Thursday, December 31, 2009

Next Year's Conference Meeting

First, let me take this opportunity to wish my readers a Very Happy and Prosperous New Year!

Next,  thoughts turn to Conference in January where the details of the final healthcare reform legislation will be ironed out for a vote by both the House and the Senate prior to sending the legislation to President Obama's pen for inking. History should be made by February.

The House, still irked by the deal Reid apparently cut with Pharma, will likely seek further concessions from the industry. 

Thursday, December 24, 2009

Pharma... Heal Thy Doctor!

No one would argue that Doctors, or more aptly put their patient care decisions, play the central roll in the cost and performance of the American healthcare system and it's reform.  But in Healthcare Reform's media blitz there is a huge issue that has been largely overlooked.  Healthcare reform will drive millions of previously uninsured into their offices.  Healthcare reform legislation will ask doctors and their staff to do  more for their patients, a lot more,  particularly for the Medicare beneficiary.

But today, there is a huge shortage of doctors.  Many are already overworked.

Saturday, December 19, 2009

Breaking News - Final Senate Legislation

Morning all,

Reid's Senate Healthcare Reform changes made public this snowy morning.  Here's my first take on a very quick look regarding the implications for Pharma:

Thursday, December 17, 2009

Expensive Jelly. Who Pays and How Much for Filling the Donut Hole?

I previously estimated that the closure of the Medicare Part D donut hole was worth close to $8 billion per year in additional revenue to the Pharma industry.  This presumed that Pharma's commitment of $80 billion in part to offset costs in the Donut Hole via a drug discount of 50% wouldn't be an opened ended commitment and it would end once the Donut Hole was actually closed.  My thinking was that once the Donut hole was closed, and the $80 billion commitment rendered (my estimates of filling the Donut Hole are lower), Pharma would benefit for years to come based upon the "insurance effect" of the closure of the Donut Hole.  However this may not be the case.  This morning there seems to be some confusion regarding the exact nature of the earlier commitment and  the possibility of a "new deal".

Tuesday, December 15, 2009

Pharmaceutical Marketing's New Role

The Senate and House's version of healthcare reform legislation seeks to improve the cost and quality of care by establishing and funding Comparative Effectiveness Research Centers.  These centers would review options available for treatment for a particular condition to determine which option produces the best clinical and economic outcome. 

For many years pharmaceutical marketing focused upon promoting a drug's efficacy and safety based upon controlled clinical trials submitted for regulatory approval by the FDA.  Typically, the clinical trials were placebo controlled.  Most often, a drug's performance was not assessed against a comparator or competing drug.  In a market with greater attention on comparative effectiveness, marketing will need to take a far more active role in both clinical trials and how the drug is actually used once approved.

Friday, December 11, 2009

Healthcare Reform To Drive Pharma R&D Spend Higher?

As senior Pharma executives consider steps to improve shareholder value stemming out of Healthcare Reform there is no doubt that one area under scrutiny will be R&D spend.  Two questions will be raised.  How to change their spending footprint (more on this later)? and how much to spend?  In contrast to what some have concluded, I believe that savvy execs may very well increase company R&D spend, at least as a percentage of their revenue dollar.

The fact is that pharma is already increasing their R&D spend irrespective of the tough sledding (e.g. increased pricing pressures) the industry has seen since the turn of the century.  Consider the graph below depicting R&D spend as a percentage of revenue

Medicare Part D Expands as 55+ year Olds Buy In?

The Senate public compromise includes an option for those Americans who are 55 years old or older to purchase health coverage via Medicare. While much of the details haven't been released yet, and the Senate waits for the cost tab from the CBO, let's take a quick look at what it might mean for Pharma.

Thursday, December 10, 2009

Dorgan's new Importation Legislation more costly to Pharma?

If Dorgan's bill, discussed today in the Senate, sees the light of day it might cost Pharma more than earlier versions of drug importation legislation.

Recent Press on Drug Prices May Negatively Impact Pharma in Final Senate Reform Legislation

Morning all.

I've been following with great interest the recent negative press regarding high drug price increases as well as this week's House hearing on the same topic. The timing couldn't be worse for pharma. The Senate is still in the process of finalizing it's healthcare reform legislation. There appears to be increasing interest to extract more concessions from pharma as the legislation is finalized.

Monday, December 7, 2009

Importation of Pharmaceuticals to the US?

An old amendment is rearing it's ugly head. The Washington Post reported yesterday that Senator Dorgan's (democrat from North Dakota) amendment #2973 is in discussion behind closed doors in the Senate. This amendment would allow both pharmacies and drug wholesalers to import drugs from a number of specified countries like Canada.

While I have not sharpened my pencil on this one yet, the Congressional Budget Office (CBO) has estimated savings to the government of almost $20 billion over the next 10 years. Of course the overall cost to the pharma industry would be even greater considering non governmental purchases.

$2 billion per year seems a bit "light" to me...

Friday, December 4, 2009

Add Sales Reps Because of Healthcare Reform?

The answer is yes or at the very least engage your favorite CSO's services on a trial basis (see post below for the significant pharmaceutical revenue gain coming from insuring the uninsured).

Where? In the South. For what products? Products used especially by the younger patient population. Why?

Industry Revenue Change... How it All Adds Up

In my post of December 3rd titled "Healthcare Reform and Revenue Growth", I pointed out the revenue lift of the pending legislation. Now I'd like to share with you my estimates of revenue impact other aspects of the pending legislation that will act to drag down industry revenue. This chart provides the viewer with a sense of the full impact of legislation with direct impact on industry revenue. Please note that some of the specific legislation will take place over a number of years such as the closure of the Medicare Part D Donut hole but they are shown here is if they occurred immediately to provide a better sense of comparison.

At the top you'll see the two revenue enhance aspects of the legislation, coverage of the uninsured and removal of the Medicare Part D donut hole. This add up to an estimated benefit of roughly $17 billion of increased revenue for the industry per year.

Next I start to subract from this revenue lift by adding in

Best Quick Look at Healthcare Reform Legislation

A number of you have asked for the best sources for an overview of pending healthcare reform legislation.

Thursday, December 3, 2009

Healthcare Reform and Revenue Growth

While there is tremendous concern regarding the negative impact of Healthcare Reform (rightfully so), there are two important aspects of the legislation in the current versions of both the House and Senate legislation that will have a significant favorable impact on industry revenue.

The first is the expansion of coverage to the uninsured. It is widely known in healthcare policy circles that when insurance coverage is provided or increased the use of healthcare services, supplies, etc also increases. This is commonly called the insurance effect. My analysis points to an increase in industry revenue of $9 to $10 billion per year as a large proportion of the uninsured receive coverage.


Hi all!

Disappointed in the coverage of Healthcare Reform and it's impact on the Pharmaceutical Industry, I've decided to look into matters myself and share my thoughts with you, my clients and others concerned about the industry.