By: Eddy Atallah


This Blog aims to examine the Hatch-Waxman Act and one of the most significant incentives behind it, a three-year market exclusivity period for the “new clinical investigations.”  Both the FDA and the courts have struggled with interpreting the exclusivity provision, among many other aspects of this inherently ambiguous regulation.[i] This confusion has a direct impact on the willingness to invent, drug pricing, the recovery of research and development (R&D), and other basic purposes of the Act.[ii]


The Hatch-Waxman Act allows for, among other things, drug manufacturers to piggy-back on the innovations of pioneer companies by allowing submission of a drug application for a drug which is already on the market, but for which the manufacturer has found a new clinical purpose.[iii] Often, a new clinical purpose, or “clinical investigation,” includes the development of a new dosage form or route of administration.  However, the FDA may not approve the new clinical investigation if it deems that the differences between the existing and the new drugs to beinsignificant.[iv]  If deemed insignificant, the new drug is blocked from entering the market by the existing drug’s three-year market exclusivity.[v]  This wait-and-see approach has led to many questions, including what standard, if any, the FDA uses to determine this three-year market exclusivity.

This question came to bear recently in in Braeburn v. FDA, where the court unexpectedly struck down the FDA’s determination that a drug with a purportedly new clinical investigation to treat Opioid Use Disorder (OUD) was blocked by an already existing drug’s three-year market monopoly because the purportedly new clinical investigation shared the same “innovations” as the already existing drug.[vi]  The first (and existing) drug was for the treatment of moderate-to-severe OUD in patients who had already initiated treatment.[vii]  Braeburn’s barred new clinical investigation was for the treatment of moderate-to-severe OUD in any adult.[viii]  The purported new clinical investigation was the use of the drug in a new population.  Braeburn instituted an action against the FDA, alleging that the agency’s interpretation barring its drug was arbitrary and capricious.[ix]

In denying FDA’s determination that Braeburn’s clinical investigation was too similar to the existing drug, the court implored the agency to develop a unified legal or scientific standard for which it will judge a drug’s “innovation”.[x] For example, the court wondered what circumstances the FDA should find relevant in its determinations, whether the characteristics of the drug should warrant exclusivity, and whether every use of the drug should merit exclusivity.[xi] The court further notes that the most detrimental aspect of the FDA’s case was that in their letter decision the agency only “[gave] a short shrift to how [it] arrived at [its] chosen statutory decision.”[xii]  Ultimately, the Braeburn Court chose not to simply defer to an agency’s interpretation of a statute but required that the FDA find a uniform legal or scientific standard for measuring a drug’s “innovations.”[xiii]


A.        Policy considerations

Litigation surrounding the three-year market exclusivity provision shows us not only how inherently ambiguous the provision is but also the need for a clearly defined standard.  However, creating a clearly defined standard for defining the scope of clinical investigation exclusivity is a double-edged sword.  On one hand, a clear statutory standard will provide pioneer drug innovators with more insight into the scope of their anticipated exclusivity and allow them to identify with more certainty the potential competitors this exclusivity will bar.  However, “the same clarity and certainty will also elucidate the potential competitors that a drug innovator’s exclusivity will not bar.” [xiv] The question still looms on how to identify what satisfies as enough “innovation.”

B.        Defining Innovation

Braeburn made it clear that the FDA can no longer rely on a subjective determination when barring new clinical investigations.[xv]  In fact, the Court ruled that when determining the “innovations” of the pioneering drug, such determinations must be made using a “legal” or “scientific” standard.[xvi]  The FDA has been defining a drug’s “innovations” as the changes an exclusivity-eligible has made relative to the drug previously approved to administer the same active moiety.[xvii]

The FDA may not need to look far to find a legal standard to define innovations.  In fact, over the centuries, patent law has developed a formal approach for evaluating a product’s “innovation.”  The FDA can find comfort knowing that the law, particularly intellectual property (IP) law, has already defined “innovation.”[xviii]  Further, it can be argued that both the three-year exclusivity and patent law share a central rationale: “the need for an enforceable right to exclude that encourages creators to invest in making new . . . products.”[xix]  Using patent law as a reference, the FDA should undergo a prosecution period, similar to a patent prosecution, with the pioneer drug to properly define the drug’s “conditions of approval,” or “innovations.” With a few modifications, the FDA could employ similar claim construction as used by the United States Patent and Trademark Office.  This would allow for a clear understanding of the pioneer drug’s “conditions of approval.”  Finally, a generic company claiming a new clinical investigation would not only need to show that its drug does not match the pioneer’s clear “conditions of approval” (which conveniently is now readily apparent) but also that the potentially new clinical investigation is useful, new, and nonobvious.  Like patent law, demonstrating all three requirements to meet the bar of “innovation” will provide for enough of a legal and scientific standard to avoid the delicate double-edged sword dilemma.[xx]

            1.         Timing and “Conditions of Approval” Prosecution.

A new clinical investigations application must not share the “innovations” of an existing pioneer. Neither the statute nor its legislative history provides any precise guidance as to the meaning of this bar.  Some suggest that a drug’s innovation should include any study presented by the pioneer applicant that was absolutely necessary to obtain FDA approval.[xxi]  Though “[n]o specific size, scope, duration, cost, etc., has been established for an investigation to qualify as ‘essential,’ and unless and until some guidelines are developed, the issue will be determined on a case-by-case basis.”[xxii]

In some circumstances, the conditions of approval will be apparent to everyone.  In other cases, like Braeburn, a dispute may arise between the FDA and the potential new clinical investigations applicant on what constitutes the pioneer drug’s innovation or the aspects of the pioneer which was or were absolutely necessary for approval.  In any event, the least disruptive mechanism evaluating a drug’s innovation is to couple it with the initial submission and consideration for a pioneer applicant’s New Drug Application (NDA), instead of continuing to use the wait-and-see approach.

