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

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

Order Code RL32003
CRS Report for Congress
Received through the CRS Web
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
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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
Provision
Current Law
H.R. 1
S. 1
Patents and generic
P.L. 98-417
Title XI Subtitle A
Title 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
on a generic version of an approved
brand name drug during the life of the
patent, so long as that work furthers
compliance with Food and Drug
Administration (FDA) regulations.
Although 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
Provision
Current Law
H.R. 1
S. 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
associated with the generic drug it
seeks to market. Four possibilities
exist under the 1984 Act: (1) that
patent information on the drug has not
been filed; (2) that the patent has
already expired; (3) the date on which
the 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 respectively
Requires the ANDA applicant to
Requires the ANDA applicant to
termed paragraph I, II, III, and IV
submit a more detailed statement when
submit a more detailed statement when
certifications. An ANDA certified
filing a paragraph IV certification than
filing a paragraph IV certification than
under paragraphs I or II is approved
currently mandated.
currently mandated.
immediately after meeting all
applicable regulatory and scientific
requirements. An ANDA certified

CRS-4
Provision
Current Law
H.R. 1
S. 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 a
Requires the ANDA applicant to notify
Requires the ANDA applicant to notify
paragraph IV certification, it must
the patent holder and the brand name
the patent holder and the brand name
notify the proprietor of the patent. The
company (if different) of a paragraph
company (if different) of a paragraph
patent owner may bring a patent
IV certification within 20 days.
IV certification within 20 days.
infringement suit within 45 days of
receiving such notification. If the
The FDA may approve the ANDA on
The FDA may approve the ANDA on
patent owner brings a patent
the date of an appeals court decision,
the date of an appeals court decision,
infringement charge against the
the date of a settlement order or
the date of a settlement order or
ANDA applicant in a timely manner,
consent decree, or when a district court
consent decree, or when a district court
then the FDA must suspend approval
decision is not appealed.
decision is not appealed.
of the ANDA until: (1) the date of the
court's decision that the listed drug's
Allows modifications to the default
Allows modifications to the default
patent is either invalid or not infringed;
30-month stay based on district court
30-month stay based on district court
(2) the date the listed drug's patent
judgments.
judgments.
expires, if the court finds the listed
drug's patent infringed; or (3) subject
The ANDA applicant may not amend
No comparable provision.
to modification by the court, the date
the certification to include a drug
that is 30 months from the date the
different from that approved by the
owner of the listed drug's patent
FDA, but may amend the application if
received notice of the filing of a
seeking approval for a different
Paragraph IV certification.
strength of the same drug.
Once the brand name company
Permits only one automatic 30-month
Permits only one automatic 30-month
indicates an intent to bring a patent
stay for those patents listed in the
stay for those patents listed in the
infringement suit against the generic
Orange Book at the time of the filing
Orange Book at the time of the filing
company as a result of the paragraph
of a paragraph IV ANDA.
of a paragraph IV ANDA.

CRS-5
Provision
Current Law
H.R. 1
S. 1
IV filing, the FDA is prohibited from
The FDA may approve the ANDA on
The FDA may approve the ANDA on
approving the drug in question for 30
the date of an appeals court decision,
the date of an appeals court decision,
months or until that time that the
the date of a settlement order or
the date of a settlement order or
patent is found to be invalid or not
consent decree, or when a district court
consent decree, or when a district court
infringed. If, prior to the expiration of
decision is not appealed.
decision is not appealed.
30 months, the court holds that the
patent is invalid or would not be
Allows the paragraph IV ANDA
If a patent owner does not file an
infringed, then the FDA will approve
applicant to request a declaratory
infringement suit within 45 days of
the ANDA when that decision occurs.
judgment regarding the validity of the
notification of a paragraph IV ANDA,
Conversely, if the court holds the
patent if an infringement suit is not
the ANDA applicant may request a
patent is not invalid and would be
filed within 45 days of notification.
declaratory judgment regarding the
infringed by the product proposed in
However, if sued, the generic firm may
validity of the patent. However, if
the ANDA prior to the expiration of 30
file a counter claim to require the
sued, the generic firm may file a
months, then the FDA will not approve
patent holder make changes to the
counter claim to require the patent
the ANDA until the patent expires.
Orange Book listings. No damages are
holder make changes to the Orange
to be awarded in either case.
Book listings. No damages are to be
awarded in either case.
If 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, the
No 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
Provision
Current Law
H.R. 1
S. 1
award treble damages if the ANDA
applicant is found to have infringed on
the patent.
The first generic applicant to file a
The 180-day exclusivity period is to
The 180-day exclusivity period is to
paragraph IV certification is awarded
begin on the date of the first
begin on the date of the first
a 180-day market exclusivity period by
commercial marketing of the generic
commercial marketing of the generic
the FDA. The 180-day market
drug by the first ANDA applicant(s).
drug by the first ANDA applicant(s).
exclusivity period ordinarily begins on
A first ANDA applicant(s) is required
A first ANDA applicant(s) is required
the earliest of two dates: (1) the day
to forfeit the 180-day exclusivity under
to forfeit the 180-day exclusivity under
the drug is first commercially
certain circumstances including failure
certain circumstances including failure
marketed; or (2) the day a court
to market within a specified time
to market within a specified time
decision holds that the patent which is
frame, withdrawal of the application,
frame, withdrawal of the application,
the subject of the certification is
amendment of the certification, failure
amendment of the certification, failure
invalid or not infringed. The
to obtain tentative marketing approval
to obtain tentative marketing approval
interpretation of a “court decision”
from the FDA, a Federal Trade
from the FDA, a Federal Trade
includes the decision of a U.S. district
Commission (FTC) or Attorney
Commission or Attorney General
court. A successful defense of a patent
General determination that an
determination that an agreement with
infringement suit is not necessary to
agreement with a patent holder
a patent holder violates antitrust laws,
obtain this exclusivity period.
violates antitrust laws, or the
or the expiration of all patents. No
expiration of all patents. No other
other subsequent ANDA applicants
subsequent ANDA applicants would
would be permitted the 180-day
be permitted the 180-day exclusivity if
exclusivity if all first ANDA
all first ANDA applicants forfeit.
applicants forfeit.

CRS-7
Provision
Current Law
H.R. 1
S. 1
Notification of agreements affecting
the sale or marketing of generic
Title XI Subtitle B
Title IX
drugs
No
provisions
Agreements between brand
name
Agreements between brand name
companies and generic firms regarding
companies and generic firms regarding
the sale or manufacture of a generic
the sale or manufacture of a generic
drug that is equivalent to the
drug that is equivalent to the
pharmaceutical marketed by the patent
pharmaceutical marketed by the patent
owner must be submitted to the
owner must be submitted to the
Federal Trade Commission and the
Federal Trade Commission and the
Assistant Attorney General for review
Assistant Attorney General for review
within 10 days of completion. Parties
within 10 days of completion. Parties
that fail to file such agreements are
that fail to file such agreements are
subject to civil penalties. The FTC
subject to civil penalties. The FTC
may engage in rule making to carry out
may engage in rule making to carry out
these provisions. The effective date is
these provisions. The effective date is
30 days after enactment.
30 days after enactment.