Drugs in pill cap The gaming of Hatch-Waxman is one of the two most important reasons why drug prices are so out of control. (Photo: Shutterstock)

The Drug Price Competition and Patent Term Restoration Act — better known as Hatch-Waxman — was signed into law by President Ronald Reagan 34 years ago. Sponsored by Senator Orrin Hatch of Utah, a devout conservative, and Representative Henry Waxman of California, a flaming liberal, its primary purpose was to make drugs more affordable by kick-starting the relatively new generic drug industry.

This law made it much easier to bring generic drugs to the market — for instance, the kind of clinical testing required to get a new drug approved by the Food and Drug Administration was largely eliminated for generics. To supply an extra incentive, the first manufacturer to have a particular drug ready would get the market to itself for 180 days before all the other companies came out with their generic version.

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