This blog suggests that the FDA should make a specific essentiality determination of what constitutes a drug’s innovation at the time it reviews and accepts an application.  Further, when the FDA permits a pioneer drug’s NDA to take effect, it should be deemed to have agreed that those investigations presented by the pioneer manufacturer are “essential,” unless it expressly notifies the applicant of the contrary. Using this or a similar standard for making essentiality determinations up front is consistent with the purpose of the statutory exclusivity clauses, which is to provide an incentive for research and development.  It should also satisfy Braeburn’s “legal” or “scientific” standard requirement while making good policy sense.

            2.         Clinical Investigations that are New, Useful, and Nonobvious

Now that the “innovations” have been evaluated and scrutinized up front, the FDA will have a stronger argument that its decision meets Braeburn’s legal or scientific standard requirement, particularly if the FDA also demonstrates that the new clinical investigations application is not new, useful, or nonobvious.  Because the FDA’s decision was based off of a clear legal standard, a court will more likely defer to the agency’s interpretation.  Particularly because Congress has not expressly provided any definition already in the statute.  Further, by requiring a generic manufacturer to prove “innovation” by satisfying the novelty, usefulness, and non-obviousness standards, the FDA’s final determination will be less likely to qualify as arbitrary or clearly erroneous.

Here, patent law can be very helpful in determining whether a generic manufacturer satisfies the novelty, usefulness, and non-obviousness standards.  Like patents, in order for a generic drug to be novel, the new clinical investigation must not be anticipated, or read on, prior NDA’s.[xxiii]  The anticipation requirement will now also include the FDA’s already determined essentiality determination for the pioneer drug, assuming that the FDA heeds my warning and changes its “what-and-see” approach for evaluating clinical investigation exclusivity.

In regard to usefulness, the Supreme Court has already addressed the question of how a chemical compound can satisfy the usefulness requirement.[xxiv]  In Brenner v. Manson, the Court concluded that efficacy must be shown in order to be deemed useful.[xxv]  Efficacy is already required by the Hatch-Waxman Act, which requires that new clinical investigations applications present the FDA with novelty, safety, and efficacy studies.[xxvi]  Therefore, this requirement should not be hard to satisfy.  Ultimately, the FDA can rely on patent law’s carefully considered definition of innovation in their exclusivity determination.  By doing so, the agency will satisfy their new requirement of needing a scientific or legal standard for defining a pioneer drug’s “innovations.”


Since the inception of the Hatch-Waxman Amendments, the FDA’s determination for three-year clinical investigations exclusivity was generally unquestioned.  However, Braeburn v. FDA brought about significant interpretive challenges to the provision and questions about agency deference.  This blog proposes a legal and scientific standard that should suffice the Court’s new requirement over the exclusivity determination process, a standard already firmly rooted in IP law.  This blog also proposes changes to the FDA’s drug approval process which will help the agency fend off interpretive challenges.

Hopefully, with these suggestions, litigation surrounding this inherently ambiguous statute will diminish.  But importantly, these suggestions hope to maintain the overall purpose of the three-year clinical investigation’s exclusivity provision; incentivize the development of new drugs, albeit in forms such as a new indication, a new route of administration, or new dosage forms, while still enabling the approval of lower-cost generic copies or competitive therapies.

[i] Robert A. Bohrer & John T. Prince, The Tail of Two Proteins: The FDA’s Uncertain Interpretation of the Orphan Drug Act, 12 Harv. J. of L. & Tech. 365, 387 (1999).

[ii] See Generally Id.

[iii] 21 U.S.C. § 355(c)(3)(E)(iii) (2018).

[iv] Id.

[v] Id.

[vi] Braeburn, Inc. v. U.S. Food & Drug Admin., 389 F.Supp.3d 1, (2019).

[vii] Braeburn, 389 F.Supp.3d at 13.

[viii] Id.

[ix] See Generally, the Administrative Procedure Act (APA). 

[x] Braeburn, 389 F.Supp.3d at 24.

[xi] Id. at 23.

[xii] Id. at 24.

[xiii] Id.

[xiv] Nicole Stakleff, Clinical Diagnosis of FDA’s Clinical Investigation Exclusivity Standard? Unreasonable, Pepper Hamilton, LLP (Aug. 27, 2019), https://www.pepperlaw.com/publications/clinical-diagnosis-of-fdas-clinical-investigation-exclusivity-standard-unreasonable-2019-08-27/#_ftnref4.

[xv] Braeburn, supra note xii.

[xvi] Id.

[xvii] Id. at 8.

[xviii] Innovation and Intellectual Property, World Intellectual Prop. Org., https://www.wipo.int/ip-outreach/en/ipday/2017/innovation_and_intellectual_property.html (last visited Apr. 10, 2021)(“[A manufacturer] needs to demonstrate that their technology is new (novel), useful and not obvious to someone working in the related field.”).

[xix] Joseph Scott Miller et al., Intellectual Property Law: Cases & Materials 124 (5th ed. 2017).

[xx] Braeburn, 389 F.Supp.3d 1, 23 (2019).

[xxi] Stakleff, supra note xiii.

[xxii] Id.

[xxiii] 35 U.S.C. 102 (2012).

[xxiv] Brenner v. Manson, 383 U.S. 519 (1966).

[xxv] Id. at 533.

[xxvi] 21 C.F.R. 314.50 (2011).

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