The United States government's move to deter companies from stopping low-priced generic versions entering the market with the help of patent protection litigations may turn out to benefit generics companies.

The US government is expected to move towards a single term three-month stay in favour of brand manufacturers in the case of a patent dispute and to tighten the rules for patent listings and increase disclosures for patent listings.

A 30-month stay of FDA approval of a generic applicant is invoked if a brand-name company receives notice of a generic applicant's paragraph IV certification and files suit for patent infringement within 45 days of that notice.

Filing of the lawsuit stays FDA's approval of the ANDA until the earliest of: (1) the date the patents expire; (2) a determination of non-infringement or patent invalidity by a court in the patent litigation; or (3) the expiration of 30 months from the receipt of notice of the paragraph IV certification.

Patent expert and former president of IDMA Dr Gopakumar Nair believes the recently passed US Greater Access to Affordable Pharmaceuticals Act (GAAP) of 2002 and the current move for restricting the extension to just one 'stay' for 30 months is a small step in the right direction.

"Eventually, the sensible lawyers and academic community supported by growing consumer health lobby will prevail - as in the recent case of Mickey Mouse's copyright case. It is only a matter of time. Just and reasonable reward for inventions for just and reasonable period, that is what is "Patent" Statute, and what it should be. President Bush is on the right track," he says.

"The balance of rights and obligations, the fact that patent rights are conditional and not absolute, and that unlike some other IPRs, patents are granted for a fixed time of maximum 20 years _ all these are being misused and abused to epidemic proportions, lately. Perennial patenting has become order of the day. Frivolous patenting has got institutionalised post-1995," he says.

Says an Indian analyst, "We have seen this bill in the offing for quite some time now a la our very own Drug Prices (Control Order). Prima facie, if enacted, it will restore the confidence of generics industry, especially after the recent Prilosec judgement."

A US Federal Trade Commission study released in July 2002 recommended changes to existing law commonly known as the Hatch-Waxman Amendments (Hatch-Waxman). The report states that "beyond any doubt, Hatch-Waxman has increased generic drug entry," but goes on to say that "two of the provisions governing generic drug approval (the 180-day exclusivity and the 30-month stay provisions) are susceptible to strategies that, in some cases, may have prevented the availability of more generic drugs... [and] ... have the potential for abuse."

"Beyond any doubt, Hatch-Waxman has increased generic drug entry. Generic drugs now comprise more than 47 percent of the prescriptions filled for pharmaceutical products - up from 19 percent in 1984, when Hatch-Waxman was enacted. In spite of this record of success, two of the provisions governing generic drug approval prior to patent expiration (the 180-day exclusivity and the 30-month stay provisions) are susceptible to strategies that, in some cases, may have prevented the availability of more generic drugs. These provisions continue to have the potential for abuse."

Accordingly, the report recommended that Hatch-Waxman be amended to permit only one automatic 30-month stay per drug product, per generic entry application, and only resolve infringement disputes over patents listed in the "Orange Book" prior to the filing of the generic's entry application. If the generic applicant seeks entry prior to patent expiration, Hatch-Waxman requires the applicant to state either that the patents for the brand-name drug products are invalid or not infringed by the generic product - technically, a Paragraph IV certification.

If a brand-name company lists an additional patent in the Orange Book after the generic applicant has filed its ANDA, more than one 30-month stay may be generated. The generic applicant is required to re-certify to this later-listed patent, and if, upon notice of the generic's re-certification, the brand-name company sues within 45 days, then FDA approval of the generic's previously filed ANDA is stayed for an additional 30-months from the notice date or until a court decision in the newly instituted patent litigation.

From 1992 through 2000, brand-name companies have listed patents in the Orange Book after an ANDA has been filed for the drug product in 8 instances; 6 of these 8 instances occurred since 1998. For the eight drug products, the additional delay of FDA approval caused by the additional 30-month stay (beyond the first 30-month stay) ranged from 4 to 40 months.

In all four of the cases so far with a court decision on the validity or infringement of a later-issued patent, the patent has been found either invalid or not infringed by the ANDA, the USTC said.

Generic applicants have prevailed in 73 per cent of the cases in which a court has resolved the patent dispute. The rate at which the U.S. Court of Appeals for the Federal Circuit reversed district court decisions of patent invalidity and non-infringement for drug products in this study was eight per cent, the USTC study says.