By: Margaret A. Hamburg, M.D.
Thirty years ago today, President Ronald Reagan signed into law the Drug Price Competition and Patent Term Restoration Act of 1984, better known today as the Hatch-Waxman Amendments. This law, championed by Senator Orrin Hatch and Representative Henry A. Waxman, made it easier for generic drugs to enter the market, and has greatly expanded access to important—often life-saving—drugs. Over the 10-year period 2003 through 2012, generic drug use is estimated to have generated more than $1.2 trillion in savings to the health care system and to have benefitted the health and well-being of innumerable lives.
Thanks to the insight of its creators, one of the strengths of this law is the fact that it provided financial incentives for pharmaceutical companies that develop and manufacture new and innovative trade name products. Under the law, sponsors of qualifying trade name drugs are provided an opportunity to extend a patent to make up for patent life lost during the process of testing and approval of the product.
The law also, however, provided a clear pathway to market for generic drugs. Before Hatch-Waxman, little more than a third of branded prescription drug products even had a generic available, and those that were available were not as widely used. Today, most drugs that go off patent face competition from cost-saving generic drugs. As a result, about 85 percent of all prescriptions filled are for generic versions.
Importantly, while Hatch-Waxman has provided powerful cost savings for American consumers, its value in providing greater access to medication cannot be overlooked. For over 30 years, millions of consumers who otherwise would not have been able to afford needed medication now have access to lower-cost, quality, generic drugs that are just as safe and effective as their brand-name counterparts.
Despite the enormous success of Hatch-Waxman, FDA faces challenges as we continue efforts to ensure access to affordable and quality generic drugs.
FDA is working to reduce the current backlog of generic drug applications for new generic drug products. Fortunately, the Generic Drug User Fee Amendments of 2012, GDUFA for short, provides additional funding for FDA’s generic drug program. We’re allocating significant time and money towards reducing the backlog.
As our world economy experiences greater globalization, it has becoming increasingly important for FDA to allocate its resources based on potential risk around the globe. More than 80 percent of the ingredients used to make our drugs now come from overseas suppliers. FDA is committed to working to ensure that, no matter where the ingredients are from or where the drugs are made, the American public can be assured their products are safe. GDUFA funding also helps FDA address global inspections, and we are diligently working to monitor production across the globe.
FDA salutes the vision of Senator Hatch and Representative Waxman. Their landmark legislation has improved the health of generations of Americans. And we’re proud of the role FDA has had in implementing Hatch-Waxman and helping to assure its success. We look forward to continuing to enhance Americans’ access to safe, effective, and affordable generic prescription drugs.
Margaret A. Hamburg, M.D., is Commissioner of the U.S. Food and Drug Administration