Research: Change to Drug Exclusivity Could Save Medicare $20B

December 15, 2020

Why It Matters

While fewer than 2% of Americans currently use biologics, such medication represents a significant portion — 40% — of drug spending nationwide. New UnitedHealth Group research reveals that capping exclusivity for original biologics — which encompasses patent protections and regulatory exclusivity — and establishing subsequent price discounts could save Medicare billions of dollars in drug spending.

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Reforms to Promote Competition

Current law allows manufacturers to obtain multiple patents on the same drug, which inhibits market competition, particularly for biosimilars. Each biologic studied is protected for an average of 14 years following its launch, however, most will likely face little, if any, competition for additional years to follow.

How to Achieve Savings

By capping exclusivity at 10 years for five original biologics that make up 13% of Medicare Part B drug spending, then establishing an automatic 27% price discount for each biologic after that exclusivity ends, Medicare Part B would save a combined $20.2 billion for the decade following the end of each exclusivity period.

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