Health Care Reform Frequently Asked Questions

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Why do biopharmaceutical companies support health care reform?

We believe that the new health care reform law will benefit patient care, bolster future medical progress and help millions of uninsured Americans - who are often forced to forgo needed medical treatments - access health care coverage and services. Ultimately, we believe that patients were the winners with the passage of health care reform.

Importantly, we can all have peace of mind knowing that the health reform law will prevent insurance companies from denying coverage for patients with pre-existing conditions. And, it provides incentives that boost preventative care coverage and services so that patients can take measures to stay healthy and out of a hospital for emergency care. This can ultimately save money in the health care system because emergency care is a driver of health spending in the U.S.

Preventative care is especially important because of the impact chronic disease - such as cancer, heart disease and diabetes - has on the health care system and the U.S. economy. Chronic disease - which accounts for 75 cents of every health dollar - can often be prevented or managed inexpensively with proper health care.

The impact of chronic disease on national, state and local economies is staggering. In fact, according to the Milken Institute, the impact of lost workdays and lower employee productivity as a result of chronic disease has resulted in an annual economic loss in America of more than $1 trillion.

How does the new health care reform law directly impact the biopharmaceutical industry?

Generally speaking, we believe that the health reform law supports medical innovation conducted by the most research-intensive sector in America - the biopharmaceutical industry.

We are fortunate that most biopharmaceutical research and development (R&D) takes place in America, providing good jobs for American workers and early access to new treatments for patients. We can continue to be the world leaders in the discovery of new medicines only if patient-centered policies - such as those found in the new law - are in place that encourage innovation and reward the often painstaking process that goes into developing new medicines, which take, on average, 10 to 15 years and more than $1 billion to develop.

The law includes a number of provisions that will be costly, such as increases in the mandated federal rebates as part of the Medicaid program, mandatory discounts in the Medicare program to help close the Medicare Part D doughnut hole, and a fee levied on brand manufacturers.

But these policies are less damaging than some proposed policies which could have significantly damaged medical innovation and patient care. For example, proposed public policies included:

  • Prescription drug importation - which would have allowed American consumers to purchase foreign medicines that would not necessarily be approved by the U.S. Food and Drug Administration. Such a scheme could put patient safety at risk because of the dangers posed by the worldwide counterfeit medicine threat.
  • Government price controls in the Medicare prescription drug program, which could have restricted seniors' access to medicines.
  • A proposal that would have almost cut in half the amount of time for biopharmaceutical companies to recoup their investments in the development of complex biologic therapies which cost, on average, $1.2 billion to develop. In the end, the law awards 12 years of data protection for innovator biologics.

But what about all the money our industry has to contribute to pay for health reform. Isn't it in the billions of dollars?

It is true that the biopharmaceutical sector's contribution is very significant. But supporting health care reform is the right thing to do. Our contribution to reform will help many Americans receive better health care. And thank goodness, now when we discover a new treatment, we can be confident that the patients who need that medicine will be able to afford their insurance coverage - and won't be locked out of the market because they're ill and have a pre-existing condition.

We're also helping senior citizens who are receiving their prescription drug benefits through the Medicare prescription drug program (Part D). America's biopharmaceutical research companies agreed to pay 50 percent of eligible seniors' brand-name medicines when they hit the doughnut hole in Medicare Part D.

The doughnut hole is a period when seniors have to pay the full cost of their drugs because they've surpassed the initial prescription drug coverage limit covered by their Medicare Part D plan. This period occurs when a beneficiary spends $2,830 and ends at $6,440, when the beneficiary reaches catastrophic coverage and the Part D plan starts paying for prescription coverage again.

We should feel good knowing that biopharmaceutical companies are helping seniors, who otherwise may have had to forgo taking their medicines when they reach the doughnut hole.

How will the health care reform law directly impact me?

