The Process is the Penalty: How Serial Patent Litigation Delays Low-Cost Drugs
The previous piece in this series identified tactics used by brand-name pharmaceutical manufacturers to extend their market exclusivity and deter entry by generic producers. It also examined how the Eliminating Thickets to Increase Competition (ETHIC) Act would end the practice of asserting multiple terminally disclaimed patents to protect essentially the same drug. While the ETHIC Act would be a useful step forward, brand manufacturers can deploy other tactics to significantly deter entry. In particular, the practice of serial litigation, which entails repeatedly suing a generic company over the same drug, is a significant source of delay that lies beyond the scope of the ETHIC Act. Additional reforms may be required to address this anticompetitive behavior.
The problem lies with the structure of the Drug Price Competition and Patent Term Restoration Act of 1984—better known as the Hatch-Waxman Act. Even if patent thickets are pruned by the ETHIC Act, waves of litigation can turn the adjudication process itself into an effective barrier to entry. Moreover, the disparity between what it costs for a brand manufacturer to claim new patents and what litigation costs generic producers creates incentives for brands to engage in serial patent litigation.
The Mechanics of Hatch-Waxman: Paragraph IV and the 30-Month Stay
The Hatch-Waxman Act launched the modern U.S. generic drug industry through a bargain that granted generics an abbreviated new drug application (ANDA) pathway in exchange for providing brand manufacturers with new exclusivities to protect their products. Importantly, the legislation also established a process for the timely resolution of patent disputes between generics and brand manufacturers before having to commit the resources required to bring a generic to market.
That process is called a Paragraph IV certification, in which a generic company notifies the Food and Drug Administration (FDA) that it intends to enter the market before a patent listed in the Orange Book expires. The generic can challenge the patent as invalid or assert that it is not infringing the existing patent. The generic is then required to notify the brand manufacturer, and if the brand manufacturer brings suit within 45 days, it is granted a 30-month stay. In effect, the stay is an injunction that prevents the FDA from approving the generic for 30 months or until litigation is resolved. Importantly, this stay is automatic. Unlike a party seeking a traditional injunction, the patent holder is not required to show that it is likely to win on the merits, that it would suffer irreparable harm, or that the balance of equities and hardships favors the patent holder. Instead, simply filing the suit triggers the stay.
In addition to the 30-month stay granted to brand manufacturers, the Hatch-Waxman Act also provided generics with a strong incentive to challenge brand manufacturers. Namely, the first generic to file a successful Paragraph IV certification receives a 180-day period of market exclusivity as the sole generic provider. Any patent listed in the Orange Book is subject to challenge and may face numerous Paragraph IV certifications, with generics competing to file as early as possible. The FDA can allow more than one Paragraph IV certification for any listing in the Orange Book, in which case multiple generic companies would share the initial period of exclusivity. But the intended goal of the 180-day exclusivity is to encourage generics to enter the market as swiftly as possible.
The Hatch-Waxman framework sought to establish a process for resolving legal disputes in a timely manner. Brand manufacturers were provided a clear process to defend their patents, while generics had an incentive to challenge weaker patents and enter the market. Cases often settled when both parties agreed on a negotiated entry date. But if the 30-month stay expired and the litigation remained unresolved, the FDA could approve the generic, which can then be launched “at risk,” meaning that if the generic then lost in court, it would be liable for damages resulting from its entry into the market.
This process was intended to expedite adjudication and reduce uncertainty, but it has emerged as a structural feature of the Hatch-Waxman Act that is vulnerable to abuse and a source of delay. What was supposed to be a single proceeding over a defined set of patents no longer holds; instead, generics face waves of litigation that can delay entry by years.
Enter the Lawyers
Brand manufacturers have become adept at using the Hatch-Waxman framework to file strategic waves of infringement litigation against a generic manufacturer over a single drug. The brand may list a patent in the Orange Book and subsequently sue a generic challenger, triggering the 30-month stay. Then, after adding a continuation patent or secondary patent to the Orange Book, the brand can file another lawsuit, forcing the generic into another round of litigation. For example, the brand can list new patents in the Orange Book covering formulations, delivery devices, or dosages that serve as new starting points for litigation, even if the original Paragraph IV challenge has been resolved. The FDA does not review the validity or relevance of patents listed in the Orange Book, which provides a strategic advantage to the brand companies, who can determine which patents to list and when to list them.
