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Apr 19 2010

Drug/Biologic/Device Highlights from the Health Care Reform Bill

Cautious, careful people, always casting about to preserve their reputations… can never effect a reform.

Susan B. Anthony

Last month, the company behind the FDA Law Blog, Hyman, Phelps & McNamara, P.C., prepared a memo that outlines the provisions in the Patient Protection and Affordable Care Act (commonly known as the “Health Care Reform Bill”) that pertain to drug, biologic, and device manufacturers.

I strongly recommend reading their full memo (or the legislation itself if you have enough coffee), but I’ve picked out 9 highlights that center on what will most directly affect drug, biologic, and device development (and added some commentary):

1. A new fee on “branded” drugs and biologics sold in the U.S.

  • Begins in 2011
  • Fee based on the manufacturers/importers ratio of sales relative to all sales from the previous year. In effect, Congress has a set amount of money it will collect each year from this fee, which will be levied according to each company’s sales figures.
  • Excludes sales of drugs for orphan indications
  • Applies to prescription drugs that receive government reimbursement (e.g., Medicare, Medicaid)
  • Fee is not tax deductible

2. A new 2.3 % tax on ‘all’ medical devices

  • A few exemptions are listed (e.g., eyeglasses, contact lenses, hearing aids)
  • Other exemptions determined by the Department of Treasury (interestingly, not the FDA) for general “retail” devices (presumably most Class I devices)

3. Establishment of an independent, non-profit Patient-Centered Outcomes Research Institute that studies “comparative effectiveness”.  This has been a buzz-phrase for a while, so it’s not surprising to see something like this adopted.

  • This institute will have access to both Medicare and Medicaid data, so right off the bat it will have an enormous stockpile of data to mine
  • All findings must be made public
  • Medicare can use these findings to make decisions on coverage or reimbursement, but those decisions cannot be based on this research alone

4. Creation of biosimilar (a.k.a., generic biolgics) approval pathway.  As I’ve mentioned before, it’s a big deal.

  • Creates an approval pathway for biosimilars
  • Allows for 12 years of marketing exclusivity for innovator products
  • Bars submission of biosimilar applications for 4 years after innovator approval
  • Grants exclusivity period to the first biosimilar approved for a reference product

5. A new tax credit for small companies with new therapies

  • Up to 50% of qualified investments made in 2009 and 2010
  • For companies with ≤ 250 employees
  • The Department of Treasury determines what kinds of investments are eligible

6. Creation of a grant-awarding entity known as the Cures Acceleration Network (CAN)

  • Will provide funding for “high need” cures
  • Must be for therapies where the market is unlikely to support development (think “neglected diseases” like those that might qualify for Priority Review Vouchers)
  • Up to $15 million in grants or contracts per year for selected projects
  • CAN will become involved in FDA review of CAN-funded therapies.  The details of this involvement have not been worked out, but we imagine this will be similar to the way that Office of Orphan Products Development (OOPD) is involved in orphan product reviews at other divisions.

7. Establishes health insurance protections for clinical trial subjects

  • Will help ensure that subjects are not denied coverage for participating in a (legal) clinical trial

8. Allows FDA to approve generic drugs (i.e., ANDAs) even if the labeling of the reference drug changes within 60 days of the approval of the generic.

  • This will (likely) deter the owners of the reference drug from making last-minute changes to their labeling to stall a competitor’s ANDA approval

9. Mandate that the Department of Health and Human Services (HHS) determine if certain changes to how drug benefits and risks are communicated (i.e., through promotional labeling or advertising) would improve health care.

  • HHS must “review all available scientific evidence and research on decision making and social and cognitive psychology”
  • HHS must then issue a report to Congress by 23 March 2011