I Suggest - Finance

In an effort to curb the nation's growing credit card debt problem, federal banking regulators are now requiring credit card companie

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

s to raise the amount of their cardholders' minimum monthly payment.

Executives at Debt Shield, Inc., a Maryland-based debt settleme

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

Examples of combination products may in

nt firm, say that the increased minimum monthly payments on credit card balances will most likely not double, as it is widely reporte

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

d, but that the increase might push financially struggling cardholders into bankruptcy or bankruptcy alternatives, like debt settleme

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

nt.

“While credit industry experts and the media claim that credit card companies are doubling their minimum monthly payments from 2

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

Combination pro

% of the outstanding balance to 4%, the actual minimum payment increase is more complicated and less drastic for most cardholders,” e

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

xplains Mark Baylis, President of Debt Shield. “The new rules require credit card banks to set their minimum payments to cover all in

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

terest and fees plus 1% of the outstanding balance, which will result in significant increases for high-interest accounts.”

Baylis s

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

aid that a cardholder with $10,000 on a credit card at 18% Annual Percentage Rate (1.5% monthly) pays $200 under the 2% minimum requi

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

rement. Out of that $200 payment, $150 (1.5%) goes towards interest and only $50 (0.5%) goes towards the outstanding balance. Under t

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

e new rule, the minimum payment will increase so that the amount applied to the outstanding balance in this example is at least $100

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

Following aspects would a

(1%), so the minimum monthly payment must increase by $50 (0.5%) to $250 (2.5%).

The average APR is currently just under 14% (1.17%

dd to the challenges in developing combination products:

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

monthly), but credit card companies increase the APR to 27% or higher if the cardholder makes one late payment. This means that the r

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

eality of the new rule will punish low- to medium-income families struggling with credit card debt more than high-income families who

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

are able to avoid paying late. Baylis said that even a small increase can have drastic consequences for families struggling to make

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

the existing payments and manage inflation combined with stagnating income.

The MMP on a credit card debt with the above-average 18%

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

Professional from academic institutions, pharmaceutical industries, health care indust

APR will increase by $50 while the same $10,000 debt with a 27% penalty APR will increase by $75. Also, the 27% APR charges $75 more

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

in monthly interest than the 18% APR. Baylis said that this clearly demonstrates the financially destructive power of high interest

.

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

rates.

“The increased minimums will be good in the long term because it should encourage less debt,” Baylis continued. “But if the c

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

Companies that provide selfless information through particip

redit card companies want to help consumers, they need to stop punishing cardholders with outrageously high interest rates.”

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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