Health Care Reform Blog : Health Care Law Reform : McDermott Will & Emery Law Firm

The Facts 

The U.S. House Energy and Commerce Committee's health reform legislation, HR 3200, includes a provision to enable the U.S. Food and Drug Administration (FDA) approval of biological products as biosimilars under the Section 351 of the Public Health Service Act. By a vote of 47-11, the Committee adopted the Eshoo-Inslee-Barton amendment that, among other things, would protect original approval data for a minimum period of 12 years. Termed “data exclusivity,” it prevents potential competitors from relying on the innovator’s intellectual property, such as clinical trials supporting the safety and efficacy of the innovator product, to support FDA approval of a biosimilar product. 

What’s at Stake

The biosimilar language in HR 3200 is not identical to that agreed to in the health reform bill approved by the Senate HELP Committee. Consequently, there is an opening for additional changes to the provisions related to biosimilars during the House/Senate conference should health reform legislation containing these provisions be passed in both chambers. Stakeholders continue to advocate for changes related to the data exclusivity provisions, which are favored by the Biotechnology Industry Organization and the Pharmaceutical Research and Manufacturers of America but opposed by the generics industry and AARP, which believe shorter exclusivity and more liberal patent protections are necessary to speed lower cost biologicals to patients.

Steps to Consider

Consider selected outreach to Congress or supporting your trade organization's efforts to advocate for more favorable accommodations in the ultimate legislative package. Determine the implications and corresponding business and legal risks from current legislative proposals. Identify steps to take prior to enactment of legislation to best position products going forward, including the following: 

• Reimbursement approaches
• Product nomenclature, marketing and labeling
• Issues related to “similar” or "interchangeable" products, including antitrust, intellectual property protection and potential litigation strategies
• Regulatory strategies for pipeline products

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The Facts

On July 31, 2009, the House Energy and Commerce Committee approved HR 3200, the America’s Affordable Health Choices Act, by a 31-28 vote. Five Democrats joined all committee Republicans in voting against the measure. Passage followed lengthy negotiations with Democrats on the committee, first with fiscally conservative “Blue Dog” Democrats and then with liberal Democrats in the Congressional Progressive Caucus. Modifications to the underlying bill include the following:

• Requirements that a new public health insurance option must use a formulary and must negotiate payment rates with providers rather than setting rates at 5 percent above Medicare payment levels
• A requirement that insurers selling plans in the new health insurance exchange obtain government approval for premium increases exceeding 150 percent of the annual medical inflation increase
• A provision allowing the Secretary of Health and Human Services to negotiate drug prices with pharmaceutical companies under the Part D prescription drug benefit
• A provision allowing 12 years of market exclusivity for new brand name biologic drugs
• An increase in the small businesses exemption from “pay or play” requirements (the new penalties will be phased in, beginning at 2 percent for businesses with annual payrolls of $500,000 to $585,000, rising gradually to 8 percent for businesses with payrolls over $750,000)
• An expansion of the accountable care organization pilot program to include Medicaid

What’s at Stake

All three House committees with jurisdiction have now approved systemic health reform legislation. The three work products will be merged, and House floor action will occur after the congressional recess, which ends September 7, 2009. This means that systemic health reform is moving forward, although the Energy and Commerce Committee experience demonstrated that the fractious Democratic Caucus in the House has not yet coalesced around a shared vision for health reform legislation. 

Steps to Consider

Examine the legislation approved by the three House committees and the Senate HELP Committee, and assess the impact on your operation. Consider attending your legislators’ home state town hall meetings on health reform during the recess. Continually evaluate ongoing business decisions in light of the direction health reform is taking.

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The Facts

Health reform legislation approved by the House Energy and Commerce Committee on July 31, 2009, includes an amendment to strike the so-called Part D “non-interference” clause, which prohibits the Secretary of the U.S. Department of Health and Human Services (the Secretary) from interfering with negotiations between pharmaceutical manufacturers, pharmacies and Part D Plan Sponsors.  Click here for an overview of the underlying legislation.

The amendment would authorize the Secretary to directly negotiate with pharmaceutical manufacturers the prices—including discounts, rebates and other price concessions— that may be charged to Part D Plan Sponsors for covered Part D drugs. The negotiated prices would apply beginning in CY 2011, and would not prevent Part D Plan Sponsors from obtaining further reductions or discounts.

What’s at Stake

Inclusion of this amendment renews debate on the role of competition within the Medicare prescription drug benefit, and whether the federal government or private health plans are better suited to achieve greater reductions on prescription drug costs for Medicare beneficiaries (and taxpayers).  That this concept is part of health reform legislation also is noteworthy for potentially signaling a first step towards federal price setting for pharmaceuticals.

Steps to Consider

Part D Plan Sponsors, pharmacies and pharmaceutical manufacturers alike should closely watch reconciliation of the Energy and Commerce Committee’s bill with the bills adopted by the two other House committees of jurisdiction to see the fate of this clause. Whether the Senate Finance Committee includes such a provision in its draft legislation also will be significant. 

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