Statement by Ralph G. Neas, GPhA President and CEO, Welcoming President Obama's FY2015 Budget

Published Online: Tuesday, March 4, 2014
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WASHINGTON, DC (March 4, 2014) — “The Generic Pharmaceutical Association welcomes President Obama’s fiscal year 2015 budget initiatives that strengthen access for millions of patients to safe and affordable generic medicines. GPhA applauds the Administration’s efforts to continue to leverage the proven power of generic medicines to provide patients with the therapies they need while keeping the nation’s budget on target.

First, we support the administration’s efforts to realize the same savings that private insurers enjoy through increased use of generic medicines in public programs; specifically, the proposal to encourage greater adoption of generic medicines by Medicare Part D beneficiaries within the low-income subsidy (LIS) program.

Secondly, the industry also appreciates the recognition of potential savings in biosimilar medicines, newer versions of biologic therapies that hold the promise of creating greater access to high-tech medicines for patients. GPhA member companies are on the forefront of biosimilar development and distribution in Europe, and look forward to bringing these therapies to patients in America. In fact, the estimate for biosimilar savings can be even higher, with some groups predicting more than $250 billion in savings over 10 years.

Conversely, GPhA strongly opposes the budget’s assumptions and methodology in estimating the impact of a ban on patent settlements. While the cited data from the FTC-based savings claims for eliminating patent settlements relies on a 2002 study, more recent analyses by the Royal Bank of Canada and others have demonstrated that settlements result in early market entry for generic alternatives and thus save billions of dollars. In June of 2013, more evidence to support this came to light when an IMS Institute for Healthcare Informatics study showed that due to patent settlements, $25.5 billion has been saved by drugs that entered the market in advance of patent expiration from 2005 to 2012. In addition, the study projected that an additional $61.7 billion can be saved if the current level of savings continues through to patent expiry for each molecule analyzed. This equates to more than$87 billion in savings from settlements.

GPhA also opposes the extension of Medicaid rebates to the Medicare Part D LIS program. Imposing rebates would likely have the unintended consequence of shifting costs onto American consumers purchasing their care in the private marketplace.

Finally, we call on the government to avoid rising costs by working with stakeholders across the healthcare spectrum to improve the FDA Proposed Rule on generic labeling, which in its current form is projected to cost $4 billion annually. A recent study by Matrix Global Advisors shows that costs of $1.5 billion annually will be borne directly by government programs such as Medicare and Medicaid, and private payers and patients will face $2.5 billion in yearly costs. We believe that more can be done to ensure that the Proposed Rule does not add to already soaring health costs or create confusion that will put patient safety at risk.”

Matrix Global Advisors (MGA) report: FDA’s Proposed Generic Drug Labeling Rule: An Economic Assessment
IMS Institute for Healthcare Informatics: Impact of Patent Settlements on Drug Costs: Estimation of Savings
GPhA Overview and Assessment: Food and Drug Administration’s Proposed Rule Supplemental Applications Proposing Labeling Changes for Approved Drugs and Biological Products
Infographic: FDA Proposed Rule Would Cause Dangerous Confusion, Economic Side Effects

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