The US healthcare bill, which has been passed by the US House of Representatives and is awaiting nod from the Senate, holds a lot of promise for generic manufacturers from India.

ImageWith emphasis on increasing the coverage and reducing healthcare costs, the bill is going to provide a big fillip to the usage of low-cost generic drugs.

The bill seeks to bring an additional 40 million US citizens under medical insurance coverage. This will open up a big market for generic drug makers. Besides, even for the existing population under insurance coverage, there is likely to be a shift in the usage from patented to generic drugs.

Indian pharma companies — most of them being exporters of generic drugs and intermediates to the US, the world’s largest drug market — are going to gain by passing of this bill. While the impact is long term in the form of increase in procurement of generic drugs by the US, it is nevertheless a positive sign. One other major aspect of the bill, which is likely to be important for Indian pharma companies, is the provision in the bill on bio-similars.

The bill has provided for a data exclusivity protection period of 12 years for biologics innovator companies. This is much longer than the period of five years, provided by the US government in case of chemical drugs. This provision, while throwing some light on the pathway to launch bio-similars in the US, will slow down the long-term growth of bio-similars in the US.

However, the good news is that this would not impact the immediate pipeline of Indian biotech players. Most biologic drugs were developed between 2000 and 2004 in the US. Indian companies, which are developing bio-similars for these biologics, will just be ready with their products by 2016 — the time when the 12-year protection period ends for the biologics in the US. However, Indian companies will have to go slow on future product development in bio-similars.

The bill also has provisions that impose restrictions on the Para IV settlements done between the innovator and generic companies. While the settlements have not been banned altogether, the restrictions may bring some deterrence to go for settlement.

The bill, however, is facing a lot of resistance and protests in its current form. It will be too naive to think that large insurance companies and big pharma firms in the US would take these sweeping changes lying down. This may lead to several compromises before it sees the light of the day as a piece of legislation.

Even in a truncated and compromised form, it is likely to benefit generic players. And Indian companies (aggressive that they are on the generic front) are likely to be natural beneficiaries.