Pharmaceutical Technologist - January 2008 - (Page 13)

Market Watch candidates’ health proposals and how they would impact individuals, employers and the sectors within the health industries. The Democrats are talking and writing about health care at least twice as much as the Republicans, but there are still many unanswered questions about the downstream impact of each of the parties’ plans. Both have similar goals regarding cost, quality and access, but they have different opinions about how to achieve them, and what role the government should take in any social issue when the markets fail. Changes in direction and policy could dramatically alter the government’s role. The government’s share of health spending has been steadily increasing and it now pays for almost 50% of all healthcare in the country. Current estimates indicate that more than half of all health expenditure will be government funded by 2017, but expansions of government programmes could alter that date; for example, spending $100 billion on expanding universal access would bring the date forward to 2011. While all candidates have formal health proposals, they differ in how much they emphasize them on the campaign trail. A quantitative survey of candidates’ public remarks found that Senators Clinton, Edwards and Obama, and Governor Romney speak about healthcare issues twice as frequently as the other candidates. This is an example of the Democratic candidates appealing to their base of constituents, which includes large segments of “middle-America” and younger America — those who represent a greater share of the uninsured population. There are also many other key findings. Both of the parties’ approaches could have far reaching consequences for the insurance market, with a huge boost to the individual market, and could create the first cracks in the, historically, employer-dominated insurance system. The Republicans want to expand the individual market through tax incentives that critics say could erode the employer-sponsored insurance coverage, while the Democrats want to mandate individual and employer insurance — although small businesses would be exempt. Despite these different approaches, all candidates are talking about decreasing costs and improving quality. Many health industry leaders believe that programmes and tools such as comparative effectiveness, information technology and wellness programmes are the best hope for improving the efficiency of the current system. Comparative effectiveness is clinically based research, funded by government, around the outcomes of various therapies that would provide new information for payers and consumers. All of these programmes are a reflection of the growth of healthcare consumerism, which rewards improvements in outcome and reduction of errors, provides greater transparency to enable comparative evaluation of cost and quality. Most importantly, it represents a significant paradigm shift in the shared responsibility between consumers, employers and the health system in better managing health. Because information technology (IT) is widely regarded as a way to improve quality and efficiency in healthcare, the presidential candidates have voiced support. However, the candidates have shied away from proposing unfunded mandates on the industry, and, thus, have shied away from broad health IT mandates. Only Senators Obama and Clinton have proposed additional government funding to accelerate adoption of electronic medical records by hospitals. The Democratic candidates’ proposals to control the cost of drugs — such as direct negotiation for Medicare drugs, reimportation and biogenerics — have the potential to significantly affect the pharmaceutical industry, which currently accounts for approximately 10% of overall healthcare spending. Taking a cue from the 1994 health reform debate, no candidate is talking about reducing reimbursement to hospitals and doctors. Yet, Senator McCain proposes fundamentally changing the Medicare reimbursement system to focus on care coordination and performance. Medicare has already said that future reimbursement increases will be tied to reporting quality, however, McCain’s proposal seems to call for fundamental changes in the basic reimbursement system, which might require a redistribution of current funding. For example, he said he wants to “compensate providers for diagnosis, prevention, and care coordination” — activities that now make up a small part of overall reimbursement The government’s share of health spending has been steadily increasing and it now pays for almost 50% of all healthcare in the country. All candidates have proposed tax law changes to pay for care of the uninsured, equalize the tax benefits of buying health insurance or encourage consumers to purchase healthcare more appropriate to their needs. The crux of their differences is the candidates’ positions on the Bush tax cuts. The 2001 tax cut phased in significant reductions in income tax rates, reduced and eventually repealed the estate tax, and provided additional tax breaks for saving, education, families with children, and married couples. Legislation in 2002 significantly reduced the tax burden on new business investments. The 2003 tax cut substantially reduced the taxation of dividends and capital gains, and accelerated the phase-ins of the 2001 tax cuts. All of those tax cuts are temporary, though, and all of the legislated tax provisions are set to expire before the end of 2010. The Republicans want to extend the tax cuts while the Democrats want to preserve some of them and spend the rest on healthcare. Healthcare will change in the next administration and the implications will be enormous, but healthcare is an incredibly complex issue — no plan is perfect and there will be trade-offs and sacrifices. PT Sandy Lutz is managing director of PricewaterhouseCoopers Health Research Institute. www.pwc.com www.ptemagazine.com 13 http://www.pwc.com http://www.ptemagazine.com

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Pharmaceutical Technologist - January 2008 Contents Editor's Comment News Morpheus Market Watch Lagging Japanese Drug R&D Croatia’s Innovation Integrating PAT with Biopharmaceutical Development and Manufacture Q&A

Pharmaceutical Technologist - January 2008

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