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Regulatory Focus™ > News Articles > 2019 > 7 > CBO Finds Major Savings in FDA Provisions of Senate Health Bill

CBO Finds Major Savings in FDA Provisions of Senate Health Bill

Posted 16 July 2019 | By Zachary Brennan 

CBO Finds Major Savings in FDA Provisions of Senate Health Bill

The Congressional Budget Office (CBO) said Tuesday that the Senate’s bill to lower health care costs will reduce the deficit by about $7.5 billion over 10 years, and the sections with US Food and Drug Administration (FDA) changes will reduce the deficit by about $4.6 billion over the same time period.

It remains unknown if or when the bill, known as the Lower Health Care Costs Act, will be taken up for a vote by the full Senate. But the CBO score makes clear that even minor tweaks to FDA processes can add up to major savings.

Several sections of the bill aim to speed the introduction of generic drugs and biosimilars to market, and the CBO breaks down each section with an explanation of how the status quo will be changed.

Of the sections related to FDA, Section 214 would provide for the largest net decrease in the deficit — $3.7 billion over the 2019-2029 period — by allowing developers of generic drugs or biosimilars to bring civil lawsuits against manufacturers of brand-name drugs if sufficient quantities of reference samples of a branded product are not made available for premarket testing.

This section also would remove a statutory requirement, which has created complications for FDA, that manufacturers of generic or biosimilars that carry a significant risk of serious side effects must use the same risk management system as the brand name reference product. The bill would allow FDA more discretion to permit manufacturers to use comparable safety systems on a case-by-case basis.

“CBO estimates that about $20 billion in total spending on brand-name drugs through 2029 would be affected by section 214. In addition, the entry of certain generic or biosimilar products could be accelerated by one to two years, on average, as a result of more timely access to samples for premarket testing and shorter regulatory delays under the bill,” the score says.

Section 203 of the bill would allow FDA to deny a citizen petition if the agency determines that the petition was submitted with the primary purpose of delaying the approval of an application or if the petition does not raise valid scientific or regulatory issues.

“Currently, both conditions must be satisfied for the agency to summarily deny the petition. As a result, CBO expects that this change in the determination criteria would allow the FDA to more quickly deny such petitions.

The bill also would require a petition to be submitted within 60 days after the petitioner knew, or reasonably should have known, the information that forms the basis of the petition,” the score says.

This section would therefore stem the tide of unnecessary petitions and speed generic drugs to market more quickly, which reduces the average prices of drugs that are paid for by federal health programs, and which means CBO estimates a total decrease in the deficit of $253 million over the 2019-2029 period for this section.

Section 205, meanwhile, would allow FDA to approve some generic drug applications that are ready for full approval if no first generic applicant has received final approval and other conditions are satisfied.

“CBO estimates that the bill would affect between $2 billion and $3 billion in sales of brand-name drugs over the 2019-2029 period and would accelerate initial competition from generic products for affected drugs by one year, on average. CBO and JCT estimate that enacting section 205 would decrease direct spending by $356 million and increase revenues by $68 million, for a total decrease in the deficit of $424 million,” the score says.

Section 211, meanwhile, would permit FDA to require generic drug sponsors to include a statement of appropriate safety information on generic drug labels to ensure safe use. Because of this provision, CBO said it expects that FDA would approve generic drugs earlier than would occur otherwise and earlier entry of generic products into the market would decrease the deficit by $164 million over the 2019-2029 period.

As far as how industry will be impacted, the CBO notes that if the bill passes, manufacturers would be required to share patent information with FDA in certain circumstances, including upon approval of biologics and biosimilars and when the Patent Trial and Appeals Board finds a drug patent to be invalid. In addition, manufacturers would be required to change generic drug labels to reflect new information and scientific evidence and manufacturers would be required to submit a justification, along with other information, to the Department of Health and Human Services after increasing the price of a drug over a specified threshold.

CBO Score
 

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