The PPACA legislation was enacted in 2010, but was promptly challenged by 26 states and a trade group for small businesses. In a 5–4 decision on June 28 this year, the Supreme Court deemed the law constitutional, upholding it almost in its entirety. The court based its decision on the US Congress's power to impose taxes. The law requires individuals to obtain health insurance by 2014 or pay a penalty, and that financial penalty “may reasonably be characterized as a tax,” Chief Justice John Roberts wrote in the majority opinion. “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness,” he wrote.
A few key provisions stand out for innovative biotech companies. Most notably, drug makers' markets should expand as more Americans become insured and gain access to medicines. Small companies developing therapeutics also receive grants and tax credits for their projects, which may prove crucial for cash-starved startups (Box 1). What's more, innovative drugs will receive 12 years of exclusivity against competition from biosimilars. The language demarcating extra exclusivity for biologics should provide innovative companies, and the investors who place their money in them, with more certainty, say industry executives. At the same time, PPACA now at least provides a legal framework for the US Food and Drug Administration (FDA) to come up with a pathway for biosimilars manufacturers.
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