Antitrust and Unfair Competition Law

Competition: Fall 2018, Vol 28, No. 1

ANTITRUST TREATMENT OF THE INTRODUCTION OF NEW DRUG PRODUCTS: THE TENSION BETWEEN HATCH-WAXMAN’S DUAL GOALS OF CHEAPER DRUGS AND BETTER DRUGS

by Rosanna K. McCalips1

Much has been said about the cost savings generated by generic drugs made more widely available by the Drug Price Competition and Patent Term Restoration Act (commonly known as the Hatch-Waxman Act or the Hatch-Waxman Amendments). The Association for Accessible Medicines (formerly known as the Generic Pharmaceutical Association) reported that generic drug use saved the U.S. healthcare system $253 billion in 2016.2 But consumer welfare also has risen tremendously from the innovation the Hatch-Waxman Act spurred. Indeed, studies show that the use of new outpatient prescription drugs lengthened life expectancy in the United States by more than a year from 1991 to 2004.3 In addition to extending life, innovations in prescription drugs have also enhanced the quality of life for many Americans. New and improved drugs have enabled the elderly to perform daily functions such as eating, dressing, and bathing with greater ease.4 And new drugs have decreased the percentage of Americans receiving Social Security Disability.5

These benefits are not due entirely, or even mostly, to new "blockbuster" drugs, but rather result in large part from incremental improvements of existing therapies. One study in the peer-reviewed journal PharmacoEconomics found that "innovation that takes the form of improved formulations, delivery methods and dosing protocols may also generate substantial benefits associated with improved patient compliance, greater efficacy as a result of improved pharmacokinetics, reduced adverse effects or the ability to effectively treat new patient populations."6

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