Follow-on Biologics Pathway May Help National Deficit

Washington DC (Jan. 8) -A December report on healthcare from the Congressional Budget Office (CBO) proposes that an abbreviated regulatory process for follow-on biologics could result in more than $10 billion in savings by the year 2020.

Spending on biologics exceeded $40 billion in 2007, according to the report, with nearly 75% of that spending put toward brand-name products that may lose patent protection within the next decade. Industry has been pursuing a follow-on pathway for biologics, similar to the abbreviated new drug application for chemical-based drugs, for some time. The CBO report notes that such a pathway, with 12 years of exclusivity given to brand-name biologics, would allow multiple manufacturers of follow-on biologics to enter the market and “put downward pressure on prices and help lower expenditures on biologic products for both the federal government and private purchases of health insurance.”

Specifically, CBO reports that savings for follow-on biologics within mandatory health programs such as Medicare and Medicaid could reach $8.1 billion between 2010 and 2019. Additional savings would go to the Veterans Health Administration and Department of Defense  in the amount of approximately $1 billion between 2010 and 2019, and to the federal government (based on tax-favored health insurance) in the amount of approximately $1.1 billion over the same period. All told, the CBO report predicts that a regulatory pathway for follow-on biologics could result in a $9.2 billion net effect on the national deficit.