Big pharmaceutical companies could face increased competition from generic drugmakers under two proposals put forth by the Obama administration on Monday.
President Barack Obama, as part of his 2012 budget proposal, called for cutting the number of years drugmakers could exclusively market brandbrand namename biologic drugs to 7 years from 12.
He also set his sights on ending controversial pay-for-delay deals that affect traditional, chemical drugs by giving the U.S. Federal Trade Commission power to block such pacts. In those type of deals, brand name and generic drugmakers settle patent challenges with payoffs that delay lower-cost rivals from reaching the market.
The proposals face a tough challenge of getting through the divided Congress, but could alter the landscape for consumers' access to cheaper medicines.
Still, they are unlikely to deliver a huge overall blow to the $890 billion global drug industry in which companies such as Pfizer Inc and Merck & Co Inc can see at least $1 billion a year in revenue from just one blockbuster medicine.
The Obama administration is turning to drugmakers to help squeeze out some savings to help reduce the deficit and cover other health initiatives such as the implementation of last year's healthcare overhaul.
The two proposals aimed at getting cheaper, generic medicines to the U.S. market would together save about $11 billion over 10 years.
The proposal impacting brand name biologics is a more dramatic version of a similar provision included in the healthcare reform law passed last year.
In that law, brand name drugmakers won 12 years of exclusive sales under an new U.S. Food and Drug Administration approval process to allow generic versions of biologics.
Such medicines treat conditions ranging from cancer to arthritis and are made from proteins, which can make them more complex to manufacture and more costly.
Generic drugmakers had fought for a shorter period of exclusivity, and on Monday the administration said 12-years of protection harms consumer access to much needed drugs.
Its 7-year proposal strikes a balance between promoting affordable access to medication while at the same time encouraging innovation to develop needed therapies, the White House said in budget documents.
The measure would start to see savings of $80 million starting in 2015 and altogether could save $2.3 billion from 2012 to 2021, it estimated.
The pay-for-delay plan would save $540 million starting in fiscal 2012 and nearly $8.8 billion through 2021, it added.
Representatives for various drug industry groups either could not be reached or had no immediate comment.
Obama's budget also renewed the call for generic drugmakers to pay fees for the FDA to review new generic medicines.
Other proposed fees would cover FDA reinspections of drug and device companies after manufacturing problems are uncovered. Hospitals and others participating in an outpatient drug pricing program known as 340B are also targeted.
Additionally, the administration calls for food safety industry fees starting in 2013 and pledged to work with Congress to enact them.
(Reporting by Susan Heavey; Additional reporting by Diane Bartz; Editing by Sandra Maler)