The Congressional Budget Office has released itslong-awaited assessment of the cost of a Senate biogenerics bill and found that the legislation, if enacted, would reduce total expenditures on biologics in the US by $25 billion between 2009 and 2018. Over that 10-year period, savings would equal roughly 0.5 percent of national spending on prescription drugs, valued at wholesale prices. Moreover, the bill would reduce budget deficits - or increase surpluses, depending on your point of view - by $6.6 billion over the same period.
A few other CBO calculations: Direct spending by the federal government would decrease by $46 million over the 2009-2013 period, and by $5.9 billion over the 2009-2018 period; most of those savings would accrue to the Medicare program. Federal revenues would increase by $6 million over the 2009-2013 period and by $0.8 billion over the 2009-2018 period, because insurance premiums paid by employers would be lower and taxable wages would consequently be higher.
The report comes as a growing group of drugmakers, insurers and employers agitate over the high cost of biologics, which may only be rectified if Congress passes legislation that would give the FDA guidance on creating a so-called pathway to approve biogenerics, or follow-on biologics. Two House bills have been proposed that are similar to the Senate bill reviewed by the CBO, although the looming summer recess and election-year politics suggest passage may not occur this year.
A couple of key sticking points: the length of time that biotechs would be granted data exclusivity, another way of saying patent protection. Biotechs want 12 years while generic drugmakers have been pushing for much less. Another contentious point is interchangeability, which refers to the extent to which a biogeneric is considered to be only similar to a brand-name biologic, but not eligible to be substituted for the original med.
The bills, by the way, are S. 1695, the Biologics Price Competition and Innovation Act of 2007; H.R. 1956, the Patient Protection and Innovative Biologic Medicines Act of 2007; and H.R. 5629, the Pathway for Biosimilars Act. If you go to this site and type in the appropriate bill number, you can read the details.
"Congress must ensure proper incentives for continued biomedical innovation in any follow-on biologics pathway so that we don’t achieve relatively minor savings as a percentage of overall health care spending at the cost of continued innovation," says BIO ceo Jim Greenwood in a statement. "We are essentially leaving money on the table the longer we wait to implement a pathway.
Kathleen Jaeger, the ceo of the Generic Pharmaceutical Association, sent us this statement: "We are still reviewing the analysis, but we are pleased that CBO agrees that significant savings will be achieved by bringing biogeneric medicines to consumers and that even greater savings will result from removing harmful barriers to access, including brand evergreening and unprecedented market exclusivity provisions. With Americans growing increasingly concerned about health care costs, we should be increasing access to affordable medicines while fostering competition in the pharmaceutical marketplace. We look forward to continuing to work with Congress on legislation that will bring affordable life-saving biogenerics to patients without needless barriers to access that will last for years to come.”