Obama Budget Raises Ire of PhRMA, BIO

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For drugmakers, the president's proposed budget represents a bit of dÃ©jÃ vu all over again. For the biopharmaceutical industry, the president's proposed budget calls for reducing exclusivity on biologics to seven years from 12 years.

This article published with permission from The Burrill Report.

President Obama’s proposed $3.7 trillion fiscal 2014 budget seeks to cut the deficit by $1.8 trillion over 10 years through new taxes, slowed growth in spending and cuts to entitlement programs. But for drugmakers, the budget represents a bit of déjà vu all over again.

“This proposed budget is not a good prescription for patients or for innovation,” says Jim Greenwood, president and chief executive officer of the Biotechnology Industry Organization.

For the biopharmaceutical industry, the president’s proposed budget calls for reducing exclusivity on biologics to seven years from 12 years, an issue the industry successfully fought to keep out of the Patient Protection and Affordable Care Act.

It would also ban pay-for-delay agreements between pharmaceutical companies and generic drug makers, and incentivize the use of generics for lower-income patients by raising co-payments on branded drugs and lowering copayments on generics.

It also calls for increasing Medicare Part D manufacturer discounts to 75% from 50%, and for the government to pay the lower cost of Part D prescription drugs for patients enrolled in both Medicare and Medicaid. And, it cuts reimbursement to doctors under Medicare Part B, which includes payments for outpatient treatments such as the treatment of cancer patients with biologics administered by physicians.

“This budget is bad for patients, bad for innovation, and bad for the economy,” says Matthew Bennett, senior vice president for the Pharmaceutical Research and Manufacturers of America.

Bennett says while the president has pressed for innovation and biomedical research, job creation, and controlling healthcare costs, his proposed budget revisits previously rejected proposals he says would “undercut all of these efforts.” The budget is not all bad news for the industry. The budget includes $31.3 billion for the National Institutes of Health and increases for the U.S. Food and Drug Administration and the National Science Foundation.

“These increases would take our nation in the right direction,” says Mary Woolley, president and CEO of the advocacy group Research!America, “but we’re concerned that budget proposals from Congress — one from each of the House and Senate — unlike the president, fail to reverse sequestration.”