As we all know by now, the new health reform law requires nearly everyone to have insurance and that many different factors - such as age and income - will determine how the law impacts you individually. It's important to realize, however, that many of the provisions do not take effect immediately. In fact, many will not go into effect until 2014. (See the separate attachment that includes a timeline for various provisions in the new law.)

While it is nearly impossible to accurately estimate the impact the health reform law will have on each person, there is an online tool offered by The Washington Post that might help you better gauge how the law could affect your own health care coverage and taxes. Click on this link and it will direct you to the website: http://www.washingtonpost.com/wp-srv/special/politics/what-health-bill-means-for-you/.

PhRMA cannot vouch for the accuracy of the health care reform calculator offered by The Washington Post, nor should we be held responsible if the calculator identifies unreliable information.

Will the health reform law have an effect on the amount of money biopharmaceutical companies spend on R&D?

Research represents the very backbone of our sector. Despite a challenging economic environment, investment in R&D by America's biopharmaceutical companies has remained strong. In fact, the biopharmaceutical industry as a whole invested an estimated $65.3 billion in R&D in 2009, up from $63.7 billion in 2008. This tremendous investment supported research on over 2,900 medicines in the pipeline, including more than 1,000 medicines to fight chronic diseases, the number one killer and leading driver of health care costs in the U.S.

Is it true that the health reform law will bankrupt America? Will our children have to face a tremendous financial burden because of this new law?

Simply put, we believe that we couldn't afford to not take action. Enacting comprehensive health care reform has certainly been a challenge, and the final law may not be perfect. But it promises coverage for millions of uninsured Americans, promotes health and wellness for all, and creates some important incentives that help preserve America's status as a world leader in innovation.

As parts of the law take effect, you and your family and friends may see a real difference in terms of lower out-of-pocket costs for health care, and an end to denials of insurance coverage for pre-existing conditions.

With millions of uninsured Americans gaining access to health care coverage and services, patients will be able to treat their conditions before they get worse. This is especially important for patients suffering from chronic disease, a top health care cost driver in America. Better access to needed care and treatment could eventually lead to a bending in the health care cost curve.

Will the health care reform law jeopardize advancements made in medicine?

While companies will have to work hard to meet the financial obligations required by health care reform, we are proud to do it because we firmly believe in doing our part to improve the health of all Americans. At the same time, research will always remain the backbone of our work. We remain committed to doing all we can to ensure that life-saving and life-enhancing medical advances will continue well into the future. We should all be proud of the amazing work that has been done by our very own biopharmaceutical researchers who, over the past several decades, have developed medicines that have revolutionized how patients battle disease and helped save millions of lives. Here are just a few outcomes of this incredible work:

  • According to the American Cancer Society, cancer death rates dropped 19.2% among men from 1990 to 2005 and 11.5% among women from 1991 to 2005. The ACS partially attributed this drop to advances in treatment.
  • According to the American Heart Association, from 1999 to 2005, the cardiovascular disease death rate dropped 26.4%, while the death rate specific to coronary heart disease declined 34.3% during the same period.
  • Since the introduction of highly active anti-retroviral therapy in 1995, the annual number of deaths due to AIDS has dropped by more than 70%, according to the Centers for Disease Control and Prevention.

What do we say to our neighbors who have read in the newspapers that our lobbyists unfairly killed proposals in the health reform bills that would have helped lower costs and improved patient care?

We looked at all proposals throughout the health reform debate and considered the impact each one would have on patient care and safety and the search for future treatments and cures. With respect to some proposals - such as prescription drug importation and price controls in Medicare Part D - we determined that they could restrict patient access to needed medicines and even endanger the lives of Americans because of the worldwide counterfeit medicine threat.

We publicly voiced our concerns that these provisions ran counter to the intent of health care reform, which is to help millions of uninsured Americans access high-quality, affordable health care coverage and medical services, as well as safe medicines. And, we weren't alone with our concerns. Many other healthcare stakeholders - including patients - also had problems with these harmful policies.

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