Despite Medicaid provision, drug makers should warm to budget deal

Drug Store News, Nov 19, 1990

Despite Medicaid provision, drug makers should warm to budget deal

WASHINGTON - Although the new Federal budget deficit reduction law will force pharmaceutical manufacturers to cut prices to the Medicaid drug program by an average of nearly $400 million a year, other provisions of the complex new legislation will garner a warm reception from the industry.

In addition to voting funds to continue Federal tax credits for "orphan drugs," the new budget package will continue to offer manufacturers major tax savings through credits covering the cost of new product "research and experimentation."

At the same time, pharmaceutical industry lobbyists beat back efforts to shift much of the cost of regulating drugs to the manufacturers of those products. Indeed, the White House had originally proposed a record $685 million budget for the Food and Drug Administration, with $150 million of it coming from "user fees" paid by regulated industries.

Under this scheme, for example, pharmaceutical manufacturers seeking marketing approval for a new drug would be expected to pay the cost of the FDA review. In rejecting this plan, Congress voted FDA a budget of more than $690 million for fiscal year 1991 - some $5 million more than the President had requested and $90 million more than last year.