Sen. Hatch on Amendment to Incentivize Generic Drug Development

Thank you, Mr. Chairman. I appreciate your efforts on this bill. As the co-author of Hatch-Waxman, I have a keen interest in ensuring that we have a well-functioning generic drug industry. For that to happen, generics need to be able to obtain access to samples so they can conduct the tests and research necessary to achieve bioequivalency. 

The CREATES Act has a laudable goal. But I don’t believe it strikes the right balance as currently written, and so I will be voting no today. In particular, I believe the damages cap in the bill far exceeds what is necessary to ensure adequate deterrence and could incentivize non-meritorious litigation.

I’d also like to take a moment to discuss the amendment I circulated. I’ve titled this amendment the Hatch-Waxman Integrity Act. 

I mentioned earlier that as the co-author of Hatch-Waxman, I have a keen interest in ensuring we have a well-functioning generic drug industry. Well, there are two sides to that coin. One is ensuring that generic companies are able to develop drugs. The other is ensuring that brand companies have sufficient protections in place to recoup their investments. It won’t do to give generics the ability to develop and market low-cost medications if brand companies don’t have the incentive to create those medications in the first place. And so Hatch-Waxman struck a careful balance, one that has endured for decades.

But it’s recently come to my attention that the inter partes review, or IPR, process that this committee created in the America Invents Act, and which I strongly support, is producing unintended consequences in the Hatch-Waxman context.  

IPR is a critical tool for fighting patent trolls and is of particular importance to the tech community. But it also threatens to upend the careful Hatch-Waxman balance by enabling two separate paths to attack a brand patent.  

First is Hatch-Waxman litigation, which contains numerous carefully calibrated requirements affecting timing, market exclusivity, and FDA approval. Second is IPR, which is a much blunter instrument than Hatch-Waxman and which contains none of the important industry-specific balancing features that come into play in Hatch-Waxman litigation.

I want to be clear that I strongly support IPR. But I do not support its use in a way that upends or eviscerates Hatch-Waxman.

And so I’ve circulated an amendment that would force a party that wishes to challenge a brand patent to choose: the party can file a Hatch-Waxman suit, which carries the benefits of being able to rely on the brand company’s safety and efficacy studies for FDA approval, or it can file an IPR proceeding, which is cheaper, faster, and easier to win. But it can’t do both.

My amendment would preserve Hatch-Waxman as the standard path for generic companies to challenge brand patents, while keeping IPR as an option in situations where other interests come into play. But it would prevent companies from using IPR to put added litigation pressure on innovators above and beyond what Hatch-Waxman already provides. And it would prevent a company that rightfully loses a Hatch-Waxman suit from getting a second bite at the apple. 

I would note as well that for purposes of symmetry, the amendment also applies to post-grant review and to biologics. It will not have any impact on the use of IPR by the tech community.

I won’t be offering my amendment today because it goes beyond the scope of CREATES. But I wanted to discuss it today because it touches on issues that tie back directly to the purpose of CREATES and because it will be a top priority for me during my remaining months in office.

Thank you, Mr. Chairman.