LONGER PATENTS FOR INCREASED GENERIC COMPETITION IN THE US - THE WAXMAN-HATCH ACT AFTER ONE DECADE

The 1984 Waxman-Hatch Act had two main objectives. Title I was designe d to promote price competition by establishing an abbreviated new drug application (ANDA) process for generic market entry. Title II was des igned to encourage drug innovation by restoring some of the patent lif e lost during the lengthy FDA regulatory process. In this paper, we co nsider whether these twin objectives have been realised during the fir st decade of the Act's existence. First, we investigate the pattern of generic and brand name prices and market shares for the major product s whose patents expired between 1984 and 1993, A regression model indi cates that generic competition has been intensifying significantly in recent periods. Major brand name products now typically lose more than half their market share within the first year after patent expiration . In addition, we examine changes in patent protection for new chemica l entities introduced over the period 1984 to 1993. For 1991 to 1993 n ew drug introductions, the average effective patent life was 11.8 year s with 2.3 years resulting from Waxman-Hatch extensions. In the final section of the paper, we consider how the US law compares with that in Europe and discuss possible legislative improvements in the 1984 Act.