Federal Food, Drug, and Cosmetic Act: How It Built the Legal Foundation for Generic Drugs

The FD&C Act didn’t start out as a law for generic drugs. When it was signed in 1938, its goal was simple: stop another tragedy like the elixir sulfanilamide disaster, where over 100 people died because a drug company used a toxic solvent and didn’t test it first. Back then, companies could sell any drug they wanted-no safety data, no proof it worked. The FD&C Act changed that. It gave the FDA the power to say no before a drug hit the market. But it didn’t say anything about generics. That came decades later.

Why Generic Drugs Didn’t Exist Before 1984

Before the Hatch-Waxman Amendments, if you wanted to make a copy of a brand-name drug, you had to do everything the original company did. That meant running full clinical trials-testing on thousands of patients-to prove your version was safe and effective. Even though the brand drug had already been approved, the FDA required you to start from scratch. It wasn’t just expensive. It was practically impossible for most companies. The result? In 1984, only 19% of prescriptions filled in the U.S. were for generics. And those generics made up just 3% of total drug spending. The system was designed to protect innovation, but it also protected monopolies.

The Hatch-Waxman Amendments: The Game Changer

In 1984, Congress passed the Drug Price Competition and Patent Term Restoration Act. Everyone calls it Hatch-Waxman after the two lawmakers who pushed it through: Senator Orrin Hatch and Representative Henry Waxman. This wasn’t just a tweak. It rewrote the rules.

Hatch-Waxman created Section 505(j) of the FD&C Act. That’s the part that lets generic drugmakers file an Abbreviated New Drug Application, or ANDA. The word "abbreviated" is key. You don’t need to prove safety and effectiveness again. You just need to show your drug is the same as the brand-name version in four ways: same active ingredient, same strength, same dosage form (pill, injection, etc.), and same way it’s taken (oral, topical, etc.).

The real magic? Bioequivalence. You don’t test on patients for effectiveness. Instead, you test blood levels. If your generic delivers the same amount of drug into the bloodstream as the brand-within 80% to 125% of the original-you’re approved. That’s it. No more years of clinical trials. No more millions in costs. Suddenly, making generics became doable.

How the System Encourages Competition

Hatch-Waxman didn’t just make generics easier to make. It gave the first company to file an ANDA a powerful incentive: 180 days of exclusive rights to sell their version. No other generic could enter the market during that time. That’s a huge financial reward. It’s why generic companies invest millions to challenge brand-name patents. If they win, they get the market to themselves for half a year-before anyone else can jump in.

There’s another layer: the Orange Book. The FDA publishes this list of all approved drugs and their patent information. Generic companies have to check it. If the brand has a patent, the generic maker must certify whether they think it’s invalid, expired, or won’t be infringed. That’s where patent battles start. And that’s exactly what Congress wanted-competition through legal challenge, not just waiting for patents to expire.

Patent Extensions and the Flip Side

Hatch-Waxman also gave brand-name companies something back: patent term restoration. If a drug took five years to get approved by the FDA, the company could get up to five extra years on its patent to make up for lost time. But there’s a cap: total patent life can’t go beyond 14 years after the drug hits the market. That’s meant to balance innovation with access.

But it hasn’t always worked that way. Some brand companies use "evergreening"-filing new patents on minor changes like a new pill coating or a slightly different dose-to delay generics. Others file citizen petitions with the FDA, asking for delays under the guise of safety concerns. These tactics aren’t illegal, but they’ve stretched exclusivity far beyond what Hatch-Waxman intended.

How the System Works Today

Today, 90% of prescriptions in the U.S. are for generic drugs. Yet they make up only 17% of total drug spending. That’s a $2.2 trillion savings for consumers over the last decade, according to the Federal Trade Commission. The FDA approves about 95% of ANDAs within 10 months now. In the 1990s, it took over three years.

That speed comes from GDUFA-the Generic Drug User Fee Amendments. Since 2012, generic companies pay fees to the FDA, and in return, the agency commits to review timelines. It’s a win-win: faster approvals, more generics, lower prices.

But challenges remain. Complex drugs-like inhalers, injectables, and biologics-are harder to copy. The science is tougher. The FDA has only approved a handful of biosimilars for complex injectables, and even fewer generics for inhalers. Patent thickets around these drugs have reduced generic entry by 42% compared to simple pills.

Compliance and Enforcement

Making a generic isn’t just about science. It’s about compliance. Every facility that makes generic drugs must follow current Good Manufacturing Practices (cGMP). The FDA inspects these plants regularly. In 2022, they issued 47 warning letters to generic manufacturers. The top two issues? Poor quality control and data integrity problems-like falsified test results or missing records.

Violations can cost up to $1.1 million per incident. And if the FDA finds intentional fraud, criminal charges can follow. That’s why big generic companies invest heavily in quality systems. A single bad batch can shut down an entire plant for months.

What’s Next for Generic Drugs?

The FDA’s 2023-2027 plan says one of its top goals is modernizing the approval process for complex generics. Draft guidance for nasal sprays and eye drops is expected in mid-2024. The CREATES Act of 2019 helps by forcing brand companies to sell samples to generic makers-something some brands refused to do, blocking competition.

The Congressional Budget Office estimates that if current policies hold, the U.S. will save $158 billion on federal drug spending between 2023 and 2032. That’s all thanks to the FD&C Act’s foundation, built on safety, then expanded by Hatch-Waxman to include access.

Without the FD&C Act, we wouldn’t have a single generic drug approved in the U.S. Without Hatch-Waxman, most of those generics would still be too expensive to make. Together, they created a system that saves lives-not just by making drugs available, but by making them affordable.