SOURCE: Kalorama Information

Kalorama Information

August 31, 2010 15:57 ET

Healthcare Reform Law May Boost Biologic Treatments

NEW YORK, NY--(Marketwire - August 31, 2010) -  Somewhat hidden in the healthcare reform legislation that passed this spring was a tax credit and exclusivity extension for biologic drug developers, which, according to healthcare market research publisher Kalorama Information, may have a long-term impact on the market for cancer treatments. Kalorama predicts $25 billion to be earned from newly developed cancer treatments in the next five years, many of which will be biologics, according to its report "World Pharmaceutical and Biopharmaceutical Market, 2010-2015 (Pipeline Analysis of the Top 50 Companies)."

"The public debate about healthcare reform concentrated on who would be covered and how it would be paid for, but from our viewpoint the encouragement of biologic treatments is also significant," said Bruce Carlson, Publisher of Kalorama Information. "Had these provisions been passed alone, it would have been the big healthcare story of the year."

The Therapeutic Discovery Project Credit, enacted as part of the US healthcare reform, permits half of the development costs for a biological drug to be earned back in the form of a tax credit. The law is designed to skip over large pharmaceutical giants by limiting the tax credit to firms with 250 employees, but the entire industry could benefit from the second provision: twelve years of market exclusivity after FDA approval, allowing biotech drug developers the opportunity to build profits for new medications before low-cost generic equivalents are introduced. 

"The law reduces the risk and increases the reward," said Carlson. "Small companies get half the research and development money back in their pocket, and if they do create a successful treatment they have a longer period to profit from it. It's a clear signal from the government that they want to see more of these new treatments."

The law is limited, as it provides for only a one billion-dollar pool of money for the next two tax years and when the pool is used up, no further credits will be granted. Firms must apply for the credit and qualify. Still, Kalorama believes there is enough money in the pool to encourage investment, especially in the treatment of cancer where there have already been successful biologic products.

Kalorama's forecast of the market, as well as a complete review of the late-stage projects of 50 companies, are presented in "World Pharmaceutical and Biopharmaceutical Market, 2010-2015 (Pipeline Analysis of the Top 50 Companies)," which can be obtained at Kalorama Information at

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