Follow-on Biologics Pathway May Help National Deficit

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ePT--the Electronic Newsletter of Pharmaceutical Technology

A December report on healthcare from the Congressional Budget Office (CBO) proposes that an abbreviated regulatory process for follow-on biologics could result in more than $10 billion in savings by the year 2020.

Washington DC (Jan. 8) -A December report on healthcare from the Congressional Budget Office (CBO) proposes that an abbreviated regulatory process for follow-on biologics could result in more than $10 billion in savings by the year 2020.

Spending on biologics exceeded $40 billion in 2007, according to the report, with nearly 75% of that spending put toward brand-name products that may lose patent protection within the next decade. Industry has been pursuing a follow-on pathway for biologics, similar to the abbreviated new drug application for chemical-based drugs, for some time. The CBO report notes that such a pathway, with 12 years of exclusivity given to brand-name biologics, would allow multiple manufacturers of follow-on biologics to enter the market and “put downward pressure on prices and help lower expenditures on biologic products for both the federal government and private purchases of health insurance.”

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Specifically, CBO reports that savings for follow-on biologics within mandatory health programs such as Medicare and Medicaid could reach $8.1 billion between 2010 and 2019. Additional savings would go to the Veterans Health Administration and Department of Defense  in the amount of approximately $1 billion between 2010 and 2019, and to the federal government (based on tax-favored health insurance) in the amount of approximately $1.1 billion over the same period. All told, the CBO report predicts that a regulatory pathway for follow-on biologics could result in a $9.2 billion net effect on the national deficit.