Fickle Independents and Healthcare Reform

Fickle independents, shifting their votes to Brown, were widely viewed as a key factor in Brown's Massachusetts victory.  Their vote will certainly be very important in the upcoming mid term elections.  So here's the crucial question....Can the Dems on The Hill move forward with Healthcare Reform while maintaining the independent vote, at least on the Healthcare Reform issue?  The answer lies in how independents view specific items within the legislation.

Healthcare Reform.. Aftermath of the Mass Nuke

All of my readers certainly have heard about Brown's stunning victory over Coakley in the Massachusetts special election and the loss of the Dems filibuster proof seat count in the Senate. There has been plenty of speculation on what this means to Healthcare Reform.  Some of you have asked for my opinion.  Well, we are slowing getting a glimpse of what may transpire in the future and at the moment I'm prepared to at least gaze into my crystal ball.  It sure looks like Dems will move forward with bits and pieces of the current legislation but some of the parts left behind, such as the huge subsidies to insure the uninsured, won't be good for Pharma. 

Biosimilars - Part II, High Entry Barriers

Following up on Biosimilars - Part I, where I blogged about what's in the legislation, lets now look at a crucial difference of Biosimilars relative to Generic Drugs. Even with the FDA's streamlined regulation, Biosimilar entry barriers to market are much hgiher than that of their generic, small molecule, counterparts. Here's a list comparing entry barriers faced by Biosimilars in comparison to generics:

Donut Hole Closure by 2014?

Update January 18th ... Donut Hole Closure in Jeopardy

With the Dems' a probable loss of Ted Kennedy's seat in the Massachusetts to Republican Brown in today's special election Dems are strongly considering a political move which would send the Senate version of Healthcare Reform to Obama's pen to avoid another vote in the Senate.  According to very recent polls, Brown has surged past Coakley.  This would mean, at least in this round of the legislation, no real closure of the Donut Hole.  The Senate plan chips off $500 of the Donut Hole but "the buck" stops there.

Update...January 15th to the Blog below, Reuters reports that indeed Pharma has been asked to

CMS Analsyis of Senate Legislation

On January 8th, Richard Foster, the Chief CMS actuary, released CMS' assessment of the savings and costs of the marked up Senate legislation.  It's interesting to see CMS's perspective on how the legislation will impact programs of concern to them.

Here's what's of direct interest to Pharma in terms of the 10 year impact from 2010 to 2019

•  Medicare Pharmaceutical MFG drug discount program - +$1.9 billion.  This Costs Medicare Part D more due to the insurance effect.  Pharma of course will be subsidizing beneficiary out of pockets to the tune of 50% or more costing Pharma up to $45 billion in lost revenue (my most recent estimates).
  
• Biosimilar Biologics provides savings (reduced revenue to Pharma and Bio) to Medicare and Medicaid of -$5.6 billion
• Medicaid Rebates - Increase in Standard Rebate Level for Brands -$8.7 billion and generics -$0.66 billion
  
• Medicaid Rebates - Extension of Rx Drug Discounts to enrollees of Medicaid Managed Care -$8.54 billion
• Medicaid Rebates - Revision of drug formulation rebates -$3.05 billion
  

Biosimilars - Part I

 Update - January 15th

The New York Times Reports that Obama is pressuring legislators to shorten the originator exclusivity period from the 12 years earlier settled upon by both the House and the Senate legislation.  Obama has been on the record in the past favoring a 7 year exclusivity period.

Update - January 16th

Pharma is threatening to withdraw it's support of Healthcare Reform upset over possible shortening of Biotech product market exclusivity period. The question is... Does the Hill still need Pharma's support? Answer... probably not.  The favorable PR impact for the Obama administration of the stunning early deal has already been fully capitalized upon.  Further, with all the bad press regarding recent Pharma price hikes, the voting Public will cheer loudly for politicians who have the industry within their gun sight.
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Original Blog

Healthcare Reform legislation will streamline FDA approval of follow on biologics in an attempt to lower entry barriers to the market. The goal of legislation is to increase competition in order to lower prices of Biotechnology drugs in a manner analogous to what Waxman Hatch did for small molecule generic drugs. 

Rather than to attempt to cover this meaty topic in a single blog I will cover it in a series. Part I, here, will cover what's in the legislation leaving the economic and market dynamic ramifications to subsequent posts.

So let's take a look at what exactly is in the healthcare reform legislation.

Bending The Pharmaceutical Cost Curve

Hot off the press.... Health Affairs published today 2008 CMS national healthcare expenditure data.  Growth in Rx Pharmaceuticals, at least in retail, has slowed to a very tepid 3.2% rate. See chart below.