Life after 40: Time to ‘kickstart’ patient access to medicines

I get vaguely irritated when people say that life begins at 40 – my gut reaction is to ask them what they’ve been doing for the past few decades.

But I totally buy the underlying idea that the Big Four Zero is a great time to look both backwards and forwards, and use the lessons of the past to inform future choices.

Don’t worry, this is not about me. I passed that particular milestone quite a while ago. But next week (September 24) marks the 40th anniversary of the US Hatch-Waxman Act being signed into law. This is the legislation that, with all its strengths and weaknesses, paved the way for the modern generics industry, not just in the US but worldwide.

Make no mistake, Hatch-Waxman was a major legislative event, which effectively created a whole new industry. Generic (off-patent) therapies today account for 90% of medicines prescribed in the US by volume, at just 13% of the total cost.

Worldwide, the picture is not so different: an estimated 80% of medicines are generics, accounting for 30% of the overall cost. Indeed, it’s no stretch to describe Messrs. Hatch and Waxman as the ‘Founding Fathers’ of global access to medicines – though the legacy is a bit mixed…

The good, the bad (and the ugly)

The underlying concept was simple. The legislation aimed to promote a balance between innovation and competition that created clear incentives for both originator companies and generic competitors to invest in and grow their respective businesses, with patients and healthcare budgets the winners.

That’s the theory. In practice, it helps to think about Hatch-Waxman in terms of both its pros and cons, and of how it has evolved over time: what I call ‘the good, the bad and the ugly’.

Let’s start with the positive: it created the first abbreviated regulatory pathway for the approval of generic medicines without the need for clinical trials.

That change led directly over time to the impressive 90% figure for US generic penetration. Per figures published earlier this month, the widespread use of off-patent medicines saved the US nearly USD 450 billion in 2023 alone. And the growth of the US market has led in turn to similar growth across Europe and beyond. Call that the ‘good’.

However, it did so at a cost: as a trade-off for the regulatory pathway, the originators were granted an automatic injunction that delays generic approval if (and when) they start litigation. As a result, the US is the only market in the world where generic companies are routinely sued, at considerable expense, on every single product they plan to launch. That’s the ‘bad’.

But it’s not the worst. Over time, pharmaceutical companies began innovating in areas way beyond the research lab. In particular, originators have developed new ways of extending their monopoly rights, both in the courts and, via throngs of high-priced lobbyists, in the halls of Congress. These efforts have further delayed patient access to new generic – and now also biosimilar – medicines.

One example is the explosion of patents listed on the Orange Book – from 2011 to 2018, the number of listed patents per product increased nearly six-fold, and the trend continues.? Many of those patents are just duplicates, representing no new innovation but deliberately created to increase the barriers to competition. Another is ‘serial patent litigation’, where they file repeated challenges against the generic company for a single product, strategically driving up litigation cost and risk. And that’s just plain ugly…

Time for a change

40 years on, given the enormous and proven benefits of a competitive medicines market, it’s time for policymakers to act to ‘rebalance’ the system. They need to ensure an environment that really equally supports both innovation and competition. Immediate priorities should include:

• Supporting the recent USPTO proposal on terminally disclaimed patents, to help reduce serial litigation and the cost and risk of litigation
• Limiting opportunities for pharmaceutical companies to litigate multiple times on the same product
• Improving USPTO examiner incentives to enhance the quality and robustness of patents

We need a renewed Hatch-Waxman Act – a Hatch-Waxman 2.0 if you will – to create an environment that truly encourages generic manufacturers to provide American patients with affordable high-quality medicines, without having to spend millions or tens of millions on unnecessary litigation.

We need fewer lawyers, fewer lobbyists, and more low-cost medicines.

I don’t think that’s too much to ask for, 40 years on…

NOTE: Sandoz will shortly be publishing a Generic Sustainability Report, to serve as a roadmap for US policymakers re the critical changes needed to ensure continued patient access to generic medicines. These include but also go beyond the Hatch Waxman framework. Stay tuned.