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Fear abodes from budget Proposal

An obscure provision in President Obama’s budget could deal it a “fatal blow’’ and cost the Biotech industry a numbers of jobs.

The president’s budget, introduced 2/14/11, increases funding for the National Institutes of Health, National Science Foundation and the Department of Energy’s Office of Science, which provide research grants.

  • But House Republicans have outlined plans to chop $2.9B from those agencies below 2010 levels, causing concern throughout the industry.

One of the proposals generating the most controversy is the budget measure that would shorten the period to seven (7) during which biotech companies have exclusive control over data that they used to develop drugs.

  • Obama’s health care overhaul said biotech companies can control the data for 12 years, effectively blocking cheaper generic competition during that time;
  • But, under the president’s proposed budget, that period would shrink to 7 years, a move that the White House said would save Medicare and Medicaid $2.34B over 10 years by introducing  faster generic competition.

 The Republican backed bill is a challenge to Obama if a compromise is not worked out by 3/4/11, when current funding expires. On a largely partisan vote of 235-189, House Republicans passed the bill to cut spending by about $61.5B from current levels.  

The Bottom Line: Shortened period of exclusivity would dampen incentives to create treatments. It would be a fatal blow to innovation, which would be catastrophic to the biotech industry and it would be devastating to the entire patient population. However, the generic drug industry disagrees believing a 12 year exclusivity period  provides unwarranted monopolies for brand biopharmaceuticals, which delay the savings that could result from early introduction for bio-generics. Remember, it takes between 12 and 15 years to discover, develop and get the FDA to approve a drug.