Obama budget aims to increase use of generics and biosimilars

Home/Policies & Legislation | Posted 04/03/2016 post-comment0 Post your comment

President Obama has revealed plans to increase the use of generics and biosimilars in his fiscal year 2017 budget proposal.

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The budget proposals come as part of a 173-page document from the US Department of Health and Human Services and are intended to ‘increase the availability of generic drugs and biologics’. The proposals are split over three themes.

Prohibit brand and generic drug manufacturers from delaying the availability of new generic drugs and biologicals
This proposal intends to increase the availability of generics by banning so-called pay-for-delay deals between originator companies and generics makers as of 2017. Pay-for-delay deals occur when brand-name companies pay generics companies challenging their patents to delay the introduction of lower-cost generics in return for a payment or payments from the originator company. The US Federal Trade Commission has long been campaigning against such deals, and has previously stated that such deals cost ‘consumers and taxpayers US$3.5 billion a year in higher drug prices’ [1].

This proposal is projected to result in savings to both Medicare and Medicaid. For Medicare savings are projected to be US$12.3 billion over 10 years.

Modify length of exclusivity to facilitate faster development of generic biologicals
Biological drugs currently enjoy a 12-year exclusivity period in the US. However, President Obama has long been an advocate for a shorter period [2], and once again this is rearing its head in a budget proposal. This proposal intends to increase competition for biologicals by reducing the number of years of exclusivity (from 12 to 7) and prohibiting additional years of exclusivity due to minor formulation changes.

Establish transparency and reporting requirements in pharmaceutical drug pricing
The final proposal comes in response to recent reports of sky-rocketing generics prices [3]. It requires pharmaceutical manufacturers to publically disclose production costs, including research and development investments and discounts to various payers for specific high‐cost drugs.

Related article
Combating shortages and price increases in the US generics’ market

1.  GaBI Online - Generics and Biosimilars Initiative. Pay-to-delay deals up by 60% in US [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2016 Mar 4]. Available from: www.gabionline.net/Pharma-News/Pay-to-delay-deals-up-by-60-in-US
2.  GaBI Online - Generics and Biosimilars Initiative. More debate over the exclusivity period for biological in the US [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2016 Mar 4]. Available from: www.gabionline.net/Biosimilars/General/More-debate-over-the-exclusivity-period-for-biological-in-the-US
3.  GaBI Online - Generics and Biosimilars Initiative. Soaring generics prices come under increased scrutiny [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2016 Mar 4]. Available from: www.gabionline.net/Generics/General/Soaring-generics-prices-come-under-increased-scrutiny

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Source: US Department of Health & Human Services

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