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The ripple effect
January 2010
by David Hutton  |  Email the author


WASHINGTON, D.C.—For several months, the most heated debate on Capitol Hill has focused on healthcare reform, including whether to include a public option and proposals regarding drug importation that would greatly impact the pharmaceutical industry.  
Whether the debate is reaching its final act or only just beginning may be anyone's guess. Regardless of just what details are included in the final proposal that Congress sends to President Barack Obama, there is no doubt that the pharmaceutical industry will feel the impact of reform—for better or for worse. 
According to the Pharmaceutical Research and Manufacturers of America (PhRMA), a trade organization representing the country's leading pharmaceutical 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 to high-quality, affordable healthcare coverage and services," notes PhRMA Senior Vice President Ken Johnson. "This is why we are so committed to making healthcare reform a reality."  
Compared to the House bill, which would have a chilling effect on medical progress in America, Johnson says the Senate approach provides a much better blueprint for reform. Pfizer Inc. has said healthcare reform is "vital." As a result, the drugmaker has stepped up support for the overhaul process.  
"Reform is very important, and that's why we've stepped up to support it," Pfizer Chief Executive Jeffrey B. Kindler said in December at the Boston College Chief Executives' Club of Boston luncheon. "Doing nothing is not an option."  
More specifically, the Wall Street Journal reported that New York-based drugmaker supports the closing of the so-called Medicare "donut hole"—the gap in coverage that forces seniors to pay out-of-pocket for drugs after a certain threshold is reached.   Kindler points out that healthcare reform would also aid in establishing a regulatory pathway for generic biologic drugs and increasing Medicaid eligibility. At the same time, the reforms should ensure "innovation is supported," says Kindler.
In a recent statement, AstraZeneca said it is committed to working with the Obama administration and Congress to help enact comprehensive healthcare reform that promotes market competition, ensures patient safety, expands coverage for the uninsured and fosters innovation while protecting intellectual property.
"In 2009, the research-based pharmaceutical and biotechnology industry agreed to contribute $80 billion over 10 years toward health reform, recognizing that all stakeholders in our nation's healthcare system must do their share to support meaningful reform," the company stated.  
"Our nation's leaders must strike a delicate balance between changing the current system to address its weaknesses and protecting America's lead 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 view medicines as an investment, not just a cost. Prescription medicines play a critical role in disease management and prevention.
Over the last 55 years, life expectancy for men and women in the United States has increased by nearly a decade, and it continues to rise. Medicines provide significant value by helping people lead healthier lives and preventing more serious, future health problems that would create an even greater financial burden on patients and their families. Studies show that newer medicines reduce hospital and other non-drug costs. Furthermore, only 10 cents of every U.S. health care dollar is attributable to prescription medicines."  
Eli Lilly & Co. announced on its corporate Web site that it has sounded its support for healthcare reform packages that extend healthcare access to those who currently lack it, while preserving or improving access for those who have it today.  
"This includes improving outreach to enroll individuals in public programs for which they are eligible," according to a statement on the company's Web site. "Lilly prefers free-market solutions over government-managed systems. Giving Americans the same tax benefits whether they purchase healthcare coverage individually or through their employer, enacting medical liability reforms and expanding Health Savings Accounts (HSAs) and other consumer-directed coverage models, would encourage participation in the healthcare system."  
Meanwhile, the lobbying efforts on all sides of the healthcare reform issues stepped up their efforts as the month of December unfolded, hoping to gain a foothold in the debate. Some drugmakers railed against a popular proposal to allow Americans to buy cheaper drugs from other countries. The debate also prompted other players in the healthcare arena—particularly hospitals, insurers and other major industries—to step up lobbying efforts in an effort to steer the legislation in their favor.  
Medical providers, for example, battled a proposed Democratic compromise that would jettison a public insurance option in favor of a limited expansion of Medicare, while the U.S. Chamber of Commerce flew dozens of corporate executives to Washington in early December to meet with lawmakers.  
