Data Management

A Life Sciences Industry Stance On Health Care Reform

Date Added: May 2010
Format: PDF

Now that health care reform has been signed into law, life science companies must make sure they fully understand the resulting mandates. Although the direct effects - such as new fees and taxes and an expanded consumer base - are relatively clear, there are many indirect effects that require careful assessment and planning. Also, the exact effects will likely be different for every company and industry sub-sector. This paper gives some key opportunities and challenges that see executives in life sciences wrestling with as they plan for the future. Insurance mandates are likely to extend coverage to over 30 million additional patients (with an estimated even split between Medicaid and Commercial).Price pressure may rise due to increased rebate requirements, episode based payments, new industry fees (starting at $2.5B in 2011) and pricing disclosure requirements. Prevention programs may result in more aggressive use of certain drug classes, creating greater market opportunities. Performance-based reimbursement tied to comparative effectiveness and outcomes could reduce the market for "Me too" products and create portfolio challenges. Anticipate new influencers. Health care reform expands the federal government's role as a customer for medicines and medical devices. But the new laws also have a huge impact on the life sciences industry's other highly influential customers, such as health plans, providers and state governments. These other influencers will face tremendous cost pressure, as well as other new requirements that will greatly affect what they do. For example, providers will be responsible for a patient's overall outcome - not just the part of the work they performed - and will be paid accordingly. Life sciences companies should consider these secondary impacts when deciding who to sell their products to - and how.