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Among the biggest winners in Thursday’s Supreme Court ruling to uphold the Patient Protection and Affordable Care Act is the drug industry, which played an intimate, if controversial, role in shaping the new law.
By expanding the number of insured Americans by as many as 32 million, the health care law will deliver drugmakers a vast new customer pool at a time of industry consolidation. It also will expand drug coverage for senior citizens in the Medicare program and speed up federal approvals of lucrative, high-tech biological medicines, both boons to the industry.
Not that drugmakers are all smiles. Industry leaders remain worried about stepped-up oversight under the system’s health insurance exchanges and about the specter of price controls imposed by a new Independent Payment Advisory Board that will recommend legislation to slow Medicare spending growth.
“I think there will be mixed feelings,” said ex-Rep. Billy Tauzin (R-La.), former president and CEO of the Pharmaceutical Research and Manufacturers of America and owner of the lobbying firm Tauzin Consultants, which is housed at the law firm Alston & Bird. Eliminating the Medicare drug coverage gap, known as the “doughnut hole,” and expanding access to biologic drugs are “a very good sign for manufacturers and patients,” Tauzin said.
But he said the IPAB “is going to be a problem for doctors and most patients in the country.” He added: “You’ll have government bureaucrats making decisions about what medicines are available to people under Medicare. So that’s a negative.”
These drug industry wins, moreover, came at a considerable political price. PhRMA, which represents pharmaceutical research and biotechnology firms, remains under fire from Republicans on Capitol Hill three years after it negotiated a health care compromise with Obama administration officials in the runup to the law’s enactment.
Led by Tauzin, a former Democrat who switched parties while in Congress, drug lobbyists agreed to halve the cost of drugs to seniors in the doughnut hole to produce $80 billion in health care cost savings over a decade. In exchange, Democrats agreed to ease federal approval of biological medicines and to drop plans to promote imports of low-cost drugs from more heavily regulated countries, such as Canada.
The deal prompted then-House Minority Leader John Boehner (R-Ohio) to accuse Tauzin in a 2009 open letter of cutting a deal with “the bully” to “steal others’ money as the price of protecting your own.” Tauzin left PhRMA in 2010, and the association replaced him with John Castellani, who had led the Business Roundtable — a group often critical of the Obama administration.