It was on September 24, 1984 that Congress gave birth to the Drug Price Competition and Patent Term Restoration Act, also known today as Hatch-Waxman (at the time of the Act’s passage, it was called Waxman-Hatch because the Democrats were in power). For those of you who don’t remember or weren’t even born when Hatch-Waxman became law, here’s a brief bit of some of the history, along with a big fat birthday acknowledgement for the Act, all of its founders, and those who have worked since its passage to create the modern generic drug industry.

The law went into effect sixty days after passage, which did not give those of us at the FDA sufficient time to fully understand what the Act did and didn’t do. However, on November 24, 1984, we were poised at the dock of the Parklawn Building (which at the time housed the Division of Generic Drugs) to begin collecting and processing, on a daily basis, the 400 post-1962 ANDAs that were received in the first two months after the law went into effect! This was in addition to the normal receipts of pre-1962 drugs that were already being approved. Remember, these pre-1962 drugs went through the Drug Efficacy Study Implementation (DESI) program and generic manufacturers were able to rely on the findings of safety and effectiveness that had been made by the DESI program for such drugs.

The goal of the Hatch-Waxman legislation was lowering prices for consumers through an abbreviated process that eliminated the need to duplicate expensive clinical studies to support approval by permitting reliance on previous findings of safety and efficacy for the brand-name reference listed drug (RLD). It provided new periods of exclusivity for brand-name products as well as patent listing and certification provisions to balance the rights of innovators while allowing referral to RLDs by generic firms as basis for approvals.

There was an unbelievable amount of pressure placed on members of the generic staff coming from every direction: from Congress, which was looking for a success in the reduction of drug prices (sound familiar?); internally, from FDA senior management, which was looking for a successful launch of the program; from consumers, who, even then, thought that prescription drug prices were too high; and from the generic drug industry, which saw a gold mine of new products for which it could now submit ANDAs.

There were many things that needed to be accomplished to make the legislation effective, such as moving ANDAs through the approval process, developing regulations for the implementation of Hatch-Waxman (which took a total of ten years during which time the Agency regulated right from the statute), convincing consumers that generic drugs are just as good as brand-name drugs at a time when the word “generic” conjured thoughts of a second-class product (for example, if you bought generic toilet paper in 1984, most people didn’t believe it would perform as the brand-name toilet paper did, and, certainly, the Charmin bears wouldn’t have believed you either!). So, the staff was off in a multitude of directions while also learning, along with industry, how the new Act would work.

We all did our jobs and, of course, there were bumps along the way. But the initial backlog of applications was eliminated. There was an unexpectedly large number of ANDA approvals and, once the generic approvals started rolling out of the review process and gaining approval, there was a substantial drop in prices for consumers. Even in the early days, after the “new generics” were first approved, prices usually dropped by 30-40% from that of the brand-name product, and soon, as more generics entered the market, consumers saw drops of up to 90% of the brand-name product prices once six to ten or more ANDA approvals were issued for a specific brand-name drug. This pleased Congress, consumer groups claimed victory, and the program became an Agency success story. But, of course, there were bumps along the way. Life chugged along very well until the late 1980s when the generic drug scandal rocked the Agency and the industry. For those of you too young to remember this unfortunate episode, there was out-and-out fraud in some of the application submissions. What precipitated the scandal? Well, it was a combination of things including Agency vulnerability from an open-door policy that permitted lobbying as brigades of industry representatives, including regulatory affairs personnel and company management, made in-person visits and constant phone calls, engaging in a full-court press for approval of their products. So, what went wrong? Unscrupulous industry personnel found weak links in the system.

Firms began to complain about unfair treatment, saying that there wasn’t a level playing field, but without solid proof the Agency wasn’t willing to act. However, eventually, industry came up with evidence through what we lovingly called the “garbage can caper,” which forced the FDA’s hand. A firm that felt it wasn’t being treated fairly hired a private investigator who went through the garbage cans of one of the FDA’s review chemist branch chiefs and uncovered evidence of wrongful acts by an FDA employee. This broke the case, and investigations then kicked into high-gear. As the investigations proceeded, others in the generic program were found to have behaved badly. Generic drug officials were found to have been taking bribes to move firms’ applications up the queue and assigning applications of competitors that weren’t playing that game to slow or very detailed reviewers while assigning applications for which they received bribes to easy, less-detailed reviewers. Some FDA officials were found to have been providing competitors’ confidential formulation to other, crooked companies’ officials.

But it was clearly not only an FDA problem as firms were found to have provided falsified data in applications, made unauthorized changes in formulation or manufacturing processes, and used two sets of books to document manufacturing practices, one for in-house and one to show FDA inspectors. Some firms were found to have performed testing on the innovator product with overcoated tablets of the generic product. Some were found to have been making exhibit batches of sterile injectable products in glass beakers and generating “graphiting” stability and other test data. The list goes on and on.

The Generic Drug Scandal was, thus, not only a major black mark on the FDA’s generic program but also on a significant portion of the generic drug industry. All told, as a result of the generic drug investigations, the Department of Justice convicted twenty-two different drug companies of cheating. There were seventy criminal convictions of individuals, including drug company executives and FDA officials, ranging from CEOs and VPs to regulatory affairs staff and bench chemists as well as FDA reviewers and senior FDA staff. In addition, $50 million dollars in fines were levied. At the time, just before the scandal was uncovered, the generic drug program had been approving about forty to fifty ANDAs per month; once the scandal broke, FDA generic drug approvals dropped to under ten per month for almost two full years. This slowdown caused many consumers to pay higher prices for brand-name drugs for which ANDA approvals were delayed.

But this is a birthday celebration after all. Looking in the rearview mirror only helps if the Agency and industry haven’t learned from their transgressions. The generic program has changed dramatically, documentation practices have been significantly improved, and the Agency got back on track. The Agency still keeps vigilant on industry based on its past transgressions.

I would say the biggest and best change since the passage of Hatch-Waxman came in 2012 with the advent of the Generic Drug User Fee Act. The Office of Generic Drugs (OGD) is now a Super Office within the Center for Drug Evaluation and Research (CDER) with over 1,000 employees, up from about 135 in the late ‘80s. The evolution of the program to its current state has been transformative. Today, the OGD continues to provide welcome guidance and advice to industry, including on some of the most complex and controversial generic products to hit the market. The scientific prowess of the OGD is second to none, and it utilizes all of the resources that it has available in making tough review and approval decisions.

From my perspective, other big, meaningful changes over the years include:

  • Updated and revised versions of the FDA’s Inactive Ingredient Database
  • Product Specific Guidances (PSGs) for bioequivalence testing
  • Reengagement of OGD and OPQ staff through additional communication channels, including both in-person and telephone meetings, as well as controlled correspondences
  • Revisions in various application review touchpoints including information requests, discipline review letters, and CRLs as well as the associated opportunities for clarification by phone or video conference
  • Increased functionality of the FDA website and improved search capability
  • Improved data transparency with ANDA approvals

If there is any doubt that we should be celebrating this law, take this into consideration: When Hatch-Waxman passed in 1984, the generic substitution rate was at 19% (remember, there were generic products before 1984; however, they were permitted only for copies of NDA products approved prior to 1962). Today, generics and biosimilars account for “a whopping 90 percent of all U.S. prescriptions” and the total generic and biosimilar savings in the commercial market in 2022 was $194 billion, with $2.9 trillion saved by patients over the past ten years (see here).

So, Happy 40th Birthday to the Drug Price Competition and Patent Term Restoration Act! Can’t wait to celebrate fifty years!