Date: 14 February 2011
Source: The Wall Street Journal
Link: http://online.wsj.com/article/BT-CO-20110214-715412.html
The Obama administration`s 2012 budget blueprint released Monday seeks to speed
up the availability of
generic drugs and projects billions in federal health-care savings if the
cheaper medicines are allowed on the market more quickly.
The White House budget included two proposals that could introduce early
price competition to brand-name drugs by generic rivals.
One would allow the U.S. Federal Trade Commission to stop controversial
settlements in which brand-name drug companies pay their generic competitors
to drop patent challenges that could lead to early entry of generic drugs.
A second proposal would hasten the availability of generic biologic drugs
by reducing the market exclusivity period for brand biologics to seven
years from 12 years.
Biologic drugs are complex and expensive medicines derived from proteins
manufactured in living cells. Traditional drugs are made by mixing
chemicals.
The proposals have run into previous opposition in Congress amid extensive
industry opposition.
John J. Castellani, president of the Pharmaceutical Research and Manufacturers
of America, said the Obama budget would diminish crucial incentives for
future U.S. medical innovations.
"While we understand the need to reduce the deficit, policies such
as these represent the wrong approach," Castellani said in a
statement.
Jim Greenwood, president of the Biotechnology Industry Organization, said
a reduction in market exclusivity for biologic drugs is "not going to
happen."
Greenwood said his industry demonstrated in the last Congress that it had
a political coalition to support 12 years of exclusivity. "Now we have a
Republican majority in the House; they are not going to stand for
backtracking on biosimilars," he said. "I don`t believe the Senate is
either."
The Generic Pharmaceutical Association offered a mixed response to the president`s
proposals. The group applauded his plan to reduce the exclusivity
period for biologics but criticized the administration`s proposal to
eliminate the drug-patent settlements as "misguided."
Both brand-name and generic drug makers have defended the patent deals as
pro-competitive, saying they can lead to early introduction of generic
drugs while eliminating the uncertainty of patent litigation.
The FTC has led the charge against the patent deals, saying brand-name drug
makers have paid generics handsomely to sit on the sidelines.
"At a time when the government is making tough choices on spending,
it is a matter of simple common sense to stop these sweetheart deals between
pharmaceutical companies that needlessly increase government
spending on prescription drugs by billions of dollars," FTC Chairman Jon
Leibowitz said in a statement.
The Obama administration has backed both proposals previously, but did not
include them in last year`s budget submission. Notably, the White House
used both proposals Monday in its projections of government
savings over the next decade.
The administration said allowing the FTC to ban anticompetitive drug patent
settlements would save federal health-care programs $8.79 billion over 10
years.
Those projected savings appear far higher than
estimates published by the Congressional Budget Office in 2010. The CBO,
which analyzed a similar proposal in the Senate, found the legislation
would have saved
the government $2.7 billion over 10 years.
The White House estimates, however, are lower than those previously offered
by the FTC`s Leibowitz, who has predicted that banning the patent
settlements would save government health-care programs roughly $12 billion
over the next decade.
The FTC`s savings projections, which found that American consumers would
save $35 billion over 10 years, were criticized as flawed by the drug
industry.
The White House also projected Monday that federal health-care programs
would save $2.34 billion over the next 10 years if generic biologic drugs
are allowed on the market after seven years.
Keywords: Generic Drugs / Obama / Budget /
Pharmaceutical
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