Health Care Reform: A Big Win for Big Pharma?

As government officials promise clarity for consumers on health care reform, many corporations are preparing for new challenges the legislation will bring. Those challenges may seem a little less daunting for pharmaceutical companies, whose lobbying efforts were reflected in the final bill.

As government officials promise clarity for consumers on health care reform, many corporations are preparing for new challenges the legislation will bring. Those challenges may seem a little less daunting for pharmaceutical companies, whose lobbying efforts were reflected in the final bill.

With the passage of health care reform legislation comes a host of new taxes, fees, and restrictions imposed on pharmaceutical companies, who are expected to contribute more than $85 billion to fund the overhaul. Despite this, many are calling the final bill a success for the drug industry, which spent an estimated $188 million in lobbying efforts in 2009 to secure its interests, the Associated Press is reporting.

Several proposed measures that were strongly and vocally opposed by drug manufacturers did not appear in the final health care reform package. Among the scrapped provisions were mandatory rebates on drugs for low-income Medicare Part D enrollees, government-imposed price controls for Medicare drugs, a ban on “pay-to-delay” patent settlements between brand and generic firms, allowances for the importation of low-cost prescription drugs from overseas, and the public insurance option.

In a blow to generic firms, the government also granted 12 years of market exclusivity to brand-name biologics. These expensive drugs currently account for 15% of all pharmaceutical sales, and are not covered under the Hatch-Waxman Act, which allows for the development of affordable generic versions of popular prescription medications.

Kathleen Jaeger, president and chief executive officer of the Generic Pharmaceutical Association and a regular Pharmacy Times contributor, called the 12-year protection period “unnecessary and precedented,” saying it would extend the brand industry’s stronghold on biotech drugs for decades.

In a concession, pharmaceutical companies agreed to offer a 50% discount for drugs in the Medicare coverage gap in order to help close the “doughnut hole” over the next 10 years. Costs incurred by the discounts are likely to be recouped by an overall increase in paying customers as a result of the closure, however.

A study by Kaiser Health News found that 15% of Medicare beneficiaries dropped their prescriptions entirely once they reached the coverage gap. These patients, along with others who switched to less expensive generics when their coverage ran out, should be able to resume their prescriptions as they become more affordable.

Perhaps the greatest boon for the drug industry will be the influx of 32 million patients who are expected to join the ranks of the newly insured by 2019. Americans spent $300 billion on prescription drugs last year alone, according to numbers gathered by IMS Health and reported in the Wall Street Journal.

For other articles in this issue, see: Next-Generation Pharmacist Program Profiles Pharmacists and Celebrates the ProfessionUniversal Flu Shot a Boost for Pharmacies

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