The Hatch-Waxman Act and Its Effect on the Term of a U.S. Patent

By Jeffrey M. Kaden

In 1984, Congress enacted the Drug Price Competition And Restoration Act of 1984 (known as the Hatch-Waxman Act) in order to eliminate two discrepancies regarding the term of a United States patent. These discrepancies were the result of the approval process that was required for drugs and medical devices that are covered by the Federal Food, Drug and Cosmetic Act (“FDCA”).

The first discrepancy related to the reduction in the effective term of a United States patent. A U.S. patent application is typically filed early during the FDA regulatory process, but market/commercial entry may be delayed several years because of the time that is normally required by the  FDA to formally approve a drug or medical device for sale.

The second discrepancy related to the effective extension of the term of a United States patent. Prior to the Hatch-Waxman Act, the non-commercial activities of a competitor in obtaining FDA approval of a patented drug or medical device (so that it could eventually market and sell a generic version of the product) was considered to be an infringement of the patent. Therefore, the competitor had to wait until the patent term expired before commencing whatever activities were required for obtaining FDA approval. Since FDA approval to market a drug or medical device normally takes several years, the patent owner enjoyed commercial exclusivity of the patented product well past the expiration date of the patent.

Patent Term Extension

In the first instance, the Hatch-Waxman Act provides for an extension of the term of a U.S. patent relating to products that could not be commercialized until FDA approval is received. Such products include drug products as well as medical devices, food additives or color additives that are regulated under the FDCA. One must apply for the extension, which must be submitted within 60 days of the date that approval is received from the FDA. Moreover, only one patent term extension is typically available.

The Safe Harbor Provision

The Hatch-Waxman Act also provides a safe harbor which insulates competitors from patent infringement by their activities if it is related to “the development and submission of information under a Federal law which regulates the manufacture, use, or sale” of drug products and medical device. This provision allows for competitors to begin the process of seeking regulatory approval while the applicable patent is still in force. The consequence is that competitors can begin commercial activities as soon as a patent expires.

A key purpose of the Safe Harbor Provision is to expedite FDA approval of generic drugs and to get these drugs to market as quickly as possible once the applicable patent has expired. Courts have interpreted the scope of the Safe Harbor provision rather broadly, permitting activities with an ultimate commercial benefit as long as the conduct is reasonably related to gaining information relevant to the FDA approval  process. Thus, activities such as using research tools, supplying active ingredients, and even stockpiling drug inventories may be protected from a patent infringement claim provided that there is a clear link between such conduct and the efforts to secure regulatory approval.