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Pharmaceuticals

Pharma Wins In Health Reform

Legislation: Industry to pick up millions of newly insured customers

by Glenn Hess
March 29, 2010 | APPEARED IN VOLUME 88, ISSUE 13

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Credit: Kevin Dietsch/UPI/Newscom
Obama signed health care reform legislation into law on March 23.
8813NOTW_signedhealthcare.jpg
Credit: Kevin Dietsch/UPI/Newscom
Obama signed health care reform legislation into law on March 23.

The pharmaceutical and biotechnology industries are among the victors in the landmark health care reform package (H.R. 3590) signed into law by President Barack Obama this week.

“Overall, there is a strong belief that the pharmaceutical industry will benefit from the reform,” says Tijana Ignjatovic, a health care analyst at market analysis firm Datamonitor.

Over the next decade, the law will cost drug companies $85 billion in the form of industry surcharges and lower prices they will receive from government programs. But drugmakers ultimately stand to gain when more than 30 million previously uninsured patients begin visiting doctors and using prescription medicines.

“Throughout this long process, we have been guided by a belief that all Americans should have access to high-quality, affordable health care coverage and services,” said the industry’s main lobbying group, Pharmaceutical Research & Manufacturers of America, in a statement. “This legislation, while not perfect, is a step in that direction.”

Brand-name drug and biotech firms that make biologics also won some advantages over rival generic drug producers. The legislation authorizes the Food & Drug Administration to create an approval pathway for generic versions of biologic drugs—expensive new therapies made from living organisms instead of chemical compounds. But brand-name companies were granted a 12-year period of exclusive sales for their biological medicines before facing generic drug competition. Industry lobbyists were able to overcome the objections of generic drug manufacturers, which wanted to limit the monopoly period to seven years or less.

“This provision includes the incentives necessary to attract the massive investment required to speed the discovery and development of the next generation of breakthrough therapies,” says James C. Greenwood, president of the Biotechnology Industry Organization, a major biotech trade group.

Drugmakers also avoided a measure pushed by the Administration and several Democratic lawmakers that would have barred brand-name companies from paying their generic counterparts to abandon patent challenges that could lead to early market entry of competing generic medicines.

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