Is The Hatch-Waxman Pipeline Running Dry?

Over the past two decades, the Hatch-Waxman Actaka the Drug Price Competition and Patent Term Restoration Act of 1984has caused a sea change in the pharmaceutical industry. The lower drug prices it spurred have been a boon for patients and their insurers, including the federal government. Generic drug companies get big incentivesnamely, 180 days of sales exclusivityto challenge pharmaceutical patents. So IP lawyers have benefited as well, litigating a growing number of long-running Hatch-Waxman cases. But is this big, profitable source of business coming to an end?

On first glance, it sure looks that way. The juiciest targets for Hatch-Waxman litigationthe blockbuster drugs with billion-dollar salesare already in short supply. Some, like Merck & Co.’s cholesterol-fighting drug, Zocor, and Pfizer Inc’s antidepressant Zoloft, have already seen their patents expire; others, like Pfizer’s enormously popular cholesterol drug Lipitor, will see their patents expire within the next few years. And the generics have done their own damage, knocking out patents on market-leading pharmaceuticals including Norvasc, a hypertension drug from Pfizer; Fosamax, an osteoporosis drug from Merck; and Paxil, an antidepressant from Glaxo-SmithKline PLC. The next wave of blockbusters is slow in coming. “The big thing I’m seeing is that there are going to be fewer huge products [reaching the market] in the next couple of years,” says James Veltrop, a partner at Axinn, Veltrop & Harkrider, which represents both generic and branded drug companies.