Biotech wins 12-year haven with passage of reform bill
The U.S. House of Representatives passed landmark healthcare reform legislation on Sunday, handing the U.S. biotech industry its long-sought 12-year haven from biosimilar competition.
While much of the analysis around the passage of the bill centered on insurers, which gain an estimated 20 million customers at a cost of being required to take all comers, analysts were also quick to gauge some big advantages for the biopharma industry. Biotech's big gain here is approval of a provision that provides 12 years of data exclusivity for new biologics. Biotech lobbyists had pressed hard for this, marshalling enough support from lawmakers to overcome the objections of leading Democrats, including Henry Waxman as well as President Obama, who both wanted a much smaller window of market protection.
BIO CEO Jim Greenwood, who got exactly what he was looking for in the legislation, called it a clear win for the biotech industry. "This provision includes the incentives necessary to attract the massive investment required to speed the discovery and development of the next generation of breakthrough therapies and potential cures for the world's most debilitating diseases," he said in a prepared statement.
Ira Loss, an analyst for Washington Analysis, tells the Wall Street Journal that drug makers probably came out of the legislative wrangle better than any other industry involved in healthcare. There is a new tax on drug sales beginning next year and the pharma industry will have to shell out a few billion more for reform than originally intended. But a whole slate of issues, from reimportation to delaying generic sales, came down in the industry's favor, much to the disdain of consumer advocates.
Analysts appear most concerned about a new tax on medical devices that kicks in starting 2013. The industry's chief lobbying group has objected to the tax, saying that it will fall heavily on small device makers which are not yet profitable.
"The hospital industry is a winner," said Leerink Swann analyst John Sullivan. "The drug industry is probably a bit better off. The device industry could be a bit worse off. The biotech industry is relatively unscathed. And for managed care I think it's a function of what happens with the individual mandate and how easy or hard it is to keep healthy people in the insurance pool."
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