Waxman/Hatch Reform May Include Generic Exclusivity, PhRMA Warns GPhA

The Pharmaceutical Research & Manufacturers of America may encourage discussions on whether 180-day generic exclusivity should be abolished if Congress reopens Waxman/Hatch.

"If Congress were to get its hands dirty on Hatch/ Waxman issues and get involved, my view would be that they would have to look at" the question of whether 180-day exclusivity is "needed at all," PhRMA Senior VP & General Counsel Bruce Kuhlik said at the Food, Drug & Law Institute Educational Conference in Washington, D.C. April 2.

Kuhlik's remarks could be interpreted as a not-so-veiled warning to the Generic Pharmaceutical Association, which is seeking legislative reform of Waxman/Hatch beyond the regulatory changes suggested by FDA in an October proposed rule.

While PhRMA opposes Congressional changes to Waxman/Hatch, GPhA is backing the McCain/Schumer bill, which would create limitations on the 30-month stay, a delisting procedure for frivolous patents and incentives for early resolution of patent disputes.

At GPhA's annul meeting in January, FDA Chief Counsel Daniel Troy warned that generic industry attempts to derail the administration's regulatory reform of Waxman/Hatch could backfire (¹ (Also see "GPhA Objection To Generic Drug Rule Could Backfire, FDA Counsel Troy Warns" - Pink Sheet, 3 Feb, 2003.), p. 18).

Innovator companies have also previously suggested that a compromise on Waxman/Hatch reform legislation could require significant sacrifices from the generic industry.

For example, former GlaxoSmithKline Chief Operating Officer Robert Ingram said in July that the company would support a legislative deal ending 30-month stays in return for repeal of the "Bolar" exemption (² (Also see "GSK Supports Waxman/Hatch Trade: Drop Bolar, Remove 30-Month Stays" - Pink Sheet, 22 Jul, 2002.), p. 25).

At the FDLI meeting, Kuhlik questioned whether 180-day exclusivity is necessary from a public policy standpoint. "This is a provision that restricts entry of generic drugs into the market vis-a-vis one another," he said. "We see situations with drugs where there are multiple, multiple challenges to patents by entrants that don't have any hope under any scenario of getting 180 days exclusivity and indeed will be blocked by somebody else."

"You have to ask...why does anybody need it? And my view is that this is primarily something for FDA to be working on," Kuhlik said. The agency has "been creative and intelligent in terms of trying to address these issues case by case as they arise and [is] not suggesting that Congress ought to legislate here. I do think the best course is for Congress to stay its hand."

FDA Associate Counsel for Drugs Elizabeth Dickinson has also questioned the need for 180-day exclusivity (³ (Also see "Generic Exclusivity "Incentive" Needs Review, FDA's Dickinson Says" - Pink Sheet, 18 Dec, 2000.), p. 30).

GPhA President Kathleen Jaeger maintained the 180-day provision "is working extremely well" from a public policy standpoint.

She noted that patent challenges have been on the rise due to the increasing number of "Orange Book" patent listings, and that the average invalidity challenge costs approximately $10 mil.

"When you're looking at invalidity challenges in the future and you're looking at more and more patents being listed in the Orange Book, the only way that generics are going to get to the marketplace is to challenge these patents," Jaeger said. "But if there's no financial incentive at the end of the day to get into the marketplace, then they're not going to take on the challenges."

Jaeger pointed to the entry of generic Prozac as an example of why 180-day exclusivity is a necessary incentive. While Lilly's branded product initially sold for approximately $2.60 per tablet, the first generic on the market, with 180 days of exclusivity, sold for 20%- 30% below the brand price, she said.

However, when a slew of generics entered the market after expiration of the 180 days, "the price per tablet went down to six cents," Jaeger said. "There is no way, if you allow all those generic companies to enter into the marketplace on the same day, that you're going to have anyone take on these challenges. You can't recoup your $10 mil., never mind make a profit."

"I think from a public policy perspective we need to sit back and say, why is 180 days in here, look at all the wonderful issues and the benefits that actually have flowed from 180-day" exclusivity, Jaeger said. "Really we should be talking about strengthening that."