Device Tax Repeal, CREATES Added to Government Spending Bills

Regulatory NewsRegulatory News | 16 December 2019 |  By 

The permanent repeal of the medical device tax and a bill to halt tactics used to delay generic drug competition have both been added to year-end spending bills, according to a bipartisan compromise.

Lawmakers have until midnight Friday to pass the government funding, which is expected to come in the form of two bills, and get them signed by President Donald Trump. The device tax repeal and the CREATES Act for helping generic drug competition were both highlighted in a compromise announced Sunday by Sens. Mitt Romney (R-UT) and Michael Bennet (D-CO).

The inclusion of a permanent repeal of the 2.3% excise tax on medical devices, which has been a priority for device industry group AdvaMed since the Affordable Care Act took effect, means the tax will have only been collected from 2013 to 2015 because of two two-year moratoriums passed by Congress in 2016 and 2018. AdvaMed claims that the tax, if it takes effect 1 January 2020, could lead to the reduction of more than 20,000 jobs.

And the inclusion of a bipartisan bill to help with generic drug competition, known as the CREATES Act, will help companies seeking samples of generic or biosimilar products that are necessary to run the appropriate tests to win approvals for their products. The bill is also included in a Republican-led bill to reduce drug prices.

For instances when access to such samples is blocked, the CREATES Act allows a biosimilar or generic manufacturer to bring an action in federal court for injunctive relief and limited damages may be awarded as a deterrent in certain particularly egregious cases.

CREATES also gives the US Food and Drug Administration (FDA) more discretion to approve alternative safety protocols, rather than only requiring brand and generic firms to use shared safety protocols. The Congressional Budget Office estimates that CREATES, which has previously passed through committees in both the House and Senate, would lower federal spending on prescription drugs by almost $4 billion.

As far as FDA’s budget increase in the new spending deal, the Alliance for a Stronger FDA estimates that it will end up being somewhere between almost 3% and 6%.


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