Policy makers are proposing changes to Medicare as a way to reduce the annual deficit and tackle the nation's current debt ceiling crisis. One proposal would require drug manufacturers to pay the federal government a rebate for drugs purchased by low-income enrollees in Medicare Part D plans. The rebate would apply to prescriptions taken by dual eligibles (people eligible for both Medicare and Medicaid) as well as other Medicare beneficiaries who are eligible for low-income subsidies. On its face, it sounds like an attractive way to help ease the burden of entitlement programs, but in reality the negative impacts from this proposal could be far reaching.
According to the Congressional Budget Office, the proposal would save the federal government about $38B from 2012-2016 and about $112B over the 2012-2021 period, however, it is not expected to generate any significant savings in 2012, and only $4B in 2013, meaning it will do little to solve the immediate debt ceiling crisis. A reduction in revenues of that magnitude to the biopharmaceutical industry on top of the anticipated $90B cost to the industry from passage of the Affordable Care Act in 2010 could have harsh consequences for patients and the economy.
Joseph Antos of the American Enterprise Institute in his report Tampering with Part D Will Not Solve our Debt Crisis warns "If this policy is adopted, patients will bear the costs." He explains that the proposed policy could result in more restrictive formularies and increased copayments for all Medicare enrollees, and particularly the most vulnerable Americans - those with the lowest incomes and poorest health.
In a time when we need to do all we can to create jobs in this country, the biopharmaceutical industry should be one place we should be looking to grow, not weaken. A new report from Battelle Technology Partnership Practice estimates that a $20 billion per year reduction in biopharmaceutical sector revenue would result in 260,000 job losses across the U.S. economy. To help put that number in perspective, the biopharmaceutical industry currently supports nearly 675,000 direct jobs and an additional 3.4 million indirect jobs. Our country cannot afford to lose hundreds of thousands of more jobs, especially when the biopharmaceutical industry has already restructured and downsized significantly as a result of declining revenues due to patent expirations as reported earlier this year in the New York Times.
These are lean times in the industry, and in the country, but we should not lose sight of what's important. As the Battelle report highlights, the biopharmaceutical industry develops products that make the U.S. a world leader in innovation, help prevent and effectively manage disease and chronic conditions, improve quality of life, increase longevity, and reduce the likelihood that patients will need other more costly healthcare treatments (such as hospitalizations). We need public policies to help sustain these positive benefits for the economy and for patients.