By Tracy Staton
Everyone's a winner with the pharma industry's $80 billion in concessions to healthcare reform. Or so analysts are saying. Political types claim President Obama's reform plans got a jump-start from the government's deal with drugmakers. Washington-watchers say the powerful special-interest group AARP pulled one over on drugmakers, which have resisted the group's efforts to close the so-called Part D donut hole. (The industry wanted to help low-income seniors, specifically, while AARP wanted help for all seniors, the Wall Street Journal reports.)
But to hear pharma analysts talk, it's the industry itself that gained most from the deal. Originally, Congressional leaders wanted drugmakers to give up $130 billion in savings. Pharma got away with $80 billion, about 38 percent less. An estimated $30 billion of that amount goes to the donut hole, but drugmakers could recoup part of that, provided the 50 percent branded-drug discount spurs more seniors to stick with name-brand meds rather than switch to generics.
"Roughly 20-25 percent of Medicare D patients reach the donut hole, and the majority of them either stop or switch their medications," Deutsche Bank analyst Barbara Ryan said in a research note (as reported by Reuters). "Therefore, pharma may be providing discounts for branded drugs which will primarily represent incremental demand."
Plus, the deal gives drugmakers some ammo to fight off less-attractive proposals. Repeal the DTC tax break? Not so fast. Direct government price negotiation? Not apart from Medicaid. "Healthcare reform, for the pharmaceutical sector at least, now doesn't stand there as being open-ended, with a worst-case scenario of virtually everything going to generics," one healthcare fund manager told Reuters. "That's no longer the case; you can move on and manage it from here." We'll have to wait and see whether Big Pharma cuts back on lobbying expenses next quarter; so far this year, the industry has ploughed millions into pushing its own reform agenda.
- see the WSJ Health Blog post on AARP
- read the Reuters analysis
- check out some calculations at Seeking Alpha
- get the numbers on pharma lobbying from BNet Pharma
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Read more about: analysts, Medicare Part D, Medicare, healthcare reform
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