When will biopharma speak up about 24 million uninsured?


In the wake of the release of the first firm plan to repeal and replace the US Affordable Care Act (ACA), doctors, hospitals, nursing homes and other providers spoke immediately about the risks to health insurance coverage. But not the biopharma sector.

Now with the first official estimates that up to 24 million people could lose coverage by 2026, the sector ought to be able to clearly see how the American Health Care Act will cause it to lose paying customers. But with the threat of the government possibly imposing price controls on drugs, biopharma likely does not want to risk opposing Congress and President Donald Trump’s administration on a separate matter of health insurance coverage.

Dropping out

The full House of Representatives is expected to vote next week on the legislation, which would ease mandates to purchase health insurance coverage and roll back subsidies for buying health insurance and funding for the federal Medicaid programme for low-income people. Having examined the American Health Care Act’s provisions, the Congressional Budget Office says it would result in 52 million people lacking coverage in 2026, compared with a forecast of 28 million uninsured under the Affordable Care Act.

An immediate effect would be felt in 2018, when 14 million would drop out either because they would no longer be penalised for failing to buy insurance or because the resulting rise in premiums would make insurance unaffordable. The rise would continue in 2020 when funding for expanding Medicaid coverage would be frozen and subsidies for purchasing individual health insurance policies would be replaced with tax credits.

Although any reduction in the number of paying customers needs to be watched with caution, the changes in Medicaid coverage have broad implications for biopharma, as enrolees in the programme have represented one of the fastest growing markets for prescription drugs. Medicaid spending on drugs has grown from $20bn to $32bn between 2009 and 2015, and from 8% to 10% of total prescription drug spending, according to the Center for Medicare and Medicaid Services.

Even before the estimates were known, hospital and physician groups were critical of the threat of the new act to health care coverage.

Rock and a hard place

However, the biopharma sector, which sees some relief in the form of a tax repeal, has said very little. The Pharmaceutical Research and Manufacturers of America (PhRMA) has not taken a clear position in opposition or in favour, merely a statement that “we look forward to continuing to work with [Congress] to enhance the competitive market, ensure patients have access to affordable health care and foster the continued development of new innovative medicines.” The Biotechnology Innovation Organization did not respond to a request for a statement.

PhRMA’s support for the Affordable Care Act was a signature moment in the effort to pass it. The group’s former chief executive, Billy Tauzin, a retired congressman, traded $30bn in drug discounts in exchange for a White House pledge to oppose efforts to allow Medicare to negotiate directly on drug pricing.

Today, with congressional action on the ACA repeal and Mr Trump’s pledges on drug pricing, everything seems to be back on the table (Obamacare repeal eliminates taxes, but pricing threat remains, March 8, 2017).

The industry has been much clearer about its feelings on price restrictions, and indeed has had its leadership meet with the president to discuss the matter. The risk for biopharma is that opposing Congress on its health insurance initiative could make the latter more receptive to price controls.

Yet, seeing the number of paying customers decline by 24 million – 14 million next year – is surely as big a risk to the sector as price restrictions. While there is clear political risk in opposing the ACA repeal, it would be unfortunate for the sector if it traded pricing freedom and lower taxes for a shrinking customer base. It is puzzling that its leadership has not expressed more concern.

To contact the writer of this story email Jonathan Gardner in Virginia at jonathang-us@epvantage.com or follow @ByJonGardner on Twitter

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