H.R. 965 would create a private right of action that would allow developers of generic drugs or biosimilar products 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. (To obtain marketing approval of their products from the Food and Drug Administration (FDA), developers of generic or biosimilar drugs currently must purchase reference samples to conduct the testing required to demonstrate that their drugs meet the FDA’s approval criteria.)
The bill also would remove a statutory requirement that manufacturers of generic or biosimilar versions of certain drugs that carry a significant risk of serious side effects use the same risk management system as the brand-name reference drug to ensure safe use of the product. Instead, it would provide the FDA with more discretion to allow those manufacturers to use comparable safety systems on a case-by-case basis.
CBO 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. 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. 965 would decrease the deficit by $3.9 billion over the 2019-2029 period. That amount includes a $3.3 billion reduction in direct spending and a $0.6 billion increase in revenues.
CBO also estimates that implementing H.R. 965 would decrease spending subject to appropriation by $118 million over the 2019-2024 period, assuming appropriation actions consistent with the bill. That decrease would result primarily because lower estimated drug prices would reduce costs for discretionary health programs.
The estimated budgetary effect of H.R 965 is shown in the attached table. The effects of the legislation fall primarily within budget functions 550 (health), and 570 (Medicare).
Previous CBO Estimate
On April 25, 2019, CBO transmitted a cost estimate for H.R. 965, the CREATES Act of 2019, as ordered reported by the House Committee on Energy and Commerce on April 3, 2019 (https://www.cbo.gov/publication/55181). While there are differences in the language, CBO’s estimates of the budgetary effects for the two versions are the same.