Advice You - Finance

On April 20 of this year, President Bush signed a bankruptcy reform law. When this law went into effect in October it made it much more difficult for Americans to u

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

se Chapter 7 bankruptcy to get a fresh start on their financial lives.

Under the old law, you could choose to file either a Chapter 7 or Chapter 13 Bankruptcy. In a

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

Chapter 7 proceeding, you are allowed to keep your exempt property, such as much of the equity in your home. Most of your other debts, such as money owed on credit

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

cards, are discharged.

In comparison, a Chapter 13 Bankruptcy is a reorganization bankruptcy. In this type of proceeding you agree to pay off your debts over a peri

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

od of three to five years.

The result of the new law is that fewer people will be able to file for Chapter 7 Bankruptcies and will be forced to file for Chapter 13

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

Bankruptcies, instead.

Major Changes

Possibly the biggest change to bankruptcy law is that there will now be a qualifying test. Under this two-part test, yo

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

u will first be required to apply a formula that exempts certain expenses such as food, rent, etc., to see if you can afford to pay 25 percent of your “non-priority

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

nsecured debt” (credit cards, medical bills and the like). Second, your income will be compared to your state’s median income.

If your income is above your state’s

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

median income, and if you can afford to pay 25 percent of your unsecured debt, you will not be allowed to file for a Chapter 7 Bankruptcy.

You may be able to file f

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

or a Chapter 7 Bankruptcy if your income falls below your state’s median income but you can pay 25 percent of your unsecured debt. However, if the court believes you

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

would be abusing the system by filing a Chapter 7, you can be required to file for a Chapter 13 Bankruptcy, instead.

More differences

If you filed a Chapte

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

r 7 Bankruptcy under the old law, the court would determine what you can afford to pay based on what you and the court determines are reasonable and necessary living

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

expenses.

Under the new law, the court is required to apply living standards that are derived by the Internal Revenue Service to determine what is reasonable to pa

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

y for rent, food, etc., and how much you should then have left over to pay your debts. The IRS regulations are more stringent and if you want to contest them, you wi

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

l need to ask for a hearing in front of the bankruptcy judge. This can easily mean more time and expense.

Tougher exemptions

When you declared bankruptcy un

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

der the old law, your state might have allowed you to keep all or much of the equity you have in your home. However, the new law places tougher restrictions on this

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

exemption. So before you file, be sure to discuss this with a knowledgeable bankruptcy attorney so that you will know exactly how much of your home’s equity you can

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

expect to protect.

Credit counseling

Here’s another tough restriction. Under the new bankruptcy law, you must meet with a credit counselor in the six months

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

before you apply for bankruptcy. However, from what I have read, many of the "certified" counselors are totally backed up and cannot handle any new cases.

You must

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

also attend money management courses – at your expense – before your debts are discharged.

Before you do anything, make sure you talk to a good bankruptcy attorney

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Advice You - Bankruptcy: What the New Law Means to You

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