Michael A. Martorelli04.05.10
You can't tell from reading it, but I submitted this column several days after the deadline set by my friendly editor. I thought I would be able to write an insightful column on the implications for the drug development and outsourcing industries of the final bill on health care reform passed by Congress and signed by the President. I was mistaken.
I must admit that I have not scrubbed the entire 2,400 pages of the Patient Protection and Affordable Care Act passed by the Senate and approved by the House of Representatives, or The Reconciliation Act of 2010 that still needs to be passed by both houses of Congress. But I think the broad outlines of ObamaCare have been known for months; it requires every citizen to purchase health insurance and alters some practices of the health insurance industry. It establishes new taxes, authorizes new subsidies, and purports to cut spending on Medicare. Still, there are many details that will impact the drug development industry - and by implication the outsourcing firms that serve that industry - that will not become clear until the Department of Health and Human Services writes the regulations that will implement them.
Medicare recipients will obtain coverage for a greater portion of their total drug costs. BUT drug companies will be paying part of those costs.
The addition of an estimated 30 million people to the ranks of the insured should lead to a meaningful increase in the number of prescriptions written. BUT it's clear that all institutional purchasers of drugs will negotiate more aggressively over the prices they pay.
Drug companies will remain free to establish the prices they charge for their products. BUT several congressional committees seem determined to make them justify those prices as well as their annual increases.
The FDA will be empowered to develop a pathway for the quick approval of biologics that lose their patent protection. BUT it's not clear what types of clinical trials will be required by companies that want to sell follow-on versions of those products.
Drug companies will remain free to spend money on DTC advertising - for now. BUT it's clear that Congress is still concerned about the negative impact those ads have on the prices consumers must pay for their drugs.
Congress will establish a Patient-Centered Outcomes Research Institute and encourage comparative effectiveness studies. BUT it's not clear whether such studies will be used by payers such as Medicare to limit reimbursement to selected products.
The bill does not allow for the widespread re-importation of drugs from Canada and other countries. BUT White House officials have promised to seek separate legislation authorizing that practice.
Finally, a provision that I have not heard discussed very much imposes an annual fee of $2.3 billion on the pharmaceutical manufacturing industry, to be allocated according to market share. BUT . . . sorry, there's no But to this one.
PhRMA has supported ObamaCare. Its members do not seem overly concerned with the potential for reducing the growth or profitability of the industry. I will be watching the comments of the industry's chief executive officers and the shifts, if any, in the companies' spending patterns closely during the next few quarters. I don't believe we've heard the end of the way ObamaCare will impact the search for new drugs.
I must admit that I have not scrubbed the entire 2,400 pages of the Patient Protection and Affordable Care Act passed by the Senate and approved by the House of Representatives, or The Reconciliation Act of 2010 that still needs to be passed by both houses of Congress. But I think the broad outlines of ObamaCare have been known for months; it requires every citizen to purchase health insurance and alters some practices of the health insurance industry. It establishes new taxes, authorizes new subsidies, and purports to cut spending on Medicare. Still, there are many details that will impact the drug development industry - and by implication the outsourcing firms that serve that industry - that will not become clear until the Department of Health and Human Services writes the regulations that will implement them.
Medicare recipients will obtain coverage for a greater portion of their total drug costs. BUT drug companies will be paying part of those costs.
The addition of an estimated 30 million people to the ranks of the insured should lead to a meaningful increase in the number of prescriptions written. BUT it's clear that all institutional purchasers of drugs will negotiate more aggressively over the prices they pay.
Drug companies will remain free to establish the prices they charge for their products. BUT several congressional committees seem determined to make them justify those prices as well as their annual increases.
The FDA will be empowered to develop a pathway for the quick approval of biologics that lose their patent protection. BUT it's not clear what types of clinical trials will be required by companies that want to sell follow-on versions of those products.
Drug companies will remain free to spend money on DTC advertising - for now. BUT it's clear that Congress is still concerned about the negative impact those ads have on the prices consumers must pay for their drugs.
Congress will establish a Patient-Centered Outcomes Research Institute and encourage comparative effectiveness studies. BUT it's not clear whether such studies will be used by payers such as Medicare to limit reimbursement to selected products.
The bill does not allow for the widespread re-importation of drugs from Canada and other countries. BUT White House officials have promised to seek separate legislation authorizing that practice.
Finally, a provision that I have not heard discussed very much imposes an annual fee of $2.3 billion on the pharmaceutical manufacturing industry, to be allocated according to market share. BUT . . . sorry, there's no But to this one.
PhRMA has supported ObamaCare. Its members do not seem overly concerned with the potential for reducing the growth or profitability of the industry. I will be watching the comments of the industry's chief executive officers and the shifts, if any, in the companies' spending patterns closely during the next few quarters. I don't believe we've heard the end of the way ObamaCare will impact the search for new drugs.