Seminar

The 1984 Hatch-Waxman Act was introduced in the USA to encourage generic competition while preserving sufficient incentives for pharmaceutical innovators. Braodly, Professor Grabowski observes the effect has been to
• Increase generic compettion of Rxs from 19% in 1984 to 51% in 2002
• Provide consumers of generics with savings of several billion dollars annually
• Decrease the present value of after tax profits for new drugs by 12 percent, according to the CBO
• R&D expenditure continues to rise, despite the negative impact on R&D returns

Regarding market exclusivtiy:
• Most major branded product patents are challenged four years after launch
• Generic firms compete for the 180 days market exclusivity awarded to the first successful patent challenge
• Given low entry or set up costs, many generic firms take a portfolio strategy to patent challenging

Over the next five years many commercially significant biologics will come off patent. Currently follow on Biologics are not covered by the Hatch-Waxman Act and many assume the economic dynamcis for biologics will be the same as generics. Professor Grabowksi suggests this may not be so. Because the development and investment costs are much higher for biologics than generics, the
• Minimum market size for profitable entry will be higher
• Competition will be lower
• Discounted / reduced prices and there for savings will be problematic

And so it cannot be assumed that the economic dynamics will be the same as generic drugs.

Henry Grabowski is one of the global leaders in the economic analysis of the biopharmaceutical industry. With Joe Di Masi and others he is the author of the definitive work on R&D costs and with John Vernon author of the definitive work on returns to the pharmaceutical industry. This is an opportunity to hear him present on the US generics market, which is the most aggressive and lowest priced market in the world.