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As promised continued from OBAMACARE and INDUSTRY Part I
Title VII, Improving Access to Innovative Medical Therapies
Section 7002 could wind up being the “sleeper” of the new law: it establishes rules for biosimilar biological entities...in essence, generic biologics. Even after a biologics patent runs out, it is in many instances theoretically impossible for a competitor to produce an absolutely identical copy (many of these products come from unique cell lines, for example), so FDA has been charged with coming up with criteria for considering a “copy” to be “close enough.” In principles, this is really nothing new: generic drugs do not have to be identical to the original drug they are based on, and in fact can be quite different in composition and manufacture.
This new provision is in response to FDA’s testimony before Congress that existing laws do not permit licensing of biosimilars, while the Europeans have been moving ahead in this area. Congress is fully aware of how competitive—and litigious—this industry is: more than half of this lengthy section deals with detailed rules for patent exclusivity! The law requires a report to Congress in January 2012 on recommendations, and Congress is required to then establish (through separate legislation) a user fee program...so don’t expect any biosimilar products to be on the U.S. market any time soon.
Title IX, Revenue Provisions
Speaking of user fees: drug manufacturers and importers have long been paying to register their facilities and market their drugs. The Medical Device world has largely avoided this (I used to recommend that my Medical Device clients ignore FDA’s “30 days before commercial distribution” regulation and just register their facility as soon as possible “because, after all, it’s free”); but in recent years, that has changed as well.
Usually, companies know in advance how much they have to pay FDA for the privilege of staying in business because Congress would pass a clearly identifiable law with the words “user fee” in the title: the FDA Modernization and User Fee Act, the Prescription Drug User Fee Act, etc. Well, if you can’t find the latest round, it doesn’t mean you no longer have to pay the government...it just means that this information is buried inside the healthcare reform bill.
Branded prescription drug fees are covered in Section 9008; sales less than five million dollars are exempt and orphan drugs are excluded. Medical device fees are discussed in Section 9009, with exemptions for Class I and certain Class II devices (under $100 retail). Companies with less than five million dollars in sales are excluded.
If you are looking for the exact dollar amount you need to write a check for, you will be disappointed; the section only explains how the fee will be calculated. You’ll still need to keep an eye on fda.gov and pay the amount the Agency subsequently publishes.
Title X, Strengthening Quality, Affordable Health Care for All Americans
This new provision is in response to FDA’s testimony before Congress that existing laws do not permit licensing of biosimilars, while the Europeans have been moving ahead in this area. Congress is fully aware of how competitive—and litigious—this industry is: more than half of this lengthy section deals with detailed rules for patent exclusivity! The law requires a report to Congress in January 2012 on recommendations, and Congress is required to then establish (through separate legislation) a user fee program...so don’t expect any biosimilar products to be on the U.S. market any time soon.
Title IX, Revenue Provisions
Speaking of user fees: drug manufacturers and importers have long been paying to register their facilities and market their drugs. The Medical Device world has largely avoided this (I used to recommend that my Medical Device clients ignore FDA’s “30 days before commercial distribution” regulation and just register their facility as soon as possible “because, after all, it’s free”); but in recent years, that has changed as well.
Usually, companies know in advance how much they have to pay FDA for the privilege of staying in business because Congress would pass a clearly identifiable law with the words “user fee” in the title: the FDA Modernization and User Fee Act, the Prescription Drug User Fee Act, etc. Well, if you can’t find the latest round, it doesn’t mean you no longer have to pay the government...it just means that this information is buried inside the healthcare reform bill.
Branded prescription drug fees are covered in Section 9008; sales less than five million dollars are exempt and orphan drugs are excluded. Medical device fees are discussed in Section 9009, with exemptions for Class I and certain Class II devices (under $100 retail). Companies with less than five million dollars in sales are excluded.
If you are looking for the exact dollar amount you need to write a check for, you will be disappointed; the section only explains how the fee will be calculated. You’ll still need to keep an eye on fda.gov and pay the amount the Agency subsequently publishes.
Title X, Strengthening Quality, Affordable Health Care for All Americans
Note: don’t get fooled by the fancy title – this is just where Congress dumped all the amendments that were added after the main bill was adopted
Section 10608 adds some minor tweaks to the ANDA process, clarifying that the generic drug’s submitted labeling need not be identical to the original when the text changes result from 21 CFR 355(i) (in other words, clinical research), so long as the “Warnings” section remains the same and there are no remaining patent conflicts. FDA has 60 days to review the new labeling and demand revisions; the Agency can then choose to deny the ANDA on the basis that the final submitted labeling impacts safe use.
Confused? Me too; expect guidance on this from FDA in the future.
MISCELLANEOUS UNRELATED ITEMS
So that’s my list of items in the healthcare bill that impact our industry. If you saw something else, or if I got something wrong (entirely possible considering how complicated the Act is) or just want to let us know your opinion, please post a comment!
Meanwhile, here are a couple of interesting items I came across in my reading.
Section 10608 adds some minor tweaks to the ANDA process, clarifying that the generic drug’s submitted labeling need not be identical to the original when the text changes result from 21 CFR 355(i) (in other words, clinical research), so long as the “Warnings” section remains the same and there are no remaining patent conflicts. FDA has 60 days to review the new labeling and demand revisions; the Agency can then choose to deny the ANDA on the basis that the final submitted labeling impacts safe use.
Confused? Me too; expect guidance on this from FDA in the future.
MISCELLANEOUS UNRELATED ITEMS
So that’s my list of items in the healthcare bill that impact our industry. If you saw something else, or if I got something wrong (entirely possible considering how complicated the Act is) or just want to let us know your opinion, please post a comment!
Meanwhile, here are a couple of interesting items I came across in my reading.
- Do you know any cosmetic surgeons? Section 9017 changes the Internal Revenue Code to require doctors to collect a 5% federal excise tax on cosmetic procedures.
- Senior citizen with unreimbursed medical bills? Section 9013 decreases the threshold for deducting medical expenses from the current 10% of income down to 7.5% – but only if you or your spouse are over 65, and only from 2013 through 2016.
- Are you a high earner? You’ll be seeing a non-deductible FICA “hospital” tax equaling 0.5% of all income above $200,000.
- Enjoying your winter tan? Section 10907 is an amendment that imposes a 10% excise tax on non-medical tanning procedures. The amendment also nullifies a pertinent section of the Internal revenue Code, so I don’t know if this is a completely new tax or just an increase.
- Finally, you have no doubt heard about the provisions in Section 4205, requiring chain restaurants and vending machine operators with more than twenty stores or machines to post full nutritional information, including on signs at drive-throughs and on the sides or near vending machines (I won’t comment on the practicality of that last one). But the law then goes on to inform owners of less than twenty restaurants and vending machines that even if they aren’t legally required to post nutritional information under the Act, they can voluntarily comply...by registering with FDA! So: if the owner of a diner decides to tell customers how many calories are in that hamburger but doesn’t first register with FDA, is he committing a federal crime? Or on a more serious note, what about municipalities that mandate posting of nutritional information at restaurants within their jurisdiction? Does that now mean the chain must also register with FDA, even if only 15 restaurants (to use New York City’s rules as an example) are within the city limits?
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