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Jul 5, 2012

R&D Changes Foreseen After Supreme Court Obamacare Decision

Innovative drugs that offer clear superiority over existing products likely among beneficiaries of overhaul.

R&D Changes Foreseen After Supreme Court Obamacare Decision

Industry mostly favors President Obama’s healthcare overhaul, though biopharma does chafe at some provisions. [© XtravaganT - Fotolia.com]

  • By upholding President Barack Obama’s healthcare overhaul, the U.S. Supreme Court set the stage for several key changes to drug development, industry executives and observers agreed in interviews.

    Craig A. Dionne, Ph.D., president and CEO of GenSpera, told GEN that biopharma startups won’t win the funding they need without showing investors solid results earlier in development. Those companies, he said, must offer investors clear evidence that their new drugs offer “clearly superior” efficacy than existing products, or else risk reduced reimbursement from government and private insurance programs under the Patient Protection and Affordable Care Act.

    “We have to develop drugs that are very highly and clear differentiated in such a way that they can command premium pricing, and command reimbursement,” Dr. Dionne said. “In oncology, which is our world, that could be something as simple as no effect on the bone marrow, so you no longer need all those supportive cares and all those other expenses that come with a drug with that kind of side effect profile.”

    “Companies won’t even get started unless they can start making that argument. And they’re not going to get continued funding unless they can make that argument for premium pricing in the future,” Dr. Dionne added.

    Richard Garr, CEO of Neuralstem, told GEN the law will aid drug R&D through its extension of insurance to 32 million more people, and its prohibition on insurers rejecting patients for pre-existing conditions. The latter, he said, should help kickstart research and product development of genetic diagnostics, and for rare disease therapy developers like his company.

    “You can’t overstate the importance of this act with respect to the impact it will have on people saying, ‘If we think we have something that’s worth pursuing here on the science side, now we have a much higher comfort level on the business side also,” Garr said. “I would think you will see a flood of genomic companies and testing. I think people will be much more responsive than they ever had been to that, now that they don’t have to worry about their insurance being canceled because they know.”

    The healthcare law incorporated the Biologics Price Competition and Innovation (BPCI) Act of 2009, which mandates creation of an abbreviated approval pathway for biological products shown to be biosimilar to or interchangeable with an FDA-licensed biological reference product.

    Among companies interested in BPCI are Quintessence Biosciences, a developer of anti-cancer, protein-based therapeutics.

    Laura E. Strong, Ph.D., Quintessence’s president and COO, told GEN BPCI’s 12-year data exclusivity period is especially welcome by her company, which envisions itself a reference drug developer for future biosimilars.

    “One of the issues that’s really important when you think about investment in innovation in biotech and pharma is, What’s the return on investment going to be? Having a more certain marketplace is definitely an improvement,” Dr. Strong said.

    Action on biosimilars, however, will have to await FDA approval of final guidances for implementing BPCI; the agency issued three draft guidances on February 9.

    FDA isn’t the only Washington hurdle for biosimilars. Obama’s administration wants to shrink exclusivity to seven years, claiming it would save $4 billion over 10 years; Congressional committees have sided with industry. “Our expectation is that the administration would continue those efforts, and we believe that would be certainly problematic,” Todd Gillenwater, svp, public policy with the California Healthcare Institute, told GEN.

    He said industry will also continue fighting the law’s Independent Payment Advisory Board focused on cutting Medicaid costs. Biopharma groups say quality of care would be sacrificed, adding the board of 15 unelected presidential appointees requires more oversight.

    Industry is also waiting for the states to establish the law’s insurance exchanges. “States continue to feel a lot of budgetary pressure, and there are other factors that may contribute to them not being able to move forward as quickly as they’d like with implementation,” Christie Bloomquist, a partner in the Washington, D.C., office of Hogan Lovells, told GEN. One such factor surfaced in recent days, as officials in Iowa, Louisiana, Mississippi, South Carolina, Texas, and Wisconsin said they may join Florida, where Gov. Rick Scott said Sunday he would not permit Medicaid expansion. All seven states are led by Republicans.

    While biopharmas chafe at some provisions, industry mostly favors the healthcare overhaul. But to see the biggest benefit, companies will have to balance their desire to grow their pipelines and advance drugs with the law’s likely reality that investors will limit already-scarce dollars to treatments showing the best results.


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