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The Medicare Modernization Act of 2003:The Effect on Entry of Generic Drugs into the Marketplace

By Andrea J. Kamage and Robert C. Millonig
April 01, 2005

The Hatch-Waxman Act, enacted in 1984, first permitted the marketing of generic pharmaceuticals based on a showing of bioequivalence, not safety and efficacy, through the use of an Abbreviated New Drug Application (“ANDA”). By significantly lowering the barrier to entry for generics, this change provided the impetus for rapid growth of the generic pharmaceutical industry in the United States. In exchange for this barrier lowering, Congress provided the holder of the previously approved new drug application (“NDA”) with patent term extensions based on FDA regulatory delay.

Under the Hatch-Waxman Act, the NDA holder must submit information to the FDA regarding patents that cover the drug product or a method of using it. The FDA then lists these patents in the “Orange Book.” A company seeking FDA approval to market a generic version of the product by submitting an ANDA must make at least one of four types of certifications to the FDA regarding patents. One type is a “Paragraph IV certification,” which certifies that a patent listed in the Orange Book for a drug product is invalid or will not be infringed by the ANDA product.

The filing of a Paragraph IV certification is an act that can qualify as patent infringement. An applicant that files a Paragraph IV certification must notify the patent owner and NDA holder, and describe the factual and legal bases for the certification that the patent is invalid or not infringed. If a lawsuit is subsequently filed, FDA approval is stayed for 30 months from receipt of the notice. If the patent owner or NDA holder does not bring an infringement action before the expiration of 45 days from the date notice is received, approval of the application may be effective immediately.

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