An amendment, sponsored by Sen. Byron L. Dorgan, D-N.D., and Olympia Snowe, R-Maine, would have allowed pharmacies and wholesalers to import U.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 of healthcare reform after reaching an agreement with the White House earlier this year—responded with a fierce lobbying campaign aimed at killing the proposal, focusing on Democratic senators from states with large drug and research sectors.  
In a big win for the pharmaceutical industry, the Senate on Dec. 15 killed the Dorgan-Snowe proposal.  
The vote, which was 51-48 in favor of the amendment, fell below the 60 votes needed to prevail under a special rule to overcome a filibuster. Thirty Democrats and Sen. Joe Lieberman, I-Conn., voted to kill the provision.
An alternative bill that sought to allow drug imports if the FDA certified the products were safe also failed on a 56-43 vote.  
The need for reform is evident. Johnson points out that millions of Americans lack insurance coverage or have excessive co-pays that cause 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, the Milken Institute has estimated that lost workdays and lower employee productivity due to chronic disease results in an annual economic loss in the U.S. of more than $1 trillion, according to the latest figures available."  
To bring rising healthcare costs under control, Johnson says there must be a focus on getting serious about addressing the chronic disease epidemic in America.  
"If we are going to cure cancer in our lifetime—as President Obama has challenged us to do—we believe any health reform package must support medical progress and innovation in America," he says. "Innovative new medicines have dramatically increased life expectancy rates in America and have allowed patients to live longer, healthier and more productive lives. Fostering continued medical progress should be a key element of healthcare reform.  
"Since 1980, life expectancy rates for cancer patients have increased about three years, and 83 percent of those gains are attributable to new medicines," he adds. "Cardiovascular death rates fell a dramatic 26 percent between 1999 and 2005, according to the American Heart Association. And HIV/AIDS deaths have dropped by more than 70 percent since the approval of the highly active anti-retroviral treatments, according to the Centers for Disease Control and Prevention." 
Johnson points out that the progress is real and it has improved the lives of millions of American patients, and it has helped save money by reducing avoidable hospitalizations and preventing unnecessary emergency room visits.
Johnson also focused on the risks involved if consumers import counterfeit drugs, saying "Congress should not be playing Russian roulette with the safety of patients."
Healthcare reform was a centerpiece of President Barack Obama's presidential campaign and as the debate unfolded throughout the month of December, the president seemingly was caught between his campaign rhetoric and the political realities of healthcare reform, which depends in large part on tacit support from drugmakers and other industry groups. Obama supported drug importation as a senator, but his administration did not embrace the Dorgan amendment.  
"It's about being a candidate as opposed to being president," Johnson says. "When you become president, you realize that the sound bites don't always work in reality … I think they've looked at the problems now and have concluded there's no way to ensure the safety of medicines reimported into the United States right now."
Johnson notes the industry's commitment to comprehensive healthcare reform is evident by its $80 billion pledge to reduce health care costs over 10 years.
"In June, as part of a broad healthcare reform agreement with the Senate Finance Committee and the White House, our sector agreed to help most eligible seniors and disabled Americans cut their out-of-pocket expenses on brand-name medicines in half as part of health reform legislation," he notes. "In its entirety, the agreement is a significant contribution by our industry toward healthcare reform."  
As the legislation began to unfold in mid-December, America's pharmaceutical research and biotechnology companies agreed to help close the gap in coverage in the Medicare prescription drug program.
"Specifically, companies will provide a 50 percent discount to most beneficiaries on brand-name medicines covered by a patient's Part D plan when purchased in the coverage gap, saving seniors and the disabled more than $30 billion over 10 years," Johnson says. "In addition, the entire negotiated price of the Part D covered medicine purchased in the coverage gap would count toward the beneficiary's out-of-pocket costs, thus lowering their total out-of-pocket spending."  
According to Johnson, the remainder of the $80 billion commitment, which is expected to include a mix of fees and Medicaid rebates, will help the government expand healthcare coverage to millions of uninsured Americans.  
"What's critical now is that we remain focused on the important goal of helping pass a bipartisan and comprehensive health care reform bill that can get to the president's desk in the near future," he points out. "We will continue to be a constructive partner to help meet this goal."
Code: E011004



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