US healthcare reform passed: Biosimilars Pathway in US with 12 years exclusivity for biologics

Biosimilares/Novedades | Posted 02/04/2010 post-comment0 Post your comment

The US House of Representatives voted 219-212 on March 21 2010 to approve President Mr Barack Obama’s US$940 billion, 10-year health reform, and he could now sign the bill into law as early as 23 March 2010.

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The legislation would give the US FDA the authority, for the first time, to approve generic versions of biological drugs, but branded drug makers would be given a 12-year exclusivity period before generics may be developed.

Although pharmaceutical majors would contribute more than the originally intended US$80 billion in savings over 10 years to help pay for the cost of the bill, the legislation does in turn create 32 million more customers for the industry’s products.

In response, European drug makers edged lower on 22 March 2010. “Pharma stocks have slipped although they are far from being the worst performing sector in Europe,” said Mr Stephen Pope at Cantor Fitzgerald.

Analysts at Panmure Gordon said: “The safe passage of US healthcare legislation overnight in the House of Representatives must be viewed positively.”

Analysts were in agreement that the impact of the legislation on the pharmaceutical sector is likely to be relatively limited and there was still plenty of scope for further dilution.

Investors’ fears were eased as the bill does not allow the US government to cap prices and premiums, which would have hurt drug makers and insurers.

Mr Jeremy Batstone-Carr at Charles Stanley Research said: “Critically, the pricing of prescription products remains free from external interference. The proposed legislation excludes any form of public option which would result in government becoming a major force in the industry, further rebates in medicare, governmental negotiation of pricing and cheap imports from low-cost countries.”

Broadly welcoming the vote, the Pharmaceutical Research and Manufacturers of America (PhRMA) said the legislation, while not perfect, is a step towards giving all Americans access to high-quality, affordable healthcare coverage and services. “Our commitment to help pay for healthcare reform will require all of our companies to make some difficult choices moving forward – on top of already losing more than 150,000 jobs since 2007 because of the recession and other economic factors. But throughout this long process, we have been guided by a belief that all Americans should have access to high-quality, affordable healthcare coverage and services. This legislation, while not perfect, is a step in that direction. Most importantly, we must also take steps in the years ahead to support critically needed innovation, ensuring future medical advancements and breakthroughs.”

However, Mr Jon Leibowitz, Chairman of the Federal Trade Commission (FTC) that has battled to get ‘pay for-delay’ deals banned, pledged that the fight will go on. These ‘unconscionable deals’ cost consumers around US$3.5 billion a year, and “it’s not a question of whether, but when, they are stopped”, he said a week earlier.

References:

Anjli Raval. Pharma shares down on US healthcare reform. Financial Times. 2010 March 22.

Lynne Taylor. US House passes Obama health reform bill. PharmaTimes. 2010 March 22.

Source: Financial Times; PharmaTimes

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