As the excitement around President Obama’s healthcare plans continues, the fact that the bill still contains provisions ensuring 12-year market exclusivity for the makers of novel biotech drugs in the USA has slipped under the radar somewhat.

Kathleen Jaeger, president of the Generic Pharmaceutical Association, said the passage of healthcare reform “provides both good and bad news for consumers”, claiming that more Americans getting insurance coverage and more seniors having access to generic medicines is a positive. However, she says the bill “provides a biogeneric pathway in name only, giving false hope to patients who desperately need access to life-saving biogeneric medicines”.

Ms Jaeger goes on to say that “simply put, the bill fails to infuse competition and choice into the healthcare system due to the excessive and unprecedented market exclusivity protections for the brand industry”. She adds that “until the brand evergreen loophole is closed and the indefinite brand biologic monopolies are addressed, our healthcare system will not see true savings from biogenerics for decades”.

Milena Izmirlieva , an analyst at IHS Global Insight, says the issue of market exclusivity for follow-on biologics “has naturally been overshadowed by the wider implications of this historic healthcare reform bill”. She claims in a research note that the 12-year period “indicates that while the US government ploughs ahead with far-reaching changes to its health system structure, the current political thinking is firmly in favour of ensuring that the domestic R&D-based pharma industry survives and prospers”.

Ms Izmirlieva goes on to say that “without doubt, the bill will lead to cost-containment pressures on the industry as the USA moves closer in its model towards the European systems of universal access to healthcare”. However, there are “few immediate risks for the pharma industry going ahead”.

The most direct impact on the pharmaceutical industry is the introduction of an annual tax. This was meant to be $2.3 billon per year under the proposed Senate bill but will now be higher ($2.5 billion in 2011, rising to $4.1 billion in 2018) but Ms Izmirlieva argues that these taxes “are a risk that is preferable to the threat of government involvement in the negotiation of pharmaceutical prices”.

Furthermore, by guaranteeing 12-year exclusivity to originator medicines before allowing biosimilars to enter the market, she notes that Democrats “have shown that they have listened to the pharma industry lobby, which called for 14 years of exclusivity, ignoring demands of key Democrats”, including President Obama who was thought to prefer seven years.

The 12-year provision “should be seen as a victory for the pharma industry”, Ms Izmirlieva concludes. Having said that, “it will come as no surprise if several years down the road, cost-containment pressure on the industry increases should the cost of supporting healthcare provision for a wider part of the US population prove to be far more expensive than currently anticipated”.