Kickoff for Reform

Apr 01, 2009

Jill Wechsler
Despite the economic crisis and the soaring federal budget deficit, President Barack Obama maintains that reducing the number of uninsured and improving the quality of American healthcare will support economic recovery. The Obama health reform campaign was launched in February, when Congress approved the economic stimulus package. That bill boosted funding for Medicaid, provided support for laid-off workers, and funded health IT and research initiatives slated to make the nation's healthcare system more efficient.

The next round won't be as easy. The administration's preliminary budget plan for fiscal year 2010 proposes to establish a $634 billion reserve fund to support healthcare reform over the next decade. However, the proposal to get half the money from tax increases on the wealthy immediately met resistance from both Democrats and Republicans. Congressional leaders seem reluctant to finance expanded coverage by assuming future savings—which means that a lot of money will have to be found, now, for any major health system change to be implemented.

Pharma is slated to do its part by paying higher rebates for drugs purchased by state Medicaid programs. The budget plan seeks to raise almost $20 billion over 10 years by boosting rebates from 15 to 22 percent and revising the system for calculating payments. The administration also promises to boost generic drug utilization by prohibiting "collusion" between brand-name and generics companies to keep generics off the market, and by establishing a "workable regulatory, scientific, and legal pathway" for the approval of generic versions of biologic drugs. The plan projects only $9 billion in savings from follow-on biologics, which acknowledges support for an exclusivity period that maintains incentives for innovation.

A Seat at the Table

These initiatives and others were discussed at a White House health reform summit last month, the first in a series of regional gatherings in which healthcare constituents voiced wide-ranging views on how to expand coverage, cut costs, and improve care. At the initial summit, members of Washington's healthcare circles pledged to earn a seat at the table by agreeing to accept some painful changes.

Billy Tauzin, president of the Pharmaceutical Research and Manufacturers of America (PhRMA), used his two minutes to endorse disease prevention and chronic care management, which can save money while also increasing demand for medications. Pfizer chief Jeffrey Kindler backed universal coverage, but raised concerns about linking comparative effectiveness research to coverage decisions.

Despite all the talk of coalition-building, cracks have already emerged in the united front for health reform, with Republican leaders voicing reservations about a government-run health plan option, a "show-stopper" for insurers and employers. Meanwhile, two leading unions dropped out over disagreements about the public-plan option and employer mandates. Fears are that such rifts will widen as details emerge for cost-cutting and coverage requirements.

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