The Hatch-Waxman of 1984 and subsequent amendments thereof provides for the first ANDA generic filer an exclusive right to market their generic medicine for 180 days, subsequent to the successful challenge to the patent’s validity.

The “first filer” has to face numerous challenges apart from the Hatch-Waxman litigation, to overcome the challenge the first filer enters into the settlements/agreements with the brand company, thereby receiving in exchange a “reverse royalty” in lieu of the delay in the introduction of the generic into the market or undergoing “royalty sharing” agreements with the brand drug manufacturers.

The brand company during this period enjoys exclusive monopoly. The consumers at large are not benefited by the healthy generic competition and in turn have to shell out extra money to buy the same prescribed medicines. Off-late such agreements are also known as “pay-for-delay” settlements between the branded/innovator and the generic pharmaceutical companies and therefore have come under the scanner of the Federal Trade Commission (FTC).

The Federal Trade Commission is empowered to scrutinise these deals for anti-trust under section 2 of the Sherman’s Act as well as anti-competitive trade practices. The FTC states that these deals are costing the patients and the American taxpayers about US$ 3-4 billion per year. These deals are beneficial for the pharmaceutical manufacturers but a losing proposition for the patient population at large.

On the other hand Generic Pharmaceutical Association (GPhA) on the contrary is lobbying against the legislation which prohibits “pay-for-delay” settlements. The GPhA is of the view point that such settlements/agreements are patient-friendly which allows the generics to enter into the market well ahead of the verdict of a favourable patent challenge court decision for the generic. Further the GPhA is of the view that such settlements may reduce the patent challenge thereby providing economical medicines to the patients.

In 2011, on 16th November, Senators Jeff Bingaman (D-NM), David Vitter (R-LA), Sherrod Brown (D-OH), and Jeff Merkley (D-OR) announced the introduction of the Fair and Immediate Release of Generic Drugs Act, or the “FAIR Generics Act,”.

This legislation would prevent anti-competitive “pay-for-delay” settlements or the “reverse payment” agreements thereby overcoming “parked exclusivities”. The main features of the legislation are:
•    Granting the right to share exclusivity to any generic filer who wins a patent challenge in the district court or is not sued for patent infringement by the brand company.
•    Maximizing the incentive for all generic challengers to fight to bring products to market at the earliest possible time by holding generic settlers to the deferred entry date agreed to in their settlements.
•    Creating more clarity regarding litigation risk for pioneer drug companies and generic companies by requiring pioneer companies to make a litigation decision within the 45 days window provided for in the Hatch-Waxman Act.

The "Fair and Immediate Release of Generic Drugs Act" or "FAIR Generics," would eliminate the 180-day exclusivity period for a generic applicant that enters into a disqualifying agreement as defined by the legislation. Among other changes, the "FAIR Generics Act," would amend Section 505(j)(5)(B) of the Federal Food, Drug, and Cosmetic Act to delete Section (bb) in clause (iv)(II), and re-designate Sections (cc) and (dd) as (bb) and (cc), respectively.

The current version of Section 505(j)(5)(B)(iv) reads as follows:
(iv) 180-day exclusivity period
(I) Effectiveness of application. Subject to sub paragraph (D), if the application contains a certification described in paragraph (2)(A)(vii)(IV) and is for a drug for which a first applicant has submitted an application containing such a certification, the application shall be made effective on the date that is 180 days after the date of the first commercial marketing of the drug (including the commercial marketing of the listed drug) by any first applicant.
(II) Definitions. In this paragraph:
(aa) 180-day exclusivity period. The term "180-day exclusivity period" means the 180-day period ending on the day before the date on which an application submitted by an applicant other than a first applicant could become effective under this clause.
(bb) First applicant. As used in this subsection, the term "first applicant" means an applicant that, on the first day on which a substantially complete application containing a certification described in paragraph (2)(A)(vii)(IV) is submitted for approval of a drug, submits a substantially complete application that contains and lawfully maintains a certification described in paragraph (2)(A)(vii)(IV) for the drug.
(cc) Substantially complete application. As used in this subsection, the term "substantially complete application" means an application under this subsection that on its face is sufficiently complete to permit a substantive review and contains all the information required by paragraph (2)(A).
(dd) Tentative approval.
(AA) In general, the term "tentative approval" means notification to an applicant by the secretary that an application under this subsection meets the requirements of paragraph (2)(A), but cannot receive effective approval because the application does not meet the requirements of this sub paragraph, there is a period of exclusivity for the listed drug under sub paragraph (F) or section 505A, or there is a 7-year period of exclusivity for the listed drug under Section 527.
(BB) Limitation. A drug that is granted tentative approval by the secretary is not an approved drug and shall not have an effective approval until the secretary issues an approval after any necessary additional review of the application.

Further the said bill is aimed to make amendments to the Hatch-Waxman act as amended by the Medicare Modernization Act with respect to 180 days exclusivity. The main essence behind bringing such legislation by the United States Congress is to strike a balance between the brand and the generic drug manufacturers keeping in view the larger public and patient interest.

Several bodies such as American Association of Retired Persons (AARP) want such piece of legislation to be enacted into the Act for the benefit of the patient and the American taxpayers.
 
The authors Gautam Bakshi - Head & DGM–IP, Kuldeep Sharma – Sr. Executive-IP, Mandar. V. Shah - R&D Head, Deepak Bahri – President, are with Promed Research Centre, Gurgaon, India)