Hatch-Waxman Act: How It Shaped Generic Drugs and Drug Prices

When you pick up a generic version of a brand-name drug, you’re seeing the result of the Hatch-Waxman Act, a 1984 U.S. law that created a legal pathway for generic drugs to enter the market without repeating costly clinical trials. Also known as the Drug Price Competition and Patent Term Restoration Act, it was designed to fix a broken system: brand-name drug companies held monopolies for too long, while generics couldn’t get approved fast enough. Before this law, a generic version of a drug couldn’t even be submitted for approval until the brand-name patent expired — and even then, the process was slow, messy, and expensive.

The Hatch-Waxman Act, a 1984 U.S. law that created a legal pathway for generic drugs to enter the market without repeating costly clinical trials. Also known as the Drug Price Competition and Patent Term Restoration Act, it was designed to fix a broken system: brand-name drug companies held monopolies for too long, while generics couldn’t get approved fast enough. Before this law, a generic version of a drug couldn’t even be submitted for approval until the brand-name patent expired — and even then, the process was slow, messy, and expensive.

The FDA Orange Book, the official list of approved drug products with therapeutic equivalence evaluations. Also known as the Approved Drug Products with Therapeutic Equivalence Evaluations, it’s the public database that shows which drugs have patents, exclusivity periods, and generic equivalents. It’s the tool doctors, pharmacists, and patients use to track when generics will become available — and it only exists because of the Hatch-Waxman Act. The law also gave brand-name companies a limited extension on their patents — up to five extra years — to make up for time lost during FDA review. That’s why drugs like Levitra or tadalafil still had exclusivity for years after their original patent expired.

At the same time, the law created a shortcut for generics: the ANDA, Abbreviated New Drug Application, a streamlined FDA submission process for generic drugs that proves bioequivalence without new clinical trials. Also known as the Abbreviated New Drug Application, it lets generic makers show their product works the same as the brand, using existing safety data. This cut approval times from years to months — and that’s why you now see dozens of generic versions of popular drugs. It also led to the creation of the GDUFA, Generic Drug User Fee Amendments, a funding system where generic manufacturers pay fees to speed up FDA reviews. Also known as the Generic Drug User Fee Amendments, it’s the system that keeps generic approvals moving fast today. Without these user fees, the FDA couldn’t keep up with the volume of applications.

The Hatch-Waxman Act didn’t just change how drugs get approved — it changed how we pay for them. Before 1984, brand-name drugs like Lipitor or Humira had no real competition for over a decade. Now, within months of patent expiry, multiple generics flood the market and prices drop by 80% or more. That’s why you can buy generic ampicillin or sertraline for pennies. But it’s also why patent cliffs — the sudden drop in revenue when patents expire — trigger big shifts in the pharmaceutical industry. Companies now race to extend patents, file new ones for minor changes, or launch their own generics right as the original expires.

This law is why you see posts about the FDA Orange Book, patent expiry dates, biosimilars, and generic drug user fees here. It’s the foundation for everything from how long you wait for a cheaper version of your medication to why some drugs still cost hundreds of dollars even after the patent runs out. The Hatch-Waxman Act didn’t solve every problem — shortages, patent abuse, and biosimilar delays still happen — but it gave patients the best shot at affordable medicine we’ve ever had.