Biopharma Bills: Tax Credits, Price Controls, Drug Imports

There are a record number of biopharma-related bills before the General Assembly—126—but the most potentially consequential bills remain in concept form, with specific language still to be drafted.

The exceptions are two bills put forth by the Lamont Administration last week: HB 6870 and SB 1246.

HB 6870 is a comprehensive bill with three central components. First, it limits the price increases drug manufacturers can charge for generic drugs to the rate of inflation.

Generic drugs include biosimilars, and an exception is made for drugs the FDA has designated as in short supply.

Second, the bill requires insurers to count towards an insured’s copayment/deductible/coinsurance payments made by the insured out-of-pocket or out-of-network.

Finally, the bill calls for the Department of Consumer Protection to conduct a study—by Oct. 1, 2027—of the feasibility of importing drugs from Canada to Connecticut.

The Good

SB 1246 increases the R&D refundable tax credit from 65% to 90%. The refundable credit allows early stage biotechs to take advantage of R&D spending they’ve made before they are profitable.

This tax policy was a Connecticut innovation, but in recent years it has been adopted—and exceeded—by other states.

CBIA will advocate for other changes to R&D policy to achieve the desired competitive position relative to states such as New York and Massachusetts.

The goal of this Lamont administration budget proposal is to make Connecticut’s R&D tax credit policy competitive with those of other states with significant biopharma sectors.

CBIA supports this budget provision but will advocate for other changes to R&D policy to achieve the desired competitive position relative to states such as New York and Massachusetts.

The Connecticut Bioscience Growth Council is also supportive of efforts to ensure that patients receive “credit” for all payments made for medicines under their insurance plans, but we find the other proposals in HB 6870 counterproductive.

The Counterproductive

Tying medicine prices to a rigid formula, including the consumer price index, is a form of price control and price controls never work. They cause shortages and stifle innovation. 

The CPI is an average of a broad spectrum of products and does not reflect the rate of inflation for any one specific product category.

The overall January CPI, for example, was 3%, but for eggs it was 15.2%. 

Tying medicine prices to a rigid formula is a form of price control and price controls never work.

The components of the generic drug supply chain, especially for the complex manufacturing applicable to injectable and infused biologics, are many and highly variable.

The price increases suppliers in the generic supply chain charge for generic drug ingredients can often exceed the CPI.

If biopharma companies cannot recoup their costs and achieve the profit they need to justify allocating their resources to medicine production, they’ll make less medicine and supply shortages will result.

The Undead

HB 6870’s call for Canadian drug importation has a vampire-like quality to it. Importation keeps coming up, keeps being shot down for good reason, but it won’t die.

The Canadian government is thoroughly opposed—because of the government’s price controls, there are barely enough drugs for Canadians, much less enough to export to the U.S. 

HB 6870’s importation provisions, like all such provisions in years past, require Canadian drugs to meet all safety standards applicable to U.S.-sourced drugs, but no one has figured out a way to accomplish such a safety profile.

Is a drug that a Canadian pharmacy sources from Uzbekistan a Canadian drug?

Is a drug that a Canadian pharmacy sources from Uzbekistan a Canadian drug?

It’s true that the Federal Drug Administration has let other states—Florida and Colorado—begin to set up Canadian importation schemes, but the myriad of regulatory, international relations and safety issues have not been resolved. 

Again, the Canadians are utterly opposed, and no drugs have or are likely to flow from Canada to Florida, Colorado or Connecticut.

Canadian drug importation is a futile effort—a bridge too far not worth the time, effort or administrative cost.

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Paul Pescatello is the executive director of CBIA’s Bioscience Growth Council and chair of We Work for Health Connecticut. Follow him on X @CTBio.