Obama's FY 2015 Budget Plan Reduces Market Exclusivity for Biologics

Industry lashes out at the proposed budget, claiming provisions will discourage biotech innovation.

By Karen Langhauser, Digital Content Manager

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While stakeholders and industry reps alike were disappointed by the meager increases promised to the FDA and the National Institutes of Health in President Obama's proposed FY 2015 budget (an increase of $211 million over FY 2014 for the NIH and an increase of $358 million over FY 2014 for the FDA), the biotech industry was particularly alarmed.

Specifically, the proposed budget would:

• Modify length of exclusivity to facilitate faster development of generic biologics

This proposal would reduce the number of years (from 12 to 7) that a drug company has exclusivity pricing and prohibit additional years of exclusivity due to formulation changes, with the goal of encouraging development of biologic drugs.

• Prohibit brand and generic drug manufacturers from delaying the availability of new generic drugs and biologics:

This would prohibit anti-competitive pay-for-delay agreements between branded and generic pharmaceutical companies, thus increasing the availability of generic drugs and biologics to consumers.

Both proposals are motivated by potential Medicare and Medicaid savings. Read the entire budget proposal here.

While the administration says the proposed budget reflects its "priority to invest in innovative biomedical and behavioral research that advances medical science while stimulating economic growth," industry groups disagree.

Biotechnology Industry Organization (BIO) President and CEO Jim Greenwood issued a response statement that cautioned, “Many of the provisions included in this budget proposal would jeopardize the continued biotech research and development that is necessary to find cures and breakthrough medicines for patients living with debilitating and life-threatening diseases."

Additionally, BIO pointed out that the 12-year term of data protection for biologics included in the Affordable Care Act received widespread bipartisan support in the Congress and is now settled U.S. law.

Pharmaceutical Research and Manufacturers of America (PhRMA) warned that the budget's proposals will "reduce the incentives to invest in the development of new biologic medicines" and also expressed confusion by the president's move to undercut initiatives that were strongly bipartisan.

Although Congress will likely recast large sections of the budget proposal, the plan does gives insight into the main policy priorities of the Obama administration for 2015.

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