High Court Upholds Affordable Care Act and Pharma-Related Provisions
Published June 29, 2012 in Drug Industry Daily
http://www.fdanews.com/newsletter/article/print?issueId=15912&articleId=147559
Drugmakers should view Thursday’s landmark Supreme Court ruling on the 2010 Affordable Care Act (ACA) as an overall victory, industry analysts and consultants say. Despite manufacturers remaining on the hook for increased Medicaid rebates and closing the Medicare Part D coverage gap, the High Court left in place a regulatory pathway for biosimilars and kept health coverage of 30 million new, potential patients who didn’t have good access to pharmaceuticals before.
Stakeholders’ eyes now turn to agencies like the Centers for Medicare & Medicaid Services, which will begin further implementation of the law. Dan Mendelson, CEO of Avalere Health, told DID he expects a flood of new regulations to come online as the end of the administration’s term brings a rush to finish such tasks.
“On balance, [the ruling] is a positive construct for the industry,” Mendelson said. It’s also far less dramatic than feared. Left standing in the wake of the decision are nearly all aspects of the ACA.
Five justices agreed that the penalty a person must pay if they refuse to buy health insurance is a tax and allowable under Congress’ taxing power. Because the mandate to buy health insurance stands, the High Court didn’t have to decide if other portions of the statute are unconstitutional.
Analysis from Avalere Health sees the result as a boost for pharma companies. The increased coverage for individuals who couldn’t previously pay for drugs will offset the losses from rebates and fees. Drugmakers can expect roughly 30 million additional health consumers when the individual coverage mandate kicks in January 2014.
Drugmakers had also waited with bated breath to hear the court’s ruling on the regulatory pathway for biosimilars, which remains intact. FDA leaders said they needed the regulatory pathway from Congress to proceed with reviews of the follow-on biologics, otherwise they would have launched a program before the ACA.
In the dissenting opinion, four of the justices said they would have found the entire act invalid, including the biosimilars provision, if a majority had found the health insurance mandate unconstitutional.
However, it’s a stretch to assume that if Chief Justice John Roberts — largely viewed as the swing vote — had come out against the mandate that the law would have been struck down entirely, Foley Hoag partner Tom Barker toldDID. Roberts would have had to agree the additional provisions of the law, including the biosimilars pathway and closing of the Part D doughnut hole, were to go as well.
Muted Industry Reaction
Soon after Thursday’s ruling, politicians, advocacy groups and stakeholders released a flood of statements either praising or lambasting the 193-page decision. Drug industry groups like PhRMA gave more cautious statements and committed to helping federal and state agencies implement the law.
PhRMA wants to avoid siding with Democrats or Republicans so it can better play its hand during deficit-reduction talks — the next great policy debate, Mendelson said. “This is one battle in the midst of a protracted war regarding the future of entitlement programs in the United States,” Mendelson told DID. “The pharmaceutical industry does not have the luxury of playing one side or the other in the coverage debate at this time.”
The drug industry was among the many health industry sectors that supported the ACA’s passage in 2010.
While Republicans have already stated their intentions to try to repeal the law, those efforts are not new and have failed so far.
View the 193-page decision at www.fdanews.com/ext/files/06-29-12-ACA.pdf. — David Pittman
http://www.fdanews.com/newsletter/article/print?issueId=15912&articleId=147559
Drugmakers should view Thursday’s landmark Supreme Court ruling on the 2010 Affordable Care Act (ACA) as an overall victory, industry analysts and consultants say. Despite manufacturers remaining on the hook for increased Medicaid rebates and closing the Medicare Part D coverage gap, the High Court left in place a regulatory pathway for biosimilars and kept health coverage of 30 million new, potential patients who didn’t have good access to pharmaceuticals before.
Stakeholders’ eyes now turn to agencies like the Centers for Medicare & Medicaid Services, which will begin further implementation of the law. Dan Mendelson, CEO of Avalere Health, told DID he expects a flood of new regulations to come online as the end of the administration’s term brings a rush to finish such tasks.
“On balance, [the ruling] is a positive construct for the industry,” Mendelson said. It’s also far less dramatic than feared. Left standing in the wake of the decision are nearly all aspects of the ACA.
Five justices agreed that the penalty a person must pay if they refuse to buy health insurance is a tax and allowable under Congress’ taxing power. Because the mandate to buy health insurance stands, the High Court didn’t have to decide if other portions of the statute are unconstitutional.
Analysis from Avalere Health sees the result as a boost for pharma companies. The increased coverage for individuals who couldn’t previously pay for drugs will offset the losses from rebates and fees. Drugmakers can expect roughly 30 million additional health consumers when the individual coverage mandate kicks in January 2014.
Drugmakers had also waited with bated breath to hear the court’s ruling on the regulatory pathway for biosimilars, which remains intact. FDA leaders said they needed the regulatory pathway from Congress to proceed with reviews of the follow-on biologics, otherwise they would have launched a program before the ACA.
In the dissenting opinion, four of the justices said they would have found the entire act invalid, including the biosimilars provision, if a majority had found the health insurance mandate unconstitutional.
However, it’s a stretch to assume that if Chief Justice John Roberts — largely viewed as the swing vote — had come out against the mandate that the law would have been struck down entirely, Foley Hoag partner Tom Barker toldDID. Roberts would have had to agree the additional provisions of the law, including the biosimilars pathway and closing of the Part D doughnut hole, were to go as well.
Muted Industry Reaction
Soon after Thursday’s ruling, politicians, advocacy groups and stakeholders released a flood of statements either praising or lambasting the 193-page decision. Drug industry groups like PhRMA gave more cautious statements and committed to helping federal and state agencies implement the law.
PhRMA wants to avoid siding with Democrats or Republicans so it can better play its hand during deficit-reduction talks — the next great policy debate, Mendelson said. “This is one battle in the midst of a protracted war regarding the future of entitlement programs in the United States,” Mendelson told DID. “The pharmaceutical industry does not have the luxury of playing one side or the other in the coverage debate at this time.”
The drug industry was among the many health industry sectors that supported the ACA’s passage in 2010.
While Republicans have already stated their intentions to try to repeal the law, those efforts are not new and have failed so far.
View the 193-page decision at www.fdanews.com/ext/files/06-29-12-ACA.pdf. — David Pittman