For other versions of this document, see http://wikileaks.org/wiki/CRS-RL32003 ------------------------------------------------------------------------------ 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. ------------------------------------------------------------------------------ For other versions of this document, see http://wikileaks.org/wiki/CRS-RL32003