Abbreviated New Drug Application (ANDA)

An Abbreviated New Drug Application (ANDA) is the submission a company files with the FDA to market a generic version of an approved drug. It is "abbreviated" because the applicant does not repeat the brand's clinical trials; instead it shows its product is the same and works the same way in the body.

How it works

Created by the Hatch-Waxman Act of 1984, the ANDA pathway requires the generic to match the reference listed drug in active ingredient, strength, dosage form, route of administration and labeling, and to be bioequivalent, meaning it delivers the same amount of drug into the bloodstream at the same rate. Reviews are funded by generic drug user fees (GDUFA).

If patents on the brand drug are still listed, the ANDA filer must certify against each one. A Paragraph IV certification claims a patent is invalid or will not be infringed. That typically triggers a patent lawsuit from the brand company, which can delay FDA approval of the generic for up to 30 months while the case proceeds. The first filer with a Paragraph IV challenge can earn 180 days of generic exclusivity.

Why it matters for traders

For brand drugmakers, ANDA filings and Paragraph IV litigation outcomes signal when revenue may face a "patent cliff". Court rulings, settlements that set a licensed generic entry date, and first-generic approvals can move both the brand and generic companies' shares. Generic makers themselves are watched for first-to-file wins, since 180-day exclusivity periods can be highly profitable.

Example

A hypothetical generic maker, Alder Generics (ALDG), files an ANDA with a Paragraph IV certification against a brand drug from Northwind Therapeutics (NWTX). NWTX sues within the statutory window, triggering a stay of up to 30 months. Two years later, the parties settle on a licensed entry date, and NWTX shares rise as the market prices in more years of exclusive sales.

FAQ

Do generic drugs need clinical trials?

Generally not efficacy trials. They need bioequivalence studies, usually small studies in healthy volunteers, plus manufacturing data.

What is a Paragraph IV filing?

An ANDA certification that a listed patent on the brand drug is invalid or not infringed, which usually leads to patent litigation.