Serial litigation imposes substantial costs on generic challengers, increasing the costs of patent challenges and making at-risk entry even riskier. At the same time, the economics of litigation are asymmetric for brands and generics. A brand can obtain an additional continuation patent for as little as $25,000, and because each patent can support a new infringement case, every patent added to the thicket poses the threat of another lawsuit for the generic. A single Hatch-Waxman case costs a generic company $6.2 million on average; serial litigation can pose these costs multiple times over. Because generics tend to be more capital-constrained than brands, this imbalance can lead generics to challenge to fewer patents or delay challenges, effectively deterring the entry of lower-cost competitors. Given these incentives, the brand does not need to prevail in every wave of litigation, and sometimes does not. But increasing the litigation costs and uncertainty surrounding a generic’s entry can effectively extend the brand’s market power.
Case Studies
Latisse: The pharmaceutical manufacturer Allergan (now part of AbbVie) has engaged in 15 years of litigation with the same generic companies trying to bring bimatoprost to market, which is the generic version of Latisse, an ophthalmic solution used to treat hypotrichosis of the eyelashes (inadequate eyelash growth). In 2010, several companies submitted ANDAs to the FDA to produce bimatoprost. Allergan filed suit, invoking the 30-month stay. A judge found Allergan’s asserted patents invalid in 2014. While appealing that case, Allergan again sued the generic companies with newly asserted patents in another round of litigation. Again, the patents were found invalid, with the judge finding that they were substantially the same as the earlier patents, preventing Allergan from litigating them again.
Allergan then sued the generics again, based on continuation patents filed while the appeal was pending, resulting in another decision invalidating Allergan’s patents. After one of the generics then launched a generic product at risk, Allergan proceeded with a fourth round of litigation, this time with a jury trial seeking damages against the new generic on the market. The jury sided with Allergan, awarding the company $39 million in damages, which was overturned by the Federal Circuit. In sum, the case was resolved 15 years after the ANDAs were filed, far from the simple adjudication process envisioned under Hatch-Waxman.
Myrbetriq: Astellas introduced Myrbetriq in 2012 to treat overactive bladder. In 2016, Astellas sued nine companies seeking to bring generic versions of mirabegron to market, triggering the FDA’s 30-month stay on generic approval. After four years of litigation, Astellas settled with the generics, agreeing on a future entry date, only to sue all nine again after the lawsuit was dismissed. The second lawsuit focused on a new formulation patent that would not expire until 2030. Six companies settled, with several agreeing to push back the previously negotiated entry date. The three that went to trial prevailed in 2023. Astellas then sued those companies again over yet another new formulation patent. That effort failed too, and two of the generics launched at risk in 2024. Astellas then filed two more lawsuits over additional formulation patents. In all, Astellas deployed five waves of litigation to keep generics off the market, extracting payments, licensing fees, and delayed-entry concessions in settlements, despite the initial success in challenging the brand’s original patent.
The mirabegron case illustrates an important caveat. A court recently found four of Astellas’s patents valid and infringed. But that ruling came ten years and five rounds of litigation after the first ANDA was filed, well beyond the 30 months Hatch-Waxman envisioned. This is the defining feature of serial patent litigation. The duration and cost of successive rounds of litigation are what thwart timely generic competition, independent of how the underlying patent disputes are ultimately resolved. By the time the merits were settled, the economic damage was done. The harm in this case is procedural, not substantive. Serial litigation imposes years of delay as the same dispute is relitigated across successive suits. Generics that could have entered the market under previous settlements either settled again, paid substantial licensing fees, or were blocked from the market until the relevant patent expires in 2029 (with pediatric exclusivity running until 2030). Requiring legitimate claims to be adjudicated together and within an appropriately defined timeframe would preserve valid patents while eliminating the delay that the current structure rewards.
