|
|
|
|
|
|
|
tervention. There is a trend toward much more government involvement in research decisions. A number of health care and regulatory reforms threaten to control the prices of new pharmaceuticals and limit the funds available for R & D investment. |
|
|
|
|
|
|
|
|
Four federal laws enacted since 1990 have significantly impacted the new drug development process: OBRA '90, The Veteran Health Care Act of 1992, The Prescription Drug User Fee Act of 1992, the tax changes required by OBRA '93. The average annual cost to industry of these four new federal laws is $2.9 billion, which represents almost 20% of the pharmaceutical industry's total investment in R & D in 1995 [48,54]. |
|
|
|
|
|
|
|
|
Under the Prescription Drug User Fee Act of 1992, revenues raised from user fees paid by pharmaceutical manufacturers were to reduce NDA review times from 20 months to 12 months, ensuring that new drug advances reach the public as quickly as possible. The reduction in approval times is to be phased in over a five-year period. By the end of 1997, 90% of standard drugs are to be acted on (i.e., approval, approvable, or nonapprovable letter issued) within 12 months of submission, and 90% of priority drugs acted on within 6 months. In 1995, the FDA's new molecular entity (NME) average approval time was 19.2 months, a 30% decrease from the 1993 average approval time. For the 14 NMEs approved in 1995 that were assessed user fees, the average approval time was 15.6 months [56]. Although the average approval time has decreased, 1995 was not a record year for drug approvals: the number of NMEs approved went from 25 in 1993 to 28 in 1995. Acceleration of the time-to-market approval has a direct impact on both a company's stock price and the perceived value of the product. Based on a study of NME sales curves, accelerating approval by 12 months could translate to an average $4.5 million additional cash flow per product. If the product is a potential blockbuster the value could reach or exceed a million dollars per day [57]. This would have a profound effect on a company's new drug development. |
|
|
|
|
|
|
|
|
The Medicaid rebate provision of the OBRA '90 Law will cost the pharmaceutical industry $10.2 billion from 1994 to 1998. The revenue-raising provisions of OBRA '93 included a higher corporate tax rate and changes to Section 936 of the tax code as well as an end to the ban on Medicaid formularies. The Veteran's Health Care Act of 1992 mandated discounts to the Department of Veterans Affairs and Department of Defense. |
|
|
|
|
|
|
|
|
The Health Security Act proposed by President Clinton would have established an Advisory Council on Breakthrough Drugs to decide whether the prices on new drugs were reasonable. This was later replaced by an Advisory |
|
|
|
|
|