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CBO says CREATES Would Reduce Federal Drug Spending

Last week, the Congressional Budget Office (CBO) announced S. 974, the Creating and Restoring Equal Access to Equivalent Samples Act of 2018 (CREATES Act), 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" in their September 18 report.

The CBO “expects that the bill’s provisions would allow generic drugs to enter the market earlier, on average, than they would under current law.” The CREATES Act creates a legal pathway for generic and biosimilar drug entrants to bring civil suits against incumbent pharmaceutical companies if "sufficient quantities of reference samples of a branded product are not made available for premarket testing".

The Act also removes statutory requirements that entrant manufacturers (generic or biosimilar) of significantly risky drugs use the same risk management system as the reference product. While the removal of safety related statutes seems counterintuitive, this move would be a big step in combating the abuse that stalls competition in the market. Risk Evaluation and Mitigation Strategy (REMS) have been abused by brand-name pharmaceutical companies to stall competition from entrants, according to a statement by FDA Commissioner Scott Gottlieb.

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

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