Budget Crunch, Political Battles Shape Policy Agenda for Year

Pressure to approve new user fees opens the door to action on drug shortages, prices, and regulation.
Jan 02, 2012
Volume 36, Issue 1

Jill Wechsler
Election-year politics will play a role in a range of legislative and policy developments affecting drug development, manufacturing, and reimbursement in the coming year. Efforts to reduce government spending on healthcare are prompting all parties to search for opportunities to do more with less. Although FDA received a slight increase in its 2012 budget, limited resources throughout the public and private sectors are likely to undercut efforts to advance biomedical research and expand public health programs. These developments will drive manufacturers to look overseas for less costly and more efficient opportunities to expand R&D, production, and sales. As the campaign for the White House and control of Congress heats up, pharmaceutical and biotech companies will need to keep a sharp eye on how new policy proposals may affect product development, drug regulation, and the debate over reauthorization of the Prescription Drug User Fee Act (PDUFA).

Whither reform?

Manufacturers backed Obamacare two years ago as a way to expand the market for prescription drugs, including a growing number of pricey biotech therapies. In return, industry agreed to pay hefty new fees as well as higher rebates on Medicaid drugs, and to subsidize the cost of drugs sold to seniors caught in the "doughnut hole" of the Medicare prescription drug program. The worst-case scenario for manufacturers now would be to eliminate the market reforms and insurance exchanges designed to expand enrollment in health plans, while retaining provisions that cut revenues and raise costs for industry.

The 800-pound gorilla in the room is the looming Supreme Court decision on the constitutionality of the Obama healthcare reform legislation. While the Justices ponder the weighty legal issues, the US Department of Health and Human Services (HHS) will continue to implement the multitude of policies and programs established by that law. The administration's working assumption is that the Affordable Care Act (ACA)—or much of it—will remain in place. Many states are moving ahead with efforts to expand health IT systems and to establish processes for determining insurance eligibility and coverage. But a Republican takeover of the White House in November 2012 would bring considerable changes in health-related programs.

Whatever the legal and political outcome, policymakers on all sides will be looking to cut payments to providers, to increase cost-sharing by patients, and to reduce benefits and services. Increased reliance on managed care plans and coordinated care programs, initiatives to reduce fraud and abuse, perennial proposals to reform the nation's medical liability system, and efforts to curb pharmacy expenditures will emerge as ways to save money without compromising care.

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