South Carolina Multistate Pharmacy Jurisprudence Examination (MPJE) Practice Exam

Under the Hatch-Waxman Amendment, what is the impact on drug prices?

1. It typically leads to lower prices

2. Drug prices remain unaffected

3. It always increases prices

4. Prices only decrease for brand-name drugs

The correct answer is: It typically leads to lower prices

The Hatch-Waxman Amendment, enacted in 1984, significantly influences the pharmaceutical market by facilitating the approval of generic drugs. The primary intent of this amendment was to strike a balance between encouraging the development of new drugs by pharmaceutical companies and allowing for the entry of generic versions of those drugs after the expiration of their patents. When a brand-name drug's patent expires, the introduction of generic alternatives generally leads to increased competition in the market. This competition often results in lower prices for consumers. Generic drugs are typically sold at much lower prices than their branded counterparts because they do not have the same development costs and can enter the market once the brand patent is no longer in effect. The availability of these lower-cost alternatives encourages price reductions, benefiting patients and healthcare systems. The impact of the Hatch-Waxman Amendment has therefore been to lower drug prices, especially in therapeutic categories where patent expirations have led to the introduction of multiple generics. As such, the correct answer reflects this understanding of how the amendment has shaped pricing dynamics in the pharmaceutical industry.