[Ip-health] Dow Jones Newswires: Obama Budget Seeks To Speed Entry Of Generic Drugs

Thiru Balasubramaniam thiru at keionline.org
Tue Feb 15 21:42:11 PST 2011


	• FEBRUARY 14, 2011, 5:12 P.M. ET
UPDATE: Obama Budget Seeks To Speed Entry Of Generic Drugs

(Updates with additional reaction.)

WASHINGTON (Dow Jones)--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.

-By Brent Kendall, Dow Jones Newswires; 202-862-9222; brent.kendall at dowjones.com

--Thomas Gryta contributed to this article.


Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
thiru at keionline.org

Tel: +41 22 791 6727
Mobile: +41 76 508 0997

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