Revisiting Reform - Pharmaceutical Executive


Revisiting Reform

Pharmaceutical Executive

More Oversight

While pharma companies traditionally look to Republican allies in Congress to champion patent protection and product exclusivity issues, GOP leaders still are smarting over PhRMA's support for Obamacare. As part of its investigation into HHS implementation of health reform, House E&C Committee chairman Fred Upton (R-Mich.) is looking hard at the "secret negotiations" between the White House and healthcare interest groups, including pharmaceutical companies, leading up to enactment of the reform legislation.

Keeping Drugs "Essential"
Upton and his colleagues also are scrutinizing the HHS process for granting states and payers waivers from complying with specific ACA rules. The legislators want to know more about how HHS is devising new rules governing the health insurance market, including the process for developing standards for "essential benefits" that will shape medical and drug coverage (see sidebar).

FDA operations also are under scrutiny. The E&C Health subcommittee held a hearing in February to discuss whether FDA's too-slow process for approving more complex medical devices for market is harming the US device industry. And Republicans once more are probing the three-year-old heparin crisis, complaining to FDA commissioner Margaret Hamburg that still no one knows the source of the adulteration nor the Chinese culprits—while imports in pharmaceutical ingredients from China are booming.

In addition to hauling administration officials up to Capitol Hill to explain their actions, Congress is moving forward with efforts to revise portions of the ACA. In the "low-hanging fruit" department, both Democrats and Republicans want to repeal the 1099 reporting policy, a burdensome rule that requires businesses to report to the IRS any expenditure over $600. The trick is to find the $22 billion needed over 10 years to offset theoretical revenue gains from the policy.

Obama also supports revisions in medical liability policy, something that Republicans have long championed as a way to reduce "defensive" medicine. A House bill proposes to set caps on damages, limit the time for filing suits, and curb attorney's fees, but faces strong opposition from trial lawyers and some patient groups. Clear evidence that the policy would save money by reducing inappropriate care could help it move forward.

Eliminating Entities

That's where bipartisanship ends in the health reform arena. President Obama recently told the nation's governors that states may opt out of exchanges and the individual mandate—if they can devise alternative ways to cover more of the uninsured with comprehensive benefits, at no extra cost to Washington. While this was considered a major concession by the White House, Republicans labeled it a "fig leaf" that didn't really increase local choices.

Instead, Republicans want to eliminate new entities that they consider examples of federal government overreach into state and private sector activities. Republicans don't want to spend $10 billion over 10 years on the Center for Medicare and Medicaid Innovation, which supports research and testing of new reimbursement and coverage approaches for health programs. And there's even skepticism about federal investment in comparative effectiveness research and the need to spend $500 million a year in appropriated funds on the Patient-Centered Outcomes Research Institute.

The impasse on Capitol Hill over how to cut federal spending points to the need to tackle ever-rising healthcare costs, something that the ACA fails to accomplish. Policymakers recognize that eliminating a few programs will do little to bend the healthcare curve in the face of an aging population, rising obesity, and provider reluctance to shift away from pay-for-volume and towards new models that support prevention, coordinated care and risk assumption.

These trends are transforming drug markets, shifting the focus to long-term product efficacy, safety and costs, supported by core data collection and analysis. All aspects of drug development and marketing are under scrutiny, as seen in recent challenges to the billion-dollar estimates for bringing a new drug to market.

Jill Wechsler is Pharmaceutical Executive's Washington correspondent. She can be reached at


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