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How Will Obama HIT Biopharm?


As 2009 gets started and a new president takes office, the Biopharma industry is left wondering if Obama will be a friend or foe when it comes to healthcare information technology.

Natives and visitors to New York greeted the New Year in Times Square and Central Park seemingly impervious to the freezing temperature outside. Champagne bottles were popped at midnight as a magnificent fireworks display reflected off thousands of windows on high-rise office and apartment buildings nearby. The crowd seemed to shrug off the economic doom and gloom that infected most of 2008. There was lots of hopeful talk about Obama and sympathy for the difficult problems that he is inheriting. Everyone is wishing that things will go better in 2009.

And so do we in the Biopharma industry where many are not sure if the new guy in the White House is friend or foe. This is especially so in the United States, a country where free market capitalism is fiercely defended and anything that smacks of socialism is treated with great suspicion.

So what can we expect from Obama on the Healthcare Information Technology (HIT) front?

First, consider why nothing will happen fast:

  • Legislation moves serially through the House, Senate and then the Office of the President;

  • Democrats and Republicans fight each other on the issue of “big government”;

  • Lobbyists come out in droves to twist the legislation to their liking;

  • Various government agencies weigh in with competing suggestions for solving the problem;

  • The population at large gets a chance to make comments and participate in hearings;

  • Academic, not-for-profit and private institutions come out to defend and push the programs they have nurtured;

  • Healthcare consulting firms attempt to convince legislators and government agencies that they are the ones who know how to fix it all;

  • Software firms try to show anyone who will listen why their solution is the best way to manage everything;

  • Everybody asks “but how can we pay for it?”

Second, evaluate how Obama is likely to behave:

  • He is moderate: Although he won the election as a populist who supports the powerless, he is not really a liberal or a leftist. His academic and thoughtful approach to issues indicates that he will act in moderation;

  • He is realistic: The current economic mess should lead him to conclude that doing anything that would weaken any industry that is still doing well (e.g. Biopharma) needs to be protected rather than chastised;

  • He is pragmatic: His appointments to date (although not yet at the FDA) show that inexperienced and/or idealistic people may be right but will not the ones needed to get the job done. Washington is a tough place to do business and insiders are the ones that can make things happen;

  • He knows how to lead: Given a difficult set of issues, he knows that it would be impossible to micro-manage anything. He has said that it’s his job to set goals and priorities and for others to do the heavy lifting. This is a key reason why something will happen on the healthcare IT front.

Third, rank the issues where IT is a significant part of the solution:

  • Covering the uninsured: Without question, this is the number one healthcare issue in the United States.  To make it a reality, it will be necessary to reduce the cost of almost every other part of healthcare which now consumes 16% of GDP. The mantra of “doing more with less” is very much in evidence here and it can’t get done without a healthy dose of information technology. Electronic Health Records (EHR) will only be one of many solutions needed to improve both the medical and administrative parts of healthcare.

  • Managing patient data: EHR is widely perceived to be a requirement for reducing the cost of healthcare while improving patient care. After years of experimentation there is still no consensus on how the USA can get this right. Indeed, it is certain that in a free-market economy (see above) there won’t be a single solution. The implementation problems experienced in the UK will pale in comparison. Yet, it will happen because the desire, if not the means, is there.

  • Electronic prescribing: It is hard to imagine why the majority of prescriptions are still scribbled on pieces of paper by physicians. Determination on Obama’s part, backed by popular support, may finally force doctors to get on board. Expect this initiative to ride in on the coattails of EHR.

  • Curbing counterfeit and adulterated drugs: Widely reported deaths and injury caused by counterfeit and adulterated drugs have put tremendous pressure on the FDA to solve this problem. Bending to political pressure, the FDA’s response has been to step up inspections of foreign raw material manufacturers and ask for more money to hire more staff and improve its IT infrastructure (e.g. build a better database of foreign manufacturers). Such a knee-jerk reaction points to the inability of the FDA to come up with realistic strategies and plans or understand how IT can best be leveraged to enable the solution.

Fourth, consider the FDA mystery:
The words “much aligned” is now a recurring phrase in news reports about the FDA. One could argue, for example, that the FDA is not “in bed” with the Biopharmaceutical industry that it supposedly regulates. It could also be argued that inspecting every raw material manufacturer or finding every shipment of counterfeit drugs are impossible tasks.

History, however, has shown that the FDA is barely getting the job done. Its leaders, with the possible exception of Mark McClellan, had trouble aligning their political mandates with the public good. Its use of user fees to beef up its staff and systems looked promising at the start but ultimately proved disappointing. Those paying the fees are not getting the service levels they were expecting while critics use the fees as yet another example of the “incestuous” relationship between the agency and the drug sellers. Without proper leadership, the worker bees do their best to get their jobs done under current mandates and practices. Progress is evolutionary since the heads of the various ‘Centers’ (e.g. CDER, CBER) are unable or unwilling to stick their necks out.

The greatest mystery is not knowing who will be Obama’s new FDA commissioner. As always, there are lots of guessing, lobbying and punditry. Given that Obama still has a lot to learn about the FDA, we can only surmise that many of the programs (e.g. PDUFA IV safety initiatives) that have already started will continue. What new programs will see the light of day (e.g. labeling reform) remains to be seen. This should continue to be the case even though Dr. Frank Torti has been named as acting commissioner.

Finally, recognize the confounding factors:  Ultimately, what the FDA does will depend on the ability of many influential players to get mindshare for their own objectives.  This includes the initiatives that will heavily depend on information technology. Tom Daschle, the new Secretary of Health and Human Services (HHS) will most likely push for greater control over what benefits are covered, expand  comparative effectiveness research, and put the government behind infrastructure investments. There is already evidence for the latter in Obama’s proposed economic stimulus package that calls for a national grid for moving data between hospitals.  Peter Orszag, Obama’s Budget Director, will try to attack the causes of out-of-control healthcare spending like reducing the prevalence of childhood obesity. He may also focus on programs that absorb a disproportionate part of the healthcare budget.

These are just two of the hundreds of individuals who have their own ideas about healthcare. It is just impossible to tell right now which of them will see the light of day. Paraphrasing the famous Chinese proverb, in the coming years expect to be “living in interesting times.”  

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