Cherry Hill, NJ, July 9, 2013 — The Courier-Post has published a commentary authored by Dean J. Paranicas, HealthCare Institute of New Jersey (HINJ) President and Chief Executive Officer, and Debbie Hart, BioNJ President and Chief Executive Officer.
* * *
New Jersey officials recently announced a plan to reward companies that hire unemployed biopharmaceutical workers. This move shows leaders recognize the importance of these highly skilled workers.
Already, New Jersey leads the nation in biopharmaceutical research. It is home to more than 350 research-based biotechnology firms and 15 of the world’s 25 largest pharmaceutical companies.
Unfortunately, just as state leaders are working to foster medical innovation, President Barack Obama and some members of Congress are considering measures that could irreparably harm the sector.
Today’s most-advanced medicines, “biologics,” are made from natural sources and are especially complicated to develop and manufacture. It can take over a decade for a compound to make its way through discovery, clinical trials and FDA approval. According to the Tufts Center for the Study of Drug Development, the average research and development cost for each new biologic was more than $1.2 billion in 2007.
It is essential we maintain the right policy environment to encourage investment on this scale. Yet, in Obama’s budget and international trade negotiations, the White House is pushing two cost-cutting measures that could undercut incentives.
The first would shorten from 12 to seven years the protection companies enjoy for biotechnology medicines. This protection temporarily prevents biosimilars — biologic medications that are similar but not exact replicas of the innovator product — from entering the market, allowing firms to recoup original investments.
Shortening this period will increase the risks associated with research. Without assurance of earning back massive upfront contributions, many investors surely will shy away.
The second proposal would require pharmaceutical firms pay “rebates” to the government for medications sold through Medicare’s prescription drug benefit, Part D.
Doing so could seriously harm a successful program. Currently, private insurers offer plans, and enrollees select the one that best fits their needs. In New Jersey, seniors have 30 plans to choose from.
By harnessing market competition, Part D has kept costs down. According to the Congressional Budget Office, the 10-year cost is on track to be 45 percent less than projected. Moreover, 94 percent of enrollees are satisfied with Part D.
The proposal is supposed to save the government money, but the plan neglects the potentially chilling consequences for drug discovery.
By squeezing rebates from biopharmaceutical firms, these proposed “reforms” could fundamentally transform the business environment. The rebate scheme would leaving fewer funds available to invest in research and development, with potentially disastrous results.
According to a 2011 Battelle study, these Part D rebates could result in a loss of billions of dollars in economic activity and thousands of jobs.
New Jersey supports the highest percentage of biopharmaceutical jobs of any state — 425 of every 10,000 — and the industry generates about $60 billion in annual statewide economic activity. The industry does not exist in a vacuum. We must reject ill-advised proposals that cut costs at the expense of innovation.
By harnessing market competition, Part D has kept costs down. According to the Congressional Budget Office, the 10-year cost is on track to be 45 percent less than projected. Moreover, 94 percent of enrollees are satisfied with Part D.
The proposal is supposed to save the government money, but the plan neglects the potentially chilling consequences for drug discovery.
By squeezing rebates from biopharmaceutical firms, these proposed “reforms” could fundamentally transform the business environment. The rebate scheme would leaving fewer funds available to invest in research and development, with potentially disastrous results.
According to a 2011 Battelle study, these Part D rebates could result in a loss of billions of dollars in economic activity and thousands of jobs.
New Jersey supports the highest percentage of biopharmaceutical jobs of any state — 425 of every 10,000 — and the industry generates about $60 billion in annual statewide economic activity. The industry does not exist in a vacuum. We must reject ill-advised proposals that cut costs at the expense of innovation.