The Issue

Affordable generic drugs allow Americans to get the medicines they need — and save governments, employers, and all taxpayers billions of dollars every year.

In 2023 alone, generics saved the U.S. healthcare system $432 billion in prescription drug costs; between 2009 and 2019, generic drugs saved the U.S. healthcare system nearly $2.2 trillion. These savings result from generics costing 80 to 85 percent less than their branded counterparts.

For patients, that results in an average co-pay for a generic drug of $6.61, while the average co-pay for a branded drug is $56.12. So although 90% of prescriptions are filled with generic drugs, generic drugs account for only about 18% of all prescription drug expenditures.

In America, the foundation of generic medicines and trillions of dollars of savings is the Hatch-Waxman Act, passed by Congress in 1984. Hatch-Waxman created a streamlined FDA approval process for generics and set clear rules for efficiently resolving patent disputes, which at the time were the primary reason why generic drugs were not reaching the market.

The law created a framework for patents to be disclosed, disputed, and resolved in a one lawsuit and 30 months.

• Brands must publicly list all core patents associated with their drugs.

• Generics must inform brands of their new competitive generic product, and provide official notice that the generic product does not infringe any of the brand’s publicly listed core patents.

• Brands that disagree can choose to sue for patent infringement and delay FDA approval of the competing generic for 30 months.

The Problem

This patent dispute resolution system worked well for decades, but recently it has broken down due to a new Pharma strategy to delay the generic market entry even after the brand loses the Congressionally-approved infringement litigation.

The new Pharma strategy is simple: sue again and again – often three, four, or more times - asserting successively weaker patents. These patents stand little chance in court but are powerful intimidation against cautious and risk-averse generic companies.

This abusive cycle of serial patent litigation has broken the Congressional process, which was intended to provide patent clarity and stability. As a result, the generic drug industry that is thriving globally has had its success limited in the US, where it could be saving patients and taxpayers even more

Serial patent litigation is powered by brand companies’ voracious appetite for the most patents possible.

Hatch-Waxman intended patent conflicts to be resolved within 30 months. But serial patent litigation can drag on for years or even decades. The costs and legal risks force generics companies to delay or give up on launching affordable products — extending Pharma’s monopoly pricing years longer than Congress intended. Pharma pockets the profits. The rest of us pay the bills.