Healthcare reform momentus for pharma too
pharmafile | April 1, 2010 | News story | | Obama, US, biosimilars, healthcare reform
Historic reforms of America’s healthcare system have now passed into law, representing its most radical overhaul ever.
Nevertheless, the bill is a work of great compromise, which means almost no interest group or section of society is entirely happy with it.
For the pharma industry, the features it had most feared have been excluded from the final reforms, and the sector secured generous deals in pricing and market exclusivity for biologics. Despite all of the talk about emerging markets, the US is still the world’s most important and valuable market for the sector, thereby making the reforms equally momentus for the industry.
Passed by the narrowest of margins (219 votes to 212) the bill was opposed by all Republicans, with Democrats winning through only after hours of heated debate which illustrated the deep divide in Congress and the country as a whole.
The bill extends insurance to 32 million Americans who currently have no coverage and seeks to address the fast-increasing costs of healthcare to the nation.
Among its measures is a reform which ends the situation where some patients are having to pay prescription costs directly, the so-called ‘doughnut hole’.
The reforms will cost $940 billion over ten years, and are expected to reduce the US fiscal deficit by $143bn. In order to pay for the reforms, Obama wants to introduce tax increases for the richest, a move which Republicans have vowed to block.
The pharma industry agreed in 2009 that it would contribute to cost reductions by guaranteeing savings of $80 billion over the next decade, in part by offering rebates and making brand-name drugs more affordable for senior citizens affected by the ‘doughnut hole’ problem.
The reform will mark the biggest change to the US healthcare system in decades, though most of its changes won’t come into force until 2014.
“We proved that we are still a people capable of doing big things,” said President Obama shortly after the vote. “This legislation will not fix everything that ails our healthcare system, but it moves us decisively in the right direction.”
The bill has now been signed by the President for a second time, following a vote on amendments to the bill in the Senate. Republicans say they will go one further and seek to repeal the bill, by claiming the way it has been approved is unconstitutional, and will co-ordinate moves in each State to block it becoming law.
Pharma backs reform
One key tactic which undoubtedly helped Obama pass the reforms was getting the pharma industry to endorse the plan.
US pharma lobbying group PhRMA agreed a deal last year to save $80 billion over a decade to health care reform savings by cutting some prices in order to close the Medicare ‘doughnut hole’. In return, President Obama agreed to drop two policies vehemently opposed by industry – the parallel importation of drugs from Canada and giving the federal government the power to negotiate Medicare prices directly with pharma companies. PhRMA spent $100 million in advertising supporting reform.
“The existing barriers to quality health care simply are not acceptable. [this] important and historic vote in the House will help to expand healthcare coverage and services to tens of millions of Americans who are uninsured and often forced to forego needed medical treatments,” a spokesman said.
“Throughout this long process, we have been guided by a belief that all Americans should have access to high-quality, affordable health care coverage and services. This legislation, while not perfect, is a step in that direction.”
The body said it was concerned about ‘overly broad powers’ of a non-elected Independent Payment Advisory Board (IPAB), which it says could enact sweeping Medicare changes without the need for Congress or legal permission.
PhRMA says it wants to work with Congress to address these and other concerns and to identify ways to contain medical costs without creating new barriers to quality health care.
Whether or not the reforms have the backing of individual pharma companies isn’t clear, however Pfizer’s chief executive Jeffrey Kindler had expressed his support for major change.
In February he said in a speech: “The system has gotten so bad and the need for reform so clear, that we just might have a unique opportunity to fix it. In fact, for the first time in decades, there is broad agreement across the political spectrum and the private sector on many elements of reform and on the urgency to act.”
Public opinion divided
A USA Today/Gallup Poll conducted shortly after the bill was passed found the country divided over its merits, with 50% calling the bill ‘a bad thing’ and 47% ‘a good thing’. Many respondents were uncertain and fearful about its cost to them. Two thirds of respondents said the reform law was too costly and expanded the government’s role in healthcare too much. While fearful of its direct impact on them, many respondents were convinced it would improve on the nation’s healthcare system overall.
Public opinion is particularly important as the mid-term elections will be held in November. Many in Obama’s Democrat party fear the unpopularity of the legislation will see them lose seats in the elections, which could put the Republican party back in to a majority in Congress.
Andrew McConaghie
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