, with no legislation in the US to allow biosimilars. And Amgen's stack of EPO patents, thanks to various cips, have enabled it to keep blocking market entry of new improved EPOs such as Roche's Mircera

The effective period of patent protection acheived for EPO is about 30 years,

Permalink to Comment

16. Robert Bruce Thompson on November 3, 2009 10:05 AM writes...

But I do support the article's main point, which is that the whole generic industry depends on someone doing to the work to discover new drugs in the first place, and we want to make sure that this engine continues to run.

Dependent how? If drug discovery ceased entirely, wouldn't the generic companies simply continue to produce existing drugs?

Sure, they'll continue to introduce new generics as drugs go off patent, but if that stream disappears it wouldn't matter from their point of view. I don't think their business depends on new products so much as cost-efficient production of existing products. If the major pharmas don't have new products in the pipeline and being introduced, the generic companies can compete just fine with what they already have.

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17. Hap on November 3, 2009 10:19 AM writes...

I know that part, but Congress has been arguing about the length of exclusivity to guarantee biologics before biosimilars are allowed to compete with them, and I think I misunderstand what that period of exclusivity means (is it on top of the 20-year patent protection or concurrent with it, or referring to something else entirely?).

EPO's not exactly a shining example of corporate behavior from the very beginning (the delays in filing Ortho's data from Amgen which resulted in some money changing hands and Ortho getting hosed). Some things never change.

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18. DylanE on November 3, 2009 12:52 PM writes...

Hap

My understanding is that the period runs concurrent with the patent, but that the clock starts ticking at approval (or market entry, never been clear on the specifics). With patents of course they start with the patent filing, so by the time you bring your drug to market you might have 10 years left, or 5 years, or even less of patent protection. So in some cases the exclusivity doesn't matter at all (assuming you have good patents), and in other cases it is the only thing you have.

I hope someone can correct me if I've misunderstood this, as it really isn't my area, but I am trying to learn more.

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19. HelicalZz on November 3, 2009 3:40 PM writes...

Watch-Hatchetman?

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20. will on November 3, 2009 6:09 PM writes...

A couple of things

1) A paragraph IV challenge has never broken a compound patent. Not once. (new salts or single isomers of existing compounds have been found obvious, however). Not even for the me-est too-est drug out there. Are things changing? Maybe (that's another post)

2) Paragraph IV challenges are more successful against formulation and method of use patents. In my opinion, as innovator pipelines dry up, companies seek to extend the monopoly of their product by obtaining additional patents on their existing drugs for formulations and new uses. To stick with the fosamax example, if certain dosing regimen was known to work with earlier bisphosphonate drugs, is it inventive to use that same regimen for other bisphosphonates?

2a) polymorphs are a whole other story

3) because the compound patent for so many FDA-approved drugs has or will expire soon, the generics are stepping up the P-IV challenges on the follow-on patents. this is the reason for the increased # of challenges cited by the Science article.

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21. Anonymous BMS Researcher on November 3, 2009 7:35 PM writes...

In addition to there being two types of pharma company (brand-name versus generic), there are also two rather different sorts of generic companies. Some generic companies make drugs like aspirin and amoxicillin that have been generics for a long time, and have corporate cultures dominated by production, quality assurance, and logistics. Other generic companies make most of their profits being the first one to break somebody's patent. Many of your readers already know about 180-day exclusivity, but some may not know that a generic company that breaks somebody's patent gets half a year in which they get to be the only competitor.

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22. DerekF on November 4, 2009 12:36 PM writes...

Will (#20)'s point 1) is not correct, although nearly so - if memory serves one of the earliest Paragraph IV cases invalidated the compound patent on cyclobenzaprine (Flexeril), because the company was simultaneously telling the US PTO that the compound was non-sedating for patentability while listing with the FDA that the principal side-effect was sedation. But I think that he's right on the general point that Paragraph IV litigation is up because generics are hitting the follow-on patents really hard as compound patents expire, though they are taking on the NCE compound patents too.

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23. will on November 4, 2009 1:26 PM writes...

@DerekF

Cyclobenzaprine is disclosed and claimed in US Patent 3,454,643, which expired on July 8, 1986. The case you are thinking of deals with patent for a method of using the api. Merck v. Danbury 873 F.2d 1418

http://www.altlaw.org/v1/cases/412753

Notably, Danbury did not file its ANDA until after the expiration of the compound patent.

So I stand by my position that no P-IV challenge has successfully broken a compound patent. Furthermore, in this particular case, it was not that court found the use of the api was obvious, but rather the patent was unenforcable because Merck withheld material information from the PTO

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