The case also illustrates why the ETHIC Act alone cannot solve these problems. Astellas obtained several of the asserted patents during ongoing litigation, and a newly issued patent that is not terminally disclaimed to a previously asserted patent can support a new lawsuit regardless of how many earlier rounds the brand has pursued. By design, the ETHIC Act only applies to patents linked by terminal disclaimers, which are used to overcome obviousness-type double patenting rejections. But continuation patents with genuinely distinct claims can be used to initiate new waves of litigation, and drug patent thickets are often composed of multiple families of patents covering different aspects of the drug. Consequently, there may be more than one patent group protecting a drug, and those patent groups are not terminally disclaimed and may be created at different times.
Structural Reforms to End Serial Litigation
Several structural reforms, alone or in combination, would provide important complements to the ETHIC Act. In the 40 years since the passage of Hatch-Waxman, a clearer picture has emerged of its strengths and weaknesses and of parties’ ability to game the process, along with a growing body of evidence on the adverse effects of serial patent litigation.
One frequent reform suggestion focuses on tightening oversight of improper listings in the Orange Book. The efficiency of Paragraph IV certifications is a function of the efficiency of Orange Book listings. Inappropriate listings can build patent thickets that delay generic entry. The Federal Trade Commission (FTC) has moved in this direction, actively challenging inappropriate Orange Book listings and sending warning letters to brand-name companies regarding 200 listings it considers inappropriate. Other proposals focus on better coordination between the United States Patent and Trademark Office (USPTO) and the FDA to enhance the quality of patents issued and listed in the Orange Book, thereby limiting gamesmanship and patent thickets.
While such proposals would help limit the scope and breadth of patent thickets, it may be useful to also consider reforms that directly address the problem of serial patent litigation. Generic firms pay significantly more in legal fees to challenge a patent than brands pay for a continuation patent. Coupled with the fact that launching at risk exposes a generic firm to damages calculated based on a monopolist’s lost profits, challenging patents is a costly endeavor. When a generic faces successive waves of litigation and potentially high damages, delayed entry or a settlement may be the only options available to limit its potential liability. It is not the quality of the patent, but the risks and costs of challenging the patent that drive the decision.
One approach would require brand manufacturers to play all their cards when responding to a generic’s ANDA filing. While the ETHIC Act tackles the volume of patents that deters entry, this “use it or lose it” reform would stop the practice of holding patents back to fuel additional rounds of litigation. Any litigation arising from the same Orange Book listing or the same continuation chain should be consolidated into one case. Not only would this limit waves of serial litigation, but it would also increase certainty in settlement negotiations, as the threat of future lawsuits over the same drug diminishes.
Another useful solution to reframe patent challenges under Hatch-Waxman would limit remedies on late-filed patents. The rule would apply only to patents issued after the generic’s initial ANDA filing. That is, for cases where a continuation patent is asserted against a generic that has already litigated a related patent with the brand manufacturer, damages could be limited to a reasonable royalty, which is the floor for damages under current law. The reasonable royalty is calculated by estimating what a generic would have paid the brand company for a license to market the drug. This compensates the brand when a generic is found to infringe, but the damages are not calculated based on the drug’s monopoly prices, which would be considerably higher. The marginal value of such continuation patents is lower than that of the original patent, so opting for reasonable royalties adjusts the damages accordingly.
Conclusion
The 1984 Hatch-Waxman Act successfully created the U.S. market for generic drugs. Generics now fill 90 percent of U.S. prescriptions, with savings to patients and taxpayers reaching over $3.4 trillion over the last 10 years. Yet, over 40 years, the Hatch-Waxman framework has become vulnerable to strategic behavior and legal tactics that can impose substantial costs and significant delays on generics seeking to enter the market. Serial patent litigation has emerged as one of the most effective means to exploit the Paragraph IV patent challenge, turning Hatch-Waxman’s streamlined adjudication process into an ordeal that can span a decade. The goal of reform is not to weaken patent rights for genuine pharmaceutical invention; it is to ensure that when patents expire, competition actually arrives.