by barbarabauer | July 28, 2011 2:25 am
Under the Affordable Care Act, President Obama signed into law the Patient Protection and Affordable Care Act (PPACA) on March 23, 2010. The PPACA proposes to extend healthcare to 32 million uninsured citizens under a health care system which will undergo a comprehensive reformation that will unfold over the next seven years. While most of the laws are expected to be in place beginning in 2014, it will still take time for companies to implement those laws.
The upside to this is the 32 million citizens expected to be covered under this plan represents a significant increase in business for pharmaceutical companies and manufacturers.A portion of the 2010 health care reform policy will include the formation of accountable-care organizations (ACOs) which will be instrumental to decisions made regarding who pays for health care and how much will be paid.
The primary purpose of ACOs is to influence hospitals, insurers and private physicians to work together to give better patient care at reasonably lower costs. This purpose has now expanded to include the pharmaceutical industry and other health care providers as well.
Expected Changes of Reformed Health Care and the Challenges it may present
Since the pharmaceutical industry already contends with FDA regulations as far as product approval is concerned and continued endorsement after approval, the additional regulations under the current evolving health care system will place them under greater scrutiny. Some of the expected changes are as follows:
1) Generic drugs will play a larger role not only because they’re less expensive, but also because under the new evaluation process of the American Recovery and Reinvestment Act of 2009 (ARRA – also signed into law by President Obama), generic drugs will replace the brand-name drugs that don’t demonstrate a proven clinical benefit. Additionally, newly-launched drug products will now have to meet higher value standards to prove their worth as a viable therapeutic option and to secure premium pricing. All of this is likely to result in lower sales of brand medications.
2) Beginning in 2011, an annual tax will be imposed on pharmaceutical manufacturers of branded drugs that could have a severe impact on research and development in the amount of grants and tax credits received.
3) After already spending in excess of $80 billion as a result of last years’ healthcare bill that became law, the pharmaceutical industry may be forced to spend even more because of the most recent cuts in Medicare and Medicaid.
There has been ample disagreement over the PPACA between Republicans and Democrats and the Republicans in both the House and the Senate have voted unanimously against it. Since, the main focus of this new law is cost containment, pharmaceutical companies should also expect the following:
The bottom line is under the evolving healthcare system, there will be an intense scrutiny of the pharmaceutical businesses, their marketing activities and practices. The presence of more direct control from outside agencies means the pharmaceutical industry can no longer operate as though it’s still in an open market where more freedoms existed. Since the newly installed agencies will have more control over what drugs are approved, the industry will have to run comparative studies that are acclimated to the new regulations. Adjustments will have to be made that will allow the industry to survive within the new structure while at the same time, allow them to retain their integrity and financial stability.
However, this is an enormous reformation process that will take years to complete and during this time, there could be numerous delays and major revisions that would have significant effects on the final outcome. Therefore, it might be wise to stay in tune with the changes as they occur and introduce adjustments accordingly.
Adjustments will have to be made that will allow the industry to survive within the new structure while at the same time, allow them to retain their integrity and financial stability. However, this is an enormous reformation process that will take years to complete and during this time, there could be numerous delays and major revisions that would have significant effects on the final outcome. Therefore, it might be wise to stay in tune with the changes as they occur and introduce adjustments accordingly.
Source URL: http://www.fdaregwatch.com/the-impact-of-2012-health-care-reform-on-the-pharmaceutical-industry/
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