Note: politics ahead. This will not be a regular feature around here, but when events warrant, it'll rear its scaly head.
BioCentury has an interesting piece this week on the growing budget impasse and its implications for both academic and industrial biomedical research. It's already widely known that the so-called "Fiscal Cliff", the budget sequestration process that will trigger if no better deal is reached, will perforce come after funding for both the NIH and the FDA. It's always tricky to figure out the impact of such spending cuts, due to the well-known "Washington Monument" tactic. (That refers to the way that if you try to cut the budget for, say, the Park Service, the first thing they'll do is close the Washington Monument. After all, you are having to save money, right? And if you can do it in a way that causes the most outrage and inconvenience, thus increasing the chance that your budget will be restored, well, why wouldn't you?)
So that means that I don't necessarily believe all the predictions for what sequestration would do to any given agency's budget. But there's no doubt that it would have a powerful effect. At the very least, current plans for increased services or expanded programs would immediately go into the freezer, and there would be layoffs and program cancellations on top of that. New NIH grants would surely be hit, and the approval process at the FDA would slow down. Budget sequestration would not mean The End of Science in America, but we'd feel it, all right.
The flip side of budget-cutting is raising revenue. And for that, we can (among many other places) turn back to the deals made with PhRMA when the Affordable Care Act (aka "Obamacare") was passed. Says BioCentury:
Many of the deficit reduction playbooks Congress and the White House will consult include recommendations to suck money out of the pharmaceutical industry. These include a number of proposals that were taken off the table in the PhRMA deal to support the Affordable Care Act.
Near the top of the list: Imposing rebates on drugs purchased under Medicare Part D by so-called “dual-eligibles,” individuals who are eligible for both Medicare and Medicaid.
The Obama administration’s proposed fiscal 2013 budget projected $135 billion in revenues over a decade from dual-eligibles rebates. The idea, which is anathema to PhRMA, was also endorsed by the National Commission on Fiscal Responsibility and Reform chaired by Alan Simpson, a former Republican senator from Wyoming, and Erskine Bowles, President Clinton’s chief of staff.
The White House is also likely to continue to press for reducing the exclusivity period for biologics to seven years from the 12 years established when Congress created a biosimilars pathway in the Affordable Care Act.
Some readers may recall that I predicted something like this. There's a quote from the head of a health-care consulting firm, who says that "Everything that was taken off the table is back", and I can't say that I'm surprised. The twelve-year exclusivity idea had already been on the block to be chopped; I assume that one way or another, it's a goner.
Here's another provision of the Affordable Care Act that could affect the pharma industry. Starting in 2014, health insurance plans will have a defined "minimum level of coverage", which will be determined state-by-state. Late last year, the Department of Health and Human Services said that it plans to require that "essential" will mean one drug in each therapeutic class, with that one drug to be determined by some process I can only imagine. That idea hasn't been popular, with either drug companies or patients, and one might expect to see it altered. But not without a huge amount of wrangling, that's for sure.