POLICY & REGULATION
T
he new political look of Washington
is not all bad news for the medicines
industry. The incoming Democratic
administration and Congress will push to
obama.com
expand and enhance healthcare coverage
ack
for approximately 70 million people who
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are currently uninsured or underinsured,
making medicines more affordable for
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these individuals and reducing the need for
manufacturer-funded free drug programmes.
Disease prevention and chronic care
management are expected to take on a
heightened policy focus, and generics stand
to benefi t from the emphasis on reducing
healthcare costs. There also is optimism that
the beleaguered US FDA will become less
of a political punching bag for Democratic
lawmakers if the agency’s commissioner is an
and Congress, followed by reauthorisation and whether the underlying structure of the
appointee of their own party’s choosing.
of SCHIP, the joint federal/state programme Part D programme is changed.
Barack Obama’s healthcare reform platform that provides health insurance to low-income
Allowing the government to negotiate
breaks down into two parts: providing children. It expires at the end of March 2009
directly with manufacturers absent changes in
quality, affordable and portable insurance and could be extended at current funding
Part D’s design will have only minimal impact
coverage, and lowering healthcare costs. levels for a brief period or signifi cantly
on reducing prices, said Dan Mendelson,
Key components include creation of a new expanded, serving as the stepping-off point
president of the Washington consulting fi rm
national health plan that would guarantee for broader changes.
Avalere Health. Currently, the government
coverage for any American, and establishment The medicines industry supports
negotiates bids for Part D plans with insurers,
of a national health insurance exchange to expanding SCHIP but is less enthusiastic
which in turn negotiate prices with drug
help individuals who wish to purchase private about some of the measures that could
manufacturers. Accommodating direct
insurance. Coverage could not be denied for be legislatively attached to it in what is
government negotiations with manufacturers
pre-existing conditions, and large employers known as the “Christmas tree” effect. This
would require a programme redesign.
who do not make a meaningful contribution includes legislation on Medicare drug price
In addition, simply allowing the HHS to
to their workers’ health insurance costs would negotiations, medicines importation and
ask a manufacturer for lower prices will have
have to pay a fee. comparative effectiveness.
no signifi cant impact unless it also has the
The cost-lowering strategies envisioned
authority to establish drug formularies – a
include establishment of an independent
factor noted in a congressional budget offi ce
institute to guide comparative effectiveness
There are many unknowns
report that concluded allowing government
reviews and research, repeal of the so-called
to Mr Obama’s ambitious price negotiations would have a negligible
“non-interference” clause that prevents
healthcare strategy, including
effect on federal spending.
Medicare from negotiating drug prices in the
Some say that a government-run Part D
Part D programme, importation of cheaper
its total cost
plan that competes with private insurers
drugs from other countries and creation of a
would need to be established if direct HHS
biosimilars approval pathway.
negotiations were to have any substantial
There are many unknowns to Mr Obama’s
changing Part D
impact, although concerns abound that
ambitious healthcare strategy, including its
With the Democrats controlling the White
private plans would be at a competitive
total cost (analysts estimate $1-2 trillion
House and bolstering their majorities in
disadvantage to the Medicare-run plan. Some
over 10 years), how it will be funded and the
the House and Senate, there is growing
leading Democrats have proposed requiring
timing for legislative changes.
expectation that Medicare drug pricing
that Medicaid’s statutory price discounts
Key Democratic lawmakers are pushing
legislation will pass Congress in 2009.
be extended to medicines used by those
for quick movement on large-scale reform.
Changing or removing the Part D non-
individuals who are dually eligible for Medicaid
Legislative proposals are expected as early as
interference clause has been staunchly
and Medicare and have been covered under
January as proponents seek to capitalise on
opposed by the pharmaceutical industry,
Part D since 2006. Some observers see this
high levels of post-election interest – and the
which says such changes are a move toward
as perhaps the most likely legislative scenario
new president-elect’s political capital – while
price controls and will result in more
given that it can be touted as reducing
also framing healthcare reform and the need
restrictive Medicare formularies and increased
drug costs but leaves intact the Part D
for expanded insurance coverage as integral
medicine costs for consumers outside of the
programme’s underlying structure.
to the nation’s economic recovery.
federal programme. However, the potential
The pharmaceutical industry has battled
However, some pharmaceutical industry
revenue threat is ominous – the Boston
the threat of importation for years, publicly
observers believe the Obama Administration
Consulting Group estimated that government
asserting safety concerns, but also fearful
might reach for a few early victories in the
price negotiations could cut pharmaceutical
about the loss of US sales when drugs
healthcare arena in 2009 before tackling
industry sales by $10-30 billion.
are imported from countries with lower,
broader reform at a more deliberate pace. The true impact will depend on various government-set prices. While Mr Obama
For example, lifting of federal funding factors, including whether the health and supports the purchase of “safe medicines
restrictions on embryonic stem cell research human services (HHS) secretary is required, from other developed countries”, his
is likely to be an early piece of healthcare or merely just allowed, to negotiate, whether enthusiasm has been dampened somewhat
related business for the new administration negotiations are limited to certain medicines by the scandal over contaminated heparin, his
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