What impact did the US Hatch Waxman Act 1984 have on Biologics?

Minneapolis patent attorney Jim Nelson of Schwegman, Lundberg & Woessner discusses how Biologics were impacted after the Hatch Waxman Act.

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As I said before, the Hatch-Waxman Act was the act that allowed pharmaceutical companies to start selling the same small molecule, the same pharmaceutical compound that the original pharmaceutical company has sold. So let’s use Lipitor again. Pfizer sold Lipitor for many, many, many years, and it had an exclusive, it had a patent on the Lipitor so nobody else could sell Lipitor during that time. Towards the end of the life of the patent, other companies came in and started selling the same drug, Lipitor. What happened to the Lipitor price? It went down from about $1,500.00 a month to about $200.00 a month for the product. Well, this is the result of the Hatch-Waxman Act. As I said, if you’ve got two companies or three companies selling the same thing, it’ll drive the price down. Normal competition.

Because biologicals are so expensive, Lipitor, for example, if you take a – if you were taking Lipitor back in the day when Pfizer was selling it exclusively, it was about $1,500.00 a month. Interestingly enough, a drug like – a biological like Herceptin or a drug like Filigastrin costs about $15,000.00 a month. It’s extremely expensive. So when legislators in the United States and all around the world began to approve the original sales for biologicals like the original sales of Herceptin or the original sales of Filigastrin, they realized, “Whoa. These things are really, really expensive. Maybe we could cause the pharmaceutical companies to lower their prices by creating competition just like we did for the Hatch-Waxman Act.” And so that’s what the Price and Competition Act is all about. The hope is that if there are two or three companies selling the same biological, it will drive the price down.