The ripple effect
Whatever shape healthcare reform takes, its impact will be felt industry-wide
WASHINGTON, D.C.—For several months, the most heated debateon Capitol Hill has focused on healthcare reform, including whether to includea public option and proposals regarding drug importation that would greatlyimpact the pharmaceutical industry.
Whether the debate is reaching its final act or only justbeginning may be anyone's guess. Regardless of just what details are includedin the final proposal that Congress sends to President Barack Obama, there isno doubt that the pharmaceutical industry will feel the impact of reform—forbetter or for worse.
According to the Pharmaceutical Research and Manufacturersof America (PhRMA), a trade organization representing the country's leadingpharmaceutical research and biotechnology companies, if done in a smart way,healthcare reform will benefit patients, the economy and the future of America.
"We believe that all Americans should have access tohigh-quality, affordable healthcare coverage and services," notes PhRMA SeniorVice President Ken Johnson. "This is why we are so committed to makinghealthcare reform a reality."
Compared to the House bill, which would have a chillingeffect on medical progress in America, Johnson says the Senate approachprovides a much better blueprint for reform.
Pfizer Inc. has said healthcare reform is "vital." As aresult, the drugmaker has stepped up support for the overhaul process.
"Reform is very important, and that's why we've stepped upto support it," Pfizer Chief Executive Jeffrey B. Kindler said in December atthe Boston College Chief Executives' Club of Boston luncheon. "Doing nothing isnot an option."
More specifically, the Wall Street Journal reported that New York-based drugmaker supports theclosing of the so-called Medicare "donut hole"—the gap in coverage that forcesseniors to pay out-of-pocket for drugs after a certain threshold is reached.
Kindler points out that healthcare reform would also aid inestablishing a regulatory pathway for generic biologic drugs and increasingMedicaid eligibility. At the same time, the reforms should ensure "innovationis supported," says Kindler.
In a recent statement, AstraZeneca said it is committed toworking with the Obama administration and Congress to help enact comprehensivehealthcare reform that promotes market competition, ensures patient safety,expands coverage for the uninsured and fosters innovation while protectingintellectual property.
"In 2009, the research-based pharmaceutical andbiotechnology industry agreed to contribute $80 billion over 10 years towardhealth reform, recognizing that all stakeholders in our nation's healthcaresystem must do their share to support meaningful reform," the company stated.
"Our nation's leaders must strike a delicate balance betweenchanging the current system to address its weaknesses and protecting America'slead in the search for new medical cures and treatments," the company added."It is our hope that efforts to reform the nation's health system will viewmedicines as an investment, not just a cost. Prescription medicines play acritical role in disease management and prevention.
Over the last 55 years,life expectancy for men and women in the United States has increased by nearlya decade, and it continues to rise. Medicines provide significant value byhelping people lead healthier lives and preventing more serious, future healthproblems that would create an even greater financial burden on patients andtheir families. Studies show that newer medicines reduce hospital and othernon-drug costs. Furthermore, only 10 cents of every U.S. health care dollar isattributable to prescription medicines."
Eli Lilly & Co. announced on its corporate Web site thatit has sounded its support for healthcare reform packages that extendhealthcare access to those who currently lack it, while preserving or improvingaccess for those who have it today.
"This includes improving outreach to enroll individuals inpublic programs for which they are eligible," according to a statement on thecompany's Web site. "Lilly prefers free-market solutions overgovernment-managed systems. Giving Americans the same tax benefits whether theypurchase healthcare coverage individually or through their employer, enactingmedical liability reforms and expanding Health Savings Accounts (HSAs) andother consumer-directed coverage models, would encourage participation in thehealthcare system."
Meanwhile, the lobbying efforts on all sides of thehealthcare reform issues stepped up their efforts as the month of Decemberunfolded, hoping to gain a foothold in the debate.
Some drugmakers railed against a popular proposal to allowAmericans to buy cheaper drugs from other countries. The debate also promptedother players in the healthcare arena—particularly hospitals, insurers andother major industries—to step up lobbying efforts in an effort to steer thelegislation in their favor.
Medical providers, for example, battled a proposedDemocratic compromise that would jettison a public insurance option in favor ofa limited expansion of Medicare, while the U.S. Chamber of Commerce flew dozensof corporate executives to Washington in early December to meet with lawmakers.
An amendment, sponsored by Sen. Byron L. Dorgan, D-N.D., andOlympia Snowe, R-Maine, would have allowed pharmacies and wholesalers to importU.S.-approved medication from Canada, Europe, Australia, New Zealand and Japan,where drug costs are far lower because of price controls.
