What is the purpose of the Drug Price Competition and Patent Term Restoration Act of 1984?

The Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, was designed to strike a balance between encouraging pharmaceutical innovation and facilitating the entry of generic drugs into the market. It serves two primary purposes: simplifying the drug approval process for generic medications and extending patent terms for innovative drugs.

The simplification of the drug approval process for generics allows manufacturers to bring their products to market more quickly by enabling them to file an Abbreviated New Drug Application (ANDA) rather than going through the full New Drug Application (NDA) process. This not only reduces costs for generic manufacturers but also helps in providing consumers with more affordable medication options.

On the other hand, the extension of patent terms for innovative drugs compensates brand-name manufacturers for the time spent in the approval process during which they cannot market their drugs. This adjustment encourages innovation by giving pharmaceutical companies a longer period to recoup their research and development investments before generic competition can enter the market.

Thus, the correct answer encompasses both the simplification of the approval process for generics and the increase in patent terms for innovative drugs, highlighting the Act's dual focus on promoting competition while supporting pharmaceutical innovation.