Pharma will benefit from US reforms for many decades “Potentailly over 39 million new customers"

Nov. 19, 2009 - PRLog -- The Pharmaceutical industry will benefit greatly from US reforms for many decades “Potentailly over 39 million new customers would create a windfall for the industry.”

As debate on the US Senate health reform legislation commences, likely this week, experts forecast that  pharmaceutical companies will feel  financial benefits of the reforms well into 2025.  Technically, Senators could begin their debate as early as Tuesday (November 17) but this seems unlikely for a number of reasons, not least of which is the fact that the Congressional Budget Office (CBO) had, by the end of last week, still not presented its cost estimates of the Senate proposals.

President Barack Obama has continued to declare that he will sign a final reconciled version of the House and Senate reform bills next month, but many members of both parties in Congress now believe that completion before Christmas is no longer possible.

Moreover, while pharmaceutical industry leaders at the Reuters Health Summit in New York last week were cautiously optimistic about the effects on their US businesses of extending health insurance to up to 39 million people who are currently uninsured.

Novo Nordisk chief executive Lars Sorensen told the conference that he was expecting “a drag on the top-line for a couple of years... and then the volume impact is going to come three years and onward,” while Murray Aitken, senior vice president, Healthcare Insight at market research firm IMS Health, forecast that the bigger overall impact of healthcare reform will be from 2012 to 2020 “and beyond.”

Last week, IMS issued a statement describing as “misleading and inaccurate” on-line media reports which claimed it had predicted that the effects of the health reforms, combined with a projected upswing in the economy, would lead to a net gain of more than $137 billion in total US pharmaceutical market sales over the next four years.

In October, IMS issued new forecasts suggesting that US market growth for 2009 would now be 4.5%-5.5% and 3%-5% in 2010.  Last week, IMS stated that the cumulative $137 billion difference between its April and October 2009 forecasts had taken into account many factors affecting the industry apart from any potential legislation - including the macroeconomy, the changing mix of innovative and mature products, generics, the rising influence of healthcare access and funding on market demand. The direct impact of current US healthcare reform measures embedded in the IMS forecast is less than 1% of projected total industry sales through 2013, the firm stressed.

But the claims made by on-line media sources (although not Pharma Times) that the industry was set to reap substantial benefits from the health reforms also drew a sharp response from the Pharmaceutical Research and Manufacturers of America (PhRMA as well as the National Association of Pharmaceutical Sales Representatives.

“Projecting annual prescription drug sales is notoriously tricky, evident by the fact that IMS Health has released three different forecasts for 2009,” said PhRMA senior vice president Ken Johnson. He added that IMS had not taken into account discounts and rebates “which can significantly lower the cost of drugs to payers.”

He also described the notion that pharmaceutical sales will increase dramatically during the forecast period “when major coverage expansions will kick in over the next few years, depending on what's in the final bill.”

Moreover, said Mr Johnson, IMS failed to take into consideration the 50% discount to be provided by drugmakers to most seniors and disabled Americans who hit the “doughnut hole” Medicare prescription drug coverage gap. “That provision alone is expected to save beneficiaries with spending in the coverage gap as much as $1,800 in 2011. What's more, under the House-passed bill, our companies will continue to provide that discount after the coverage gap is eliminated. These would be statutorily-mandated discounts - not voluntary discounts as some have suggested,” he said.

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The largest association in the United States representing over 53,000 pharmaceutical sales representatives.