But the pharmaceutical industry—a key supporter ofhealthcare reform after reaching an agreement with the White House earlier thisyear—responded with a fierce lobbying campaign aimed at killing the proposal,focusing on Democratic senators from states with large drug and researchsectors.
In a big win for the pharmaceutical industry, the Senate onDec. 15 killed the Dorgan-Snowe proposal.
The vote, which was 51-48 in favor of the amendment, fellbelow the 60 votes needed to prevail under a special rule to overcome afilibuster. Thirty Democrats and Sen. Joe Lieberman, I-Conn., voted to kill theprovision.
An alternative bill that sought to allow drug imports if theFDA certified the products were safe also failed on a 56-43 vote.
The need for reform is evident. Johnson points out thatmillions of Americans lack insurance coverage or have excessive co-pays thatcause them to pass on needed medical treatments.
"This not only has a detrimental effect on patient health,it impacts job stability and economic growth," he says. "For example, theMilken Institute has estimated that lost workdays and lower employeeproductivity due to chronic disease results in an annual economic loss in theU.S. of more than $1 trillion, according to the latest figures available."
To bring rising healthcare costs under control, Johnson saysthere must be a focus on getting serious about addressing the chronic diseaseepidemic in America.
"If we are going to cure cancer in our lifetime—as PresidentObama has challenged us to do—we believe any health reform package must supportmedical progress and innovation in America," he says. "Innovative new medicineshave dramatically increased life expectancy rates in America and have allowedpatients to live longer, healthier and more productive lives. Fosteringcontinued medical progress should be a key element of healthcare reform.
"Since 1980, life expectancy rates for cancer patients haveincreased about three years, and 83 percent of those gains are attributable tonew medicines," he adds. "Cardiovascular death rates fell a dramatic 26 percentbetween 1999 and 2005, according to the American Heart Association. AndHIV/AIDS deaths have dropped by more than 70 percent since the approval of thehighly active anti-retroviral treatments, according to the Centers for DiseaseControl and Prevention."
Johnson points out that the progress is real and it hasimproved the lives of millions of American patients, and it has helped savemoney by reducing avoidable hospitalizations and preventing unnecessaryemergency room visits.
Johnson also focused on the risks involved if consumersimport counterfeit drugs, saying "Congress should not be playing Russianroulette with the safety of patients."
Healthcare reform was a centerpiece of President BarackObama's presidential campaign and as the debate unfolded throughout the monthof December, the president seemingly was caught between his campaign rhetoricand the political realities of healthcare reform, which depends in large parton tacit support from drugmakers and other industry groups.
Obama supported drug importation as a senator, but hisadministration did not embrace the Dorgan amendment.
"It's about being a candidate as opposed to beingpresident," Johnson says. "When you become president, you realize that thesound bites don't always work in reality … I think they've looked at theproblems now and have concluded there's no way to ensure the safety ofmedicines reimported into the United States right now."
Johnson notes the industry's commitment to comprehensivehealthcare reform is evident by its $80 billion pledge to reduce health carecosts over 10 years.
"In June, as part of a broad healthcare reform agreementwith the Senate Finance Committee and the White House, our sector agreed tohelp most eligible seniors and disabled Americans cut their out-of-pocketexpenses on brand-name medicines in half as part of health reform legislation,"he notes. "In its entirety, the agreement is a significant contribution by ourindustry toward healthcare reform."
As the legislation began to unfold in mid-December,America's pharmaceutical research and biotechnology companies agreed to helpclose the gap in coverage in the Medicare prescription drug program.
"Specifically, companies will provide a 50 percent discountto most beneficiaries on brand-name medicines covered by a patient's Part Dplan when purchased in the coverage gap, saving seniors and the disabled morethan $30 billion over 10 years," Johnson says. "In addition, the entirenegotiated price of the Part D covered medicine purchased in the coverage gapwould count toward the beneficiary's out-of-pocket costs, thus lowering theirtotal out-of-pocket spending."
According to Johnson, the remainder of the $80 billioncommitment, which is expected to include a mix of fees and Medicaid rebates,will help the government expand healthcare coverage to millions of uninsuredAmericans.
"What's critical now is that we remain focused on theimportant goal of helping pass a bipartisan and comprehensive health carereform bill that can get to the president's desk in the near future," he pointsout. "We will continue to be a constructive partner to help meet this goal."