CBO Says CREATES Act Would Reduce Federal Spending on Prescription Drugs

Last week, the nonpartisan Congressional Budget Office (CBO) announced its cost estimate of implementing S. 974, the Creating and Restoring Equal Access to Equivalent Samples Act of 2018, otherwise known as the CREATES Act.

If adopted, the CREATES Act would create a legal pathway to allow generic and biosimilar drug developers to bring civil lawsuits against manufacturers of brand-name drugs if “sufficient quantities of reference samples of a branded product are not made available for premarket testing.”

Additionally, the CREATES Act also seeks to remove a statutory requirement that manufacturers of generic or biosimilar versions of certain drugs that carry a significant risk of serious adverse effects would use the same risk management system as the reference product. Instead, it would allow the FDA to enable those manufacturers to use comparable safety systems on a case-by-case basis. In recent months, FDA Commissioner Scott Gottlieb, MD, has spoken out about this issue, and has made it a priority of the agency to tackle Risk Evaluation and Mitigation Strategy (REMS) abuse that stalls competition in the market.

Click here to read more about the CREATES Act.

In its report, CBO notes that it “expects that the bill’s provisions would allow generic drugs (including biosimilar versions of biologics) to enter the market earlier, on average, than they would under current law.” Additionally, CBO said that enacting the legislation would reduce federal spending on prescription drugs.

In total, CBO and the staff of the Joint Committee on Taxation estimated that implementing the bill would reduce spending by $3.3 billion over the 2019 to 2028 period; increase revenues by $600 million over the same period; reduce unified budget deficits by $3.9 billion over the same period; and reduce spending subject to appropriation, on net, by $87 million over the 2019 to 2023 period.

Despite broad bipartisan support, the CREATES Act has faced opposition from pharmaceutical companies and industry trade groups, such as the Pharmaceutical Research and Manufacturers of America (PhRMA), which spent an estimated $10 million on lobbying efforts—including efforts to stall progress of the CREATES Act–in the first quarter of 2018.

The bill is currently up for vote in the Senate, where it has been pending since it was reported on June 14, 2018.