The government has prepared to take a $869 million hit to keep the pharmaceutical industry happy – and churning out rare disease therapies.
Indeed, there are some steep costs folded into the 21st Century Cures legislation – a landmark medical innovation bill.
As the Wall Street Journal points out, there’s a provision that allows the FDA to grant drugmakers an additional six months of exclusive marketing rights to a company if their existing drug is approved to treat a rare disease.
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This provision, however, would cost the federal government about $869 million between 2016 and 2025, according to a new report from the Congressional Budget Office.
Patient advocacy groups have been lobbying the FDA to speed up drug approval times for rare disease. But to do so, Congress folded in the marketing provisions into the bill, the Wall Street Journal says. That way, drugmakers have an incentive to pursue rare disease targets – an incentive that’s costing the government.
This could be a boon to drugmakers, however, in warding off generics and biosimilars from penetrating the market quickly:
Nonetheless, by extending exclusivity for some drugs, the law would delay arrival of lower-cost generic drugs and biosimilars – which are cheaper versions of expensive biologics – for about 15% of brand-name medicines expected to lose marketing exclusivity during that decade, according to the report.
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Many doctors use existing drugs for off-label use; this encourages biopharma companies to repurpose their drugs for rare disease indications – helping patients, and expanding their marketing exclusivity for a drug.
However, the Wall Street Journal spoke with Harvard professor Jerry Avorn, who is hugely critical of the existing pharma business model. He called the provision a “lavish giveaway to the pharmaceutical industry” – and that it will simply cost taxpayers more.
“If we called this provision a ‘publicly supported monopoly-extension tax’ instead of dressing it up as promoting research on rare diseases, it would more accurately depict what’s going on,” he told the Wall Street Journal.
“If this passes, at some point in a few years, someone will do the arithmetic and find out the companies’ added revenue will have far outstripped the cost of doing this research. Of course, these revenues will be paid by the same government that has trouble finding the funds to fund NIH adequately, and also by private citizens and insurers who will have to pay for prolonged premium pricing on branded products.”
The Wall Street Journal wrote:
We asked the House Energy & Commerce Committee, which crafted the legislation, for comment and will update you accordingly. However, one person familiar with the matter tells us that the committee has identified offsets for all components of the bill that carry a cost.
