Pharma Faces New Political Landscape - Pharmaceutical Technology

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Pharma Faces New Political Landscape
Republican gains in Congress create uncertainty for healthcare reform, drug regulation, and biomedical research.

Pharmaceutical Technology
Volume 34, Issue 12, pp. 26-30

Cuts and revisions

In Washington this month
Instead of wholesale repeal of ACA, the new Congress will be looking to challenge specific provisions in the bill. Medical product makers and insurers would like to roll back the billions in added taxes imposed on them to help finance expanded coverage. One piece of low-hanging fruit that even President Obama agrees should be modified is a cumbersome tax-reporting provision that requires businesses to file 1099 forms with the IRS for payments for goods and services worth more than $600 during the year.

Republicans also may implement a seldom-used policy that permits Congress to pass resolutions blocking new regulations before they go into effect. And they may propose medical malpractice reforms to protect doctors who follow "best practice" guidelines.

A prime target for the axe, according to manufacturers and providers, is the Independent Payment Advisory Board (IPAB), which has broad powers to set payment policy for Medicare and to recommend changes in private-sector payment systems. Doctors and hospitals are leery of IPAB's authority to implement rate cuts, and manufacturers fear the Board will propose lower acquisition costs of drugs —particularly high-cost therapies—without weighing how these treatments can help lower healthcare costs overall.

Senate Republicans offered legislation in July to eliminate the advisory board, arguing that members of Congress, and not "unelected, unaccountable bureaucrats," should make the important decisions on how to control Medicare spending. At the Mid-Atlantic Biotechnology Industry Organization (BIO) conference a few weeks ago, John Castellani, president of the Pharmaceutical Research and Manufacturers of America (PhRMA) since September, noted concern about the board's "sweeping powers" to revise Medicare payment policies without any outside legal review. Congress is supposed to start funding IPAB in 2012 so that it can be up and running in 2014, but that may not happen.

Members of PhRMA are hoping that Republicans will be responsive to industry concerns about excessive regulation and threats to innovation, but some GOP leaders still resent industry's support for healthcare reform. Last year, Rep. John Boehner (R-OH), who is slated to be the next speaker of the House, castigated PhRMA for its deal with the White House to ante up some $80 billion in higher Medicaid drug rebates and subsidies on doughnut-hole drugs, in return for administration opposition to drug reimportation and government price negotiation.

With the anti-health reform rhetoric heating up in recent months, manufacturers have moved to rebuild their traditional ties to Republicans. A top priority for PhRMA and BIO in the coming year is to gain renewal of the Prescription Drug User Fee Act (PDUFA). Republicans traditionally have been less concerned than Democrats that user fees make the Food and Drug Administration too dependent on industry. However, the new powers on Capitol Hill may want to hike the fees to cover more FDA activities as part of efforts to reduce government appropriations.


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