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. 

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.

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:

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".

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.

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.