As expected, the Obama administration has made health care reform a high priority in its first proposed budget and plans to pay for it in part by reducing tax breaks for the wealthy.


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Health care reform on fast track

March 16th, 2009

WASHINGTON – As expected, the Obama administration has made health care reform a high priority in its first proposed budget and plans to pay for it in part by reducing tax breaks for the wealthy.

The budget, which was unveiled late last month, establishes over 10 years a reserve fund of $634 billion that is acknowledged to be a first step, or “down payment,” for a program intended to enable all Americans to have health insurance coverage.

The $634 billion fund does not include such recent health care expansions as $32 billion slated to expand coverage for children of low-income workers and $19 billion intended to hasten the adoption of electronic health records.

Half of the reserve will be funded by new revenue to be generated by progressive tax measures aimed at the wealthy, while the other half will be derived through savings proposals designed to improve efficiency and accountability among health care providers, insurers and drug manufacturers.

“In the last eight years premiums have grown four times faster than wages,” President Barack Obama said during a speech to both houses of Congress two days before the budget was issued. “And in each of these years, 1 million more Americans have lost their health
insurance.

“It is one of the major reasons why small businesses close their doors and corporations ship jobs overseas. And it’s one of the largest and fastest-growing parts of our budget.”
According to the administration, though, the program is not intended to sweep away the entire established health care structure. Rather, it seeks to build on the existing system, including current health plans.

It does, however, aim to curb the power of insurance companies and make them more accountable, allowing people to make health care decisions with their doctors rather than seeking approval from insurance workers.

Some of the key features of the plan are:
• Insurance companies would be required to cover preexisting conditions.
• A National Health Insurance Exchange would be established that would offer a range of private insurance options as well as a new public health plan that would allow individuals and small businesses to obtain affordable health coverage.
• A small business health tax credit would be created to help small businesses provide affordable coverage to their employees.
• Insurers would be prevented from overcharging doctors for malpractice insurance.
• Large employers that do not offer health coverage would be required to contribute a percentage of their payroll toward the health care costs of their employees.

In addition to the $19 billion already allocated to promoting the adoption of health care information technology, doctors and hospitals who participate in Medicare will receive temporary incentive payments for using certified electronic health records, followed by penalties starting in 2015 for failure to use such a system. Incentives will also be extended to Medicaid providers.

The response from some health care trade organizations was enthusiastic.

“President Obama’s speech was one that offered ideas, inspiration and hope for the American people,” said Bruce Roberts, executive vice president and chief executive officer of the National Community Pharmacists Association. “The president’s emphasis on health IT is consistent with the mission of our association.

“We look forward to seeing the fiscal year 2010 budget presented to Congress and are encouraged that President Obama will assure community pharmacists a seat at the table in the overall health care debate.”

Another key feature of the program for generic drug manufacturers is its determination to establish a new regulatory path for the approval of generic biologics, which represent the fastest-growing segment of the pharmaceuticals industry.

To maintain research and development incentives, branded manufacturers would receive a period of exclusivity “generally consistent with” the principles of the Hatch-Waxman Act for traditional pharmaceuticals.

However, branded biologics makers would be prohibited from reformulating the products they develop into new drugs in order to extend exclusivity, and the administration will attempt to prohibit collusion and anticompetitive agreements between branded and generics makers to keep new generics off the market.

“For patients across the country suffering from cancer, diabetes and other diseases, the support stated by President Obama for a workable biogenerics approval pathway is lifesaving news,” said Kathleen Jaeger, CEO of the Generic Pharmaceutical Association. “The exclusivity provisions of Hatch-Waxman have been a successful model, fostering innovation and competition while saving hundreds of billions of dollars, and this same success can be achieved with biogenerics.”

As part of a mammoth $3.6 trillion budget that was immediately denounced by Republicans, who are calling for more fiscal restraint, the health care plan may face tough sledding in Congress, particularly in the Senate, where the opposition party has enough votes to block legislation.

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