Repercussions of the Drug Price Competition and Patent Term Restoration Act of 1984

Recently enacted legislation involving patent terms and the approval of new generic equivalent drug products is described, and the law's potential repercussions are discussed. The Drug Price Competition and Patent Term Restoration Act of 1984 (PL 98-417) consists of two titles that affect introduction procedures and patent requirements for certain types of generic new drug products. Title I allows drug manufacturers to use an abbreviated new drug application when seeking approval to make generic copies of drug products that were approved by the FDA after 1962. Title II encourages drug manufacturers to assume the increased costs of research and development of certain products that were subject to premarketing clearance by restoring some of the time lost on patent life while the product was awaiting FDA approval. Legislative analysts continue to question whether the short-term gains of eased market access to the generic manufacturers will be outweighed by the long-term benefits of patent extensions to the pioneer drug companies. The potential difficulties in the implementation of the Act and unresolved questions of law surrounding the new law are discussed. The possible effects of the new law on the drug manufacturing industry and market composition are described. Since PL 98-417 was implemented in September 1984, little has been settled in the way of implementing its provisions or accurately measuring its nonregulatory impact. It seems certain that the bill will be difficult to regulate and that litigation will proliferate. Furthermore, the impact of the statute on the composition of the drug industry will undoubtedly be substantial.