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Vote brings US health reform closer

Published on 10/11/09 at 01:28pm
We the people
There are vocal opponents to more government control of healthcare

Momentus reform of America's healthcare system is a step closer following the passing of a bill in the House of Representatives - but the US pharma industry has warned it would be a blow for drug discovery if the legislation is not altered.

The House of Representatives voted on the bill on Saturday 7 November, with the bill being approved by the narrowest of margins, 220 votes in favour, with 215 against.

The next step is for the Senate to approve its own version of the reform, and then for these two different bills to be reconciled and combined into one.

President Obama hailed the vote as "historic" and said he was "absolutely confident" that healthcare reforms would become law by the end of the year.

"Tonight, in an historic vote, the House of Representatives passed a bill that would finally make real the promise of quality, affordable healthcare for the American people," he said.

"The United States Senate must follow suit and pass its version of the legislation. I am absolutely confident it will, and I look forward to signing comprehensive health insurance reform into law by the end of the year."

While new legislation is looking increasingly likely, the important details of how the system will work and how much it will cost individuals, employers and the country as a whole remain undecided.

The House bill would require employers to provide insurance coverage to all their employees, while a parallel plan from Senate Finance Committee would not.

The now narrowly approved House legislation has many opponents, including many Democrats in the House, who are unhappy with its cost to taxpayers and its use of a 'millionaires tax' to fund the overhaul.

The cost of implementing the bill over 10 years is estimated at $1.2 trillion, significantly more than the plan put forward by President Obama ($900 billion) and that of the Senate Finance Committee.

Industry opposition

The pharmaceutical industry is among the opponents of the House bill.

The US industry body PhRMA says it still supports the overall goal of reform, but says the House bill is not the answer.

"We are disappointed, but not surprised by today's vote - an uneasiness echoed by millions of hardworking Americans as well as nearly half of the members of the US House of Representatives who voted against the bill," said PhRMA senior vice president Ken Johnson after the bill was passed.

"While well intentioned, the bill - as passed - would have the unintended consequences of killing tens of thousands of jobs in our industry at a time when the American economy is struggling and unemployment has soared above 10%.

"This is absolutely the worst time to be putting additional strains on the economy with punishing job losses," he added.

PhRMA is concerned about the bill's solution to the pressing problem, the so-called 'doughnut hole' in the Medicare D insurance system covering medicines costs.

The 'doughnut hole' refers to the disappearance of insurance coverage once a level of medicines cost is reached, and is only restored once costs rise much higher.

The House bill's solution to this is to impose mandatory rebates from pharma companies, which PhRMA says would squeeze pharma revenues and end up costing patients more, as costs would be passed back to them through higher insurance premiums.

The industry organisation cites a report by the non-partisan Congressional Budget Office, which says mandatory rebates would reduce incentives to invest in R&D.

But Ken Johnson reiterated PhRMA's support for reform, and said universal healthcare coverage was the defining goal: "Done in a smart way, health care reform will benefit patients, the economy and the future of our nation."

PhRMA is backing the Senate Finance Committee's proposals, which it says "provides the best blueprint for comprehensive reform".

Johnson said he hoped the Senate would seriously consider the impact any final legislation will have on US jobs and innovation, and indicated that flawed legislation could harm pharmaceutical innovation.

Another major issue for pharma and biotech companies are plans to include new legislation on market exclusivity for biologics, and new clearer rules on biosimilars to provide competition to existing biotech drugs.

President Obama has proposed a seven-year period of market exclusivity, but lobbying by the industry has helped promote proposals which would see a 12-year period made law.

Both the House bill and the current Senate proposal both advocate a 12-year period. A report by the Federal Trade Commission concluded that biologics needed no market exclusivity guarantee, as the difficulty of producing biosimilar versions (in addition to the patent protection) would provide sufficient exclusivity.

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