Fear of ObamaCare
Of the 30-plus consultants, academics, and other experts Pharm Exec talked to, most are optimistic about Obama. "The Obama administration creates a very complex and exciting environment for
pharma," says Carolyn Buck-Luce, choosing her adjectives carefully. "There will be more net benefits than risks. Pressure
over prices will be outweighed by the commitment to healthcare expansion."
The Bruckner Group's Michael Russo agrees. "Obama's going to do a lot of the right things. Some of it may hurt in the short
run, but the industry will be much better off for it," he says. "The question is: Do pharma leaders want the right things
for the long-term health of the industry?"
Even Billy Tauzin, head of industry trade group PhRMA, is upbeat. "I have a growing optimism about what the new year holds
for the industry, based on my conversations with Obama's advisors and transition team. They believe a lot of things in common
with us," he says, ticking off expanded and higher quality healthcare coverage, prevention and wellness, and a revitalized
FDA. "They have definite views on policy, but they're open-minded and want to hear from us."
Obama is a science booster, who has pledged to increase funding to the federal research establishment and restore its independence
from the faith-based lobby. One of his first acts as president is expected to be the signing of an executive order lifting
Bush's ban on federal funding for embryonic stem cell research.
Healthcare Reform And what's not to love about many more millions of newly insured people filling new scrips? According to the Boston Consulting
Group, healthcare reform's enhanced safety net is likely to deliver an annual $17 billion in additional prescription drug
sales. "Certain classes of drug are going to be taken up at enormous rates," says Mason Tenaglia. When Part D was introduced,
many seniors who previously had no prescription coverage upped their scripts from one to four a month once covered. We can
expect a comparable uptake with expanded access."
However, for an industry that sees itself as fettered by regulation, Obama poses some real threats. Lower drug prices are
widely viewed as inevitable, while price controls are not as unimaginable as they once were. On the campaign trail, candidate
Obama was frequently heard to say that he would "take on the drug and insurance companies and hold them accountable for the
prices they charge and the harm they cause." Yet the apparent centrism and pragmatism on display in his transition raise hopes
that President Obama will not walk that walk. "Industry should be a bit encouraged. In the past Obama has given signals that
he favors a balanced approach that also incentivizes innovation," says Daniel Kracov. "The hope is that his cooler head will
filter down to every level of the new administration. But there are a lot of forces out there that could turn this into a
frenzy against pharma."
Comparative Effectiveness Obama proposes a national insurance marketplace that includes a government-run coverage option along with private ones. Tom
Daschle, tapped to head not only HHS but also a new White House Office of Health Reform, advocates further regulation in the
form of a federal health board, which would make coverage decisions for all government-run health plans. "Value for money"
animates Daschle's agenda, as do the efficiencies promised by cost-effectiveness and pay-for-performance. The studies would
be done by an "independent" comparative-effectiveness institute run by Daschle and other federal healthcare honchos along
with "experts" in and around the field. Most alarmingly for pharma, Daschle wants to link tax breaks for private payers to
compliance to these coverage decisions.
But it will take time to hammer out the details of such an institute, including pharma's role in it—if any. "Comparative [effectiveness]
and cost effectiveness are at about where safety was five years ago," says Richard Gliklich, MD, the CEO of Outcome Sciences.
"There's a lot of momentum, the industry as a whole is moving the ball forward, and policymakers and the public are getting
up to speed."
Price Controls Most of Pharm Exec's sources agree that price controls are off the table. Says Billy Tauzin: "The Obama administration and the Senate are more
concerned with getting something done on the big healthcare issues, rather than starting that political war again." Tufts
University's Ken Kaitin also nixes the notion. "Obama and his advisors understand that price controls effect innovation and
new product development," he says. As for Daschle's federal health board, "A NICE would never fly in the US," says Gary Liberson.
"Congress got involved in [a case of] a woman on life support who was brain dead. Would our elected officials tell a dying
patient he or she can't have a lifesaving drug?"
In the end, economic woes are more likely than ideological wars to stall healthcare reform. "We won't be taking over the hospitals
the way we took over the banks," says Shire's Charlotte Silbey. "We'll only have the money to do some basic things like coverage
for poor children and maybe veterans' rehabilitation." She notes that Obama's $600-billion-and-counting economic stimulus
package includes funding for electronic health records and a general IT upgrade.