5 Ways that Healthcare Reform will affect the Pharmaceutical Industry
By Imari Patel, MPH, Research Associate
Although healthcare reform will take years to implement and the changes may not be visible instantaneously, this is a perfect time
for the pharmaceutical industry to prepare for the changes yet to come and think prospectively. It is important to remember that while healthcare reform will reduce the number of uninsured Americans, it will not provide “universal” coverage. This brings us to the first point:
- After the reform takes place, an estimated 8% of Americans will be uninsured in the year 2020 instead of 19% if reform did not take place. Although not every American will be insured, an additional 30 million Americans can potentially become prescription drug consumers. This has major implications for drug production (especially certain orphan drugs or drugs that we have a shortage of right now). This will also influence cost and access to drugs.
- Although prescription drug costs comprise only 10% of overall healthcare expenditures in this country, costs are increasing at a rapid rate. This is a major concern with regards to affordability and access to drugs even after the healthcare law goes into effect. Drugs being sold at a higher price in the U.S. compared to other countries are a concern for consumers. Obtaining prescription drug coverage takes care of affordability and access to some extent, but does not mean that these issues will be resolved by any means. The option of importing drugs to be sold at lower prices also introduces safety concerns. What is a happy medium between reducing costs for the consumer, increasing safety/efficacy, and the high cost of drug development?
- There may be more movement towards smaller biotech companies that focus on drug discovery and development in specific areas like orphan drug development. Companies that focus on specific therapeutics may fare better due to the drive to cut costs. There will be a shift towards “high need cure” drug development so that drugs for diseases and conditions that otherwise would not be researched, due to marketing and profit incentives, can be developed.
- Healthcare is not the only thing that needs to be reformed. The methods in which pharmaceutical companies marketed in the past such as making physician office visits, sponsoring continuing education programs, and providing gifts or drug samples will change as well.
- Healthcare reform will move towards increased access to low-cost generic drugs. Preventing brand name drug manufacturers from changing drug labels and therefore extending the patent of a brand name drug, will occur. Approving generic drugs as soon as a brand name drug’s patent is expired will be necessary for this change.
These are only 5 changes that may take place when healthcare reform goes into effect. Other ways in which this reform will affect the pharmaceutical industry remains to be seen.