Federal Report Outlines Cost Savings in Biosimilars Approval Pathway

Washington, DC (June 25)-The Congressional Budget Office (CBO) released a report that provides a picture of the financial impact from the enaction of S.1695, the Biologics Price Competition and Innovation Act of 2007. The act would establish an abbreviated regulatory procedure for licensing biosimilars (i.e., follow-on biologics or biogenerics) by the US Food and Drug Administration. These products meet certain agency criteria and would be considered “highly similar to or interchangeable with” products originally licensed to innovator companies.

Estimates in the report assume that S.1695 is enacted near the beginning of the 2009 fiscal year and outlays follow historical spending patterns for existing programs or similar activities.

According to the report, CBO estimates that:

• Enacting S.1695 would reduce total expenditures on biologics in the United States by $0.2 billion between 2009 and 2013 and by about $25 billion between 2009 and 2018.

• Federal government direct spending would decrease by $46 million between 2009 and 2013 and by $5.9 billion between 2009 and 2018. Meanwhile, federal revenues would increase by $6 million and $800 million over those two time periods, respectively, therefore reducing budget deficits.

• Federal discretionary costs would have a net increase of nearly $30 million between 2009 and 2013 and $5.3 billion between 2009 and 2013.

• Because the requirements would lower costs for biologics provided under Medicaid, state spending for Medicaid would decrease by nearly $4 million between 2009 and 2013.

The bill allows FDA to “rely, in part, on literature or the agency’s findings of safety and effectiveness related to an innovator’s biological product that was previously approved by FDA.”

Organizations such as the Biotechnology Industry Organization have publicly supported the bill. “The CBO study shows we can achieve meaningful cost savings in biologics spending while providing needed protections to allow for continued innovation,” said BIO Chief Executive Officer Jim Greenwood. “We are essentially leaving money on the table the longer we wait to implement a pathway.”