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Pharma and Insurance Concessions on Health Reform: What Now?

Pharma and Insurance Concessions on Health Reform: What Now?

Picture of Barbara Feder Ostrov

One question that's getting lost in all the chatter after Scott Brown's historic election and Nancy Pelosi ‘s defeated comments on health reform today is what's going to happen to the concessions that the insurance and pharmaceutical industries offered last year as serious reform discussions were just getting underway.  The Wall St. Journal offers some preliminary analysis, noting that some industry executives still expressed support for now-uncertain health reform efforts:

PhRMA, the drug industry association, as well as companies including Pfizer Inc., Johnson & Johnson, WellPoint Inc. and Humana Inc., voiced support for an overhaul of some kind, despite objections among insurers about the efforts to date. Trade associations representing the insurance, hospital and medical-device industries declined to comment.

For some companies, insurers in particular, the likelihood that pending bills were derailed spelled relief and presented an opportunity to push for legislation that better contained costs. Insurers would benefit from the increased number of customers envisioned in an overhaul, but the industry opposes the bills passed by the House and Senate because they contain new taxes and regulation.

Pharmaceutical companies stand to benefit under the proposed legislation as some 30 million newly insured Americans would become able to buy prescription medicines. Hospitals would gain since people currently without insurance-many of whom end up in hospitals unable to pay-would become insured. Both industries had pledged to support the effort with cost cuts, rebates to government and new fee payments.

Still, the question remains: are the old deals on life support given health reform's exceedingly uncertain future?

To recap: In March 2009, the insurance industry offered to stop charging sick policyholders more in a bid to avoid more stringent regulation. The industry's stated support for reform was seen as disingenuous when it was reported that some insurance companies were quietly financing anti-health reform political ads (and paying Facebook game-players virtual currency to oppose reform).

In June, the pharmaceutical industry announced it would provide discounts for Medicare drugs totaling $80 billion over the next decade.

Then, just before the Massachusetts election that erased the Democrats' Senate supermajority, Congressional representatives asked pharma to cough up another $10 billion in drug discounts in addition to its previous concessions, according to The Wall St. Journal and other news outlets.

It's worth staying on top of what happens to these deals, because they were a key part of health care costs in expensive legislation that didn't otherwise offer substantial cost controls. As Democratic leaders pick up the pieces from a year's worth of negotiation, watch for future announcements – or, more tellingly, silence – from insurance and pharmaceutical industry leaders.  

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