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Obama Pushing Lower Biologics Protection In Health Care Bill

The President is clearly taking control of health care reform. We know about the pep talk Obama gave publicly in his meeting with House Democrats, but it was the private session that revealed much more.

Clearly, Obama was leaning on the House caucus to pass through health care. But there were a couple specifics that came up in the meeting. Obama responded to a newfound push to end the insurance industry’s anti-trust exemption by saying, essentially, tell it to Ben Nelson:

“I’m entirely supportive of that,” Obama told (Rep. Peter) DeFazio during a Democratic caucus meeting tonight, according to a Democratic aide. “But I want 60 votes in the Senate. I’m trying to get it done, I’ll leave it at that.”

But far more interesting is Obama’s deliberate push to lower the 12-year period of patent protection for costly biologic drugs.

President Barack Obama told House Democrats on Thursday that he wants to reduce the amount of time certain biotechnology treatments are protected under an agreement in both the House and Senate bills […]

Ironically, his last-minute push, which comes as negotiators try to bridge divisions between the House and Senate bills, undermines one thing that both bills share: a 12-year exclusivity deal allowing the producers of so-called biologics to make and market these treatments without competition from generic manufacturers. One option on the table would reduce the exclusivity period to 10 years, sources say.

Why is Obama looking to break up the biologics deal? This one comes down to money. The deal with labor on the excise tax left the bill $60 billion short in pay-fors. Providers and stakeholders have been asked for more money (which is galling, that they get asked, but ain’t that America) to fill that gap. One way would be to lower the threshold for biologics, which would bring generics to market quicker, and save the government money on bulk purchasing of those drugs for public health care programs.

Granted, lowering the exclusion from 12 years to 10 isn’t earth-shattering, but it’s demonstrably better. And while Obama has weighed in on other issues involving cost control, this one offers a real public benefit and is separate from the excise tax or the Medicare commission. Not to mention that it’s a burn on the members of Congress representing the biotech industry like Anna Eshoo.

Expect some other moves like this, squeezes on provider profits to scrounge up the money for the bill.

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David Dayen

David Dayen