September marks the 40th anniversary of the Hatch-Waxman Act. Last week, we explored the origins and key components of one of the most instrumental pieces of biopharmaceutical legislation. Hatch-Waxman incentivized biopharmaceutical innovation and bolstered competition from the generic drug industry by creating a streamlined regulatory approval process and new incentives to encourage generic entry.
The balanced framework the law implemented has proven a remarkable success. Across many diseases, biopharmaceutical innovation has ushered in the next generation of treatment advances for patients, improving health outcomes for years to come, while paving the way for lower costs generics providing long-term value to patients and the health care system.
The success of this system is so ubiquitous that it’s hard to imagine a world in which innovative brand medicines didn’t lead to robust and immediate generic competition following patent expiration. For these reasons, the impact of the changes set forth through Hatch-Waxman cannot be overstated. Before the law was enacted, it took three to five years for a generic medicine to enter the market after the patent protections for a brand-name drug expired. Since the bill’s implementation, generics have been entering the market at a rapid pace and patient uptake has skyrocketed.
In the four decades since Hatch-Waxman’s passage, generic uptake in the U.S. has grown from a mere 19% of prescriptions being filled with generics to a whopping 90% today. The U.S. leads the world in generic uptake, with only 41% of prescriptions filled using generics on average in other OECD countries.
With the rapid growth in availability of these low-cost alternatives, we have seen the biopharmaceutical space evolve into an option-rich market that offers cutting-edge treatments and cures at increasingly competitive prices.
While only 35% of the top-selling brand pharmaceutical drugs had a generic competitor before Hatch-Waxman, today more than 80% of approved pharmaceuticals have a generic competitor.
For patients, this shift has helped to significantly increase access and lower costs to the medications they rely on. When you consider that the average generic copay costs only $6.16 and 92% of all generics have a copay of less than $20, Hatch-Waxman is clearly doing its job.
Unfortunately, patients often still have issues accessing and paying for the medicines they need, despite expansive generic competition thanks to Hatch-Waxman. Instead, patients are often steered by insurers and pharmacy benefit managers (PBMs) towards higher priced drugs to further pad profits as they make more money off a higher list price medication. Our next post in this series will unpack how we can stop these practices and help secure Hatch-Waxman’s cost-saving legacy for years to come.
Jocelyn Ulrich
Jocelyn Ulrich, MPH, is Vice President of Policy and Research at the Pharmaceutical Research and Manufacturers of America (PhRMA). At PhRMA, she is responsible for developing legislative and policy analysis and research studies on a range of issues impacting innovative biopharmaceutical companies including intellectual property issues, FDA policy issues, the R&D process, the value of innovation, and other issue areas impacting the environment for innovation. In addition to her experience at PhRMA she has over 15 years of experience in the pharmaceutical industry at Pfizer, Human Genome Sciences, and EMD Serono in roles in clinical research management, investigator-initiated and collaborative research, and global policy and corporate affairs. Jocelyn holds an MPH in global health policy and management from New York University.
Jocelyn Ulrich
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40 Years of Hatch-Waxman: How does the Hatch-Waxman Act help patients?
40 Years of Hatch-Waxman: How does the Hatch-Waxman Act help patients?