Obama offering drug industry R&D "olive branch"

By Gareth Macdonald

- Last updated on GMT

Related tags: Big pharma, Pharmacology

Barack Obama’s support for R&D tax credits to boost innovation is designed to assuage Big Pharma’s fears about a ban on “authorised generics,” and new “comparative effectiveness" tests, according to Datamonitor’s Sandra Reynolds.

Dr Reynolds, a senior pharmaceutical analyst, said President Obama’s focus on investment in scientific technology, an area she describes as being "severely circumscribed​" by the previous administration, coupled with his commitment to the development of personalised medicines are positive for the drug industry.

"Obama's continuing support for R&D tax credits will be seen as offering Pharma an olive branch and [an attempt] to counter Pharma's primary argument of lack of state support for pharmaceutical innovation,​" wrote Reynolds in a note released yesterday.

She also said that the proposed changes to healthcare provision, which are designed to target the 16 per cent of US citizens without medical insurance, could generate $100bn (€78.9bn) in additional sales for the top 40 US Pharma firms.

However, Reynolds predicted that Big Pharma would be less happy about a potential ban on authorised generic settlements and the expected introduction of a biosimilars approval pathway, both of which would increase generic competition.

Another potential area of discomfort for the pharmaceutical industry is the re-examination of the rules on patent exclusivity. The evaluation will address the conflict between Big Pharma, which believes a 14 year period of exclusivity is appropriate, and generics companies that are calling for a five year limit.

Also under the proposed rules, comparative effectiveness research may be used to compare the clinical effectiveness of new drugs against existing ones, a move that does not fit with the drug sector's need to replace old products with new ones to maintain growth.

Lifting ban on re-importation?

Lifting the ban on drug re-importation, which was a cornerstone of the Obama election campaign, is another issued raised by Reynolds as a likely concern for big pharma.

She predicted that such an action would hit revenues, citing US National Coalition on Healthcare (NAHC) 2008 data indicating that drugs cost approximately 67 per cent more in the US than in other countries.

Reynolds conceded however that recent high-profile scandals and concerns about the US Food and Drug Administration's (FDA) ability to ensure manufacturing standards overseas, has made increasing the either the importation or potentially the re-importation of drugs less of a focus for the Obama government.

Related topics: Markets & Regulations, Globalization

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