Under current law, manufacturers of generic drugs may seek approval from the Food and Drug Administration (FDA) to market a generic drug before the expiration of a patent listed with the FDA for the brand-name product. The first generic applicant that submits a substantially complete application to the FDA challenging an innovator's patent claim may be awarded 180 days of generic market exclusivity. (The FDA cannot approve any other generic versions of the drug during that 180-day period.) If certain conditions are met, the exclusivity period begins upon the first applicant’s commercial marketing.
H.R. 938 would allow the FDA to approve a subsequent generic drug application that is ready for full approval if no first applicant has received final approval and other conditions are satisfied. In such cases, the exclusivity period would be triggered and would run for 180 days after which time the subsequent applicant could enter the market.
CBO expects that the bill’s provisions would allow generic drugs to enter the market earlier, on average, than they would under current law. Because of the earlier entry of lower-priced generic drugs, CBO estimates, enacting the legislation would reduce federal spending on prescription drugs and subsidies for health insurance. In total, CBO estimates that enacting H.R. 938 would decrease the deficit by $442 million over the 2019-2029 period. That amount includes a $374 million reduction in direct spending and a $68 million increase in revenues.
CBO also estimates that implementing H.R. 938 would decrease spending subject to appropriation by $17 million over the 2019-2024 period, assuming appropriation actions consistent with the bill. That decrease would occur primarily because lower estimated drug prices would reduce costs for discretionary health programs.
