How Increased Competition from Generic Drugs Has Affected Prices and Returns in the Pharmaceutical Industry

In 1984, the Drug Price Competition and Patent Term Restoration Act also known as the Hatch-Waxman Act created an abbreviated approval process for generic prescription drugs and at the same time extended patent terms for innovator drugs. This Congressional Budget Office CBO study examines the extent to which competition from generic drugs has increased since the act. It also analyzes how that competition has affected the returns from developing a drug. The analysis was conducted at the request of the Chairman of the Senate Committee on the Budget.