One can get some clues from the reaction of two leading industry bodies representing two different sides of the debate.
The Pharmaceutical Research and Manufacturers of America (PhRMA) represents the interests of Big Pharma and the Generic Pharmaceutical Association (GPhA) represents generic pharmaceutical companies operating in the US. PhRMA welcomes the passage of the Bill in the Senate, saying it expands the scope of healthcare coverage and also encourages innovation. GPhA, however, is disappointed and says that the Bill benefits branded drug companies rather than improve access to cheaper medicines.
Investors need to keep a watch on the developments as the BillвЂ™s impact can be significant on Indian generic firms too. The US market is the main market for large Indian pharmaceutical generic firms.One key issue is with respect to biogenerics, where innovator companies will get an exclusivity period of 12 years compared with the five-seven years that was originally being considered. It has no immediate impact but limits the potential that biogenerics offers to Indian companies. Most companies have been eyeing this segment as one of the new areas to drive growth.
Will the passage of the US healthcare reform Bill benefit Indian generic pharmaceutical companies or harm them? It may be too premature to conclude that generic companies will be harmed but what is certain is that there are no unequivocal benefits for them either.
The practice has been frowned upon as these settlements prevent cheaper drugs from reaching patients. If this makes it to the final version of the Bill, it will be a blow for Indian generic drug makers.Another proposal involves reducing the initial payments needed to be made by patients before the insurance coverage kicks in. Apparently, since patients had to pay a higher sum from their pocket, they preferred generic drugs, whereas now, that incentive may be lower.
Initially, companies were fighting the patent challenge battles in court. But over the past few years, the all-or-nothing approach has given way to a middle path. Details of these settlements, especially financial, are seldom disclosed. But they could involve an upfront payment, the innovator firm authorizing the generic firm to launch a drug ahead of the patent expiry or some multiple drug marketing agreements.Eventually generic companies may benefit, too, as will innovator companies, because the Bill seeks to widen the scope of insurance coverage. It may be too premature to conclude that generic companies will be harmed but what is certain is that there are no unequivocal benefits for them either.