Obama Budget Blueprint Seeks Drug Pricing Authority, Shortened Data Exclusivity Period for Biologics

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The 2016 White House Budget proposes a change to the data exclusivity period for biologics and the authority to influence drug pricing.

The Obama administration announced on Feb. 2, 2015 that it seeks authority to negotiate the price of drugs under the federal government's Medicare Part D program. A push to incorporate precision medicine could also mean high prices for biologics, and the White House said it would increase discounts offered by the pharmaceutical industry on brand drugs in Part D by 2017, three years earlier than under current law.

The Administration said it is “deeply concerned with the rapidly growing prices of specialty and brand name drugs,” and as a result, “The Budget proposes to give the Secretary of HHS the authority to negotiate drug prices for biologics and high-cost drugs in Medicare Part D to help ensure access to and affordability of these treatments.” The change would save Medicare $126 billion over 10 years, the administration estimates.

Not only does the administration seek to influence pricing, it also wants to shorten the data exclusivity period for biologics from 12 years to seven years, a move that is vehemently opposed by many Republicans such as Senator Orrin Hatch (R, Utah). This would mean that specialty drugs and large-molecule biotechnology therapies would not have as much patent protection, making way for speedier biosimilar market entry. According to the budget document, the change is “designed to increase access to generic drugs and biologics by stopping companies from entering into anticompetitive deals intended to block consumer access to safe and effective generics.”