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Health Reform Debate Heats Up and Slows Down

June 22, 2009
The health reform debate is heating up and, in at least one respect, slowing down a bit.

On Sunday, President Obama, PhRMA and the Senate Finance Committee announced an agreement to help close the coverage gap in the Medicare prescription drug program to help reduce the cost of comprehensive health-reform.  Under the proposal, U.S. drug companies would provide half-price discounts to Medicare recipients in the "doughnut hole" and provide other unspecified discounts and rebates for a total of $80 billion in savings.

It is unclear at this point how this deal will impact biotech as health care reform proposals continue to wind their way through the Congress.

While we all want to expand access to health care, we also need to consider the impact of these cuts on drug discovery research and development. Smaller biotech companies could be particularly vulnerable to big pharma R&D cutbacks. We will examine the deal through the lens of measuring its impact on the ability of biotechnology researchers to continue to develop and produce breakthrough medicines and therapies for the patients of today and tomorrow.

Meanwhile, the Congressional Budget Office scored Senator Max Baucus’ health reform bill at $1.5 trillion over ten years. This is considerable more than had been anticipated and has slowed down the pace for the Senate Finance Committee mark-up.

Last week, nine Democrats on the Energy & Commerce Committee urged Chairman Henry Waxman to include the Pathway for Biosimilars Act of 2009 in the comprehensive health reform legislation. Indicating that the Senate Health, Education, Labor and Pensions Committee intends to incorporate a pathway for the approval of biosimilars into its health care reform package, the Members stressed the importance of establishing a House position before the bills from both Chambers are approved and go to a conference committee.

Meanwhile, the Senate Small Business and Entrepreneurship Committee  approved a bill to amend the Small Business Innovation Research (SBIR) Act to allow majority-venture-backed companies to compete for 18 percent of SBIR grants from the National Institutes of Health and eight percent from all other federal agencies. This program has been critical to the success of the biotech industry. The Small Business Administration’s  Administrative Law Judge’s decision of six years ago has prevented companies with more than 50% venture capital firm ownership from participating in the program, which we at BIO believe is contrary to the law’s original intent.