In markets such as Europe and Japan, data exclusivity alone protects the new drug from generic competition for ten years. In the U.S., the innovator must rely on strong patent protection to obtain market exclusivity of an NME beyond five years.
Specifically, the Hatch-Waxman Act (the “Act”) linked the FDA’s regulation of new drugs and the patent system. For an NME, the Act creates a five-year data-exclusivity period during which the FDA cannot approve a generic version of the drug. Because of delays inherent in commercialization, however, the period of optimum sales would be shorter and it may not be possible to recoup the investment in development relying solely on the five-year period.
But, if the new drug is patented, the Act may provide additional protection beyond the right to exclude provided by the patent itself. If the NME is protected by a patent listed in the FDA’s Orange Book, additional market exclusivity may be triggered by the filing of an Abbreviated New Drug Application (ANDA) by a generic drug company.
Filing an ANDA constitutes infringement of Orange Book listed patents covering the drug, and it is often filed with a certification that the listed patents are invalid or not infringed. If the NDA sponsor brings a patent infringement suit against the ANDA filer who filed with that certification, the FDA may not approve the ANDA for an additional 30 months (7.5 years after NDA approval), but this period may be shorted by resolution of the litigation.
Thus, Orange Book patents may extend protection for a new drug up to 7.5 years. But an innovator must successfully enforce its patents against all generic challengers to ensure more than 7.5 years of market exclusivity. Thus, the Act enables exclusivity of more than five years, but only for patented new drugs listed in the Orange Book.
The PTO is faced with a substantial backlog of patent applications (Figure). In 2007, the latest year for which figures are available, over 1.1 million patent applications were pending and over 700,000 had not been acted on by an examiner. With only 5,376 examiners, it is not surprising that it was, on average, over two years (25.3 months) before a patent applicant received a substantive communication (“first Office Action”), and over three years (31.9 months) before a patent was issued.
The delay for the Tech Center responsible for Biotechnology was slightly better for the first Office Action (22.7 months) but worse for the delay in issuance (34.3 months).