Biomedical Engineering Reference
In-Depth Information
Bioequivalence is typically shown by measuring and comparing the absorption
of the branded and generic drug in the blood stream in around 30 healthy volunteers
(Bhat 2005 ; Dubey and Dubey 2009 ). Testing for bioequivalence is 18 times cheaper
than also repeating the safety and effi cacy tests (Bae 1997 ). The costs to prepare an
ANDA are about $1 million (Hemphill and Sampat 2011 ). The fi rst generic manu-
facturer that successfully fi les an ANDA is granted an exclusive marketing period
of 180 days for the drug among generic manufacturers. The Act also allows fi rms to
test the patented drug before patent expiry and specifi es a process to resolve a patent
dispute between a branded and generic manufacturer.
An ANDA must contain one of the four certifi cations with respect to each patent
listed for the branded drug. A Paragraph I, II, and III Certifi cation involve the assurance
that respectively: (1) no patent for the branded drug is fi led, (2) the patent on the branded
drug has expired, (3) the approval of the ANDA is only sought after the patent on the
branded drug has expired. A Paragraph IV Certifi cation involves a claim of a generic
manufacturer that the patent on the branded drug is invalid or will not be infringed
(Bulow 2004 ; Hemphill and Sampat 2011 ). After an ANDA is fi led by a generic manu-
facturer, based on a noninfringement claim, branded manufacturers can fi le a patent-
infringement suit within 45 days. The FDA cannot approve the ANDA until a court
invalidates the infringement or 30 months elapse (Bhat 2005 ). In 2003, the Medicare
Prescription Drug, Improvement and Modernization Act (MMA) passed the senate to
prevent branded manufacturers to exploit former law to delay generic entry. For exam-
ple, fi rms started multiple patent-infringement litigations, which all provided a 30-month
stay of generic drug approval. The new Act allows a maximum of one such extension.
Higgins and Graham ( 2009 ) report that, between 1992 and 2000, branded fi rms started
an infringement suit to 72 % of the Paragraph IV challenges and the branded drug man-
ufacturer won these litigations in 58 % of the cases. They also report that the number of
paragraph IV challenges has increased substantially after 2000.
Title II of the Hatch-Waxman Act grants additional market exclusivity to branded
drugs for the time lost due to FDA drug review. On average, the additional market exclu-
sivity granted is 2.5-3 years with a maximum of 5 additional years or 14 years from the
original FDA approval date. Newly approved drugs get a minimum of 5 years market
exclusivity. Firms need to apply for the extension within 60 days of market approval.
In all US states and many other countries there are generic substitution laws for
pharmacists, allowing them or making it compulsory to substitute the branded pre-
scription by a bioequivalent generic (Vivian 2008 ). This leads to a higher generic
share. In some states patients fi rst need to give their consent prior to the generic sub-
stitution by the pharmacist, leading to a lower substitution rate (Shrank et al. 2010 ).
8.2
Generic Entry
When the patent on a drug expires, generic drugs can enter the market. These gener-
ics have substantially lower prices than the branded drug before patent expiry and
take a large share of the market. Hellerstein ( 1998 ) fi nds that almost all doctors
prescribe both generic and branded versions of the same molecule if a generic is
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