FEBRUARY 01, 2006

The PricewaterhouseCoopers Health Research Institute recently predicted the top business concerns that will face the health care industry in 2006. Major issues include the Medicare prescription drug program, patient safety/technology, and a decreasing drug pipeline.

As a result of the Part D prescription drug program, Medicare will account for 28% of prescription drug spending in 2006, compared with 2% in 2005. The institute's report cautioned that premiums could rise if the program does not get enough participants, and for Congress to rein in spending if Medicare costs continue to grow.

Patient safety will continue to make headlines. Industry experts forecast that calls for improved patient safety will intensify in 2006. Therefore, the health care industry will implement technologies to help reduce medical errors (eg, electronic prescribing and computerized health records) and improve tracking and reporting of safety and quality standards.

The looming expiration of key patents could be problematic for pharmaceutical manufacturers and could decrease profits by >50%. The increased competition from generic drugs, the production of less expensive counterfeit drugs, and the emergence of China as a low-cost manufacturing base will contribute to the falling revenues. With the cost of drug development exceeding $800 million, pharmaceutical companies are under fire to produce more drugs with less money. In 2006, the pharmaceutical industry will focus on increasing research and development productivity and slashing costs.