Obamacare vs. Drug Innovation


PhRMA’s quiescence on Obamacare badly hurt the industry — and all those who depend on medical innovation.

With the release of the president’s budget, it is now beyond dispute — Beltway spin notwithstanding — that the decision by the Pharmaceutical Research and Manufacturers of America (PhRMA) to support the health-care bill was one of the worst self-inflicted wounds in the history of lobbying. For biotech and pharmaceutical companies, the president’s budget repudiates one of the most important benefits of their “deal” with the White House: the ability to market biotech drugs without generic competition for twelve years. The president would reduce that period to seven years, precisely the position of the generics industry and a position that the pharmaceutical industry had fought aggressively before it decided to make a deal with the president.

This embarrassing repudiation of the deal follows another hostile act from the Obama administration. On February 3, health and human services secretary Kathleen Sebelius released a letter to all the governors encouraging them to modify their states’ Medicaid rules so as to use more generic drugs and to make deeper price cuts for drugs purchased in Medicaid. Since the industry had already agreed, when it signed onto the health-care bill, to cut deeply their prices for Medicaid drugs, Sebelius’s inclusion of this advice in her letter to the governors was a gratuitous slap.

In fact, the best thing that could happen to the industry — and therefore to all those individuals, here and around the world, who benefit from the strides it has taken in research — would be an unraveling of PhRMA’s deal. Since the president has walked away from the deal, now is the moment for the industry to walk away from a law that will significantly weaken the all-important U.S. market for pharmaceuticals.

What will Obamacare do to America’s premier health-care research industry?

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Before the budget was released Obama was touting a competing federal drug development agency.
Something like $1 billion to get it started.
But I haven’t seen any proof he included it.
There is only a 15% success rate of a new biologic going from Phase I all the way through to FDA approval.
When the new drug is a small molecule chemical drug, the success rate is only 7%.
And yet, here is Obama, making it MORE difficult to break even even in such a success.
Obama once admitted: Regulations have costs.
He should read what his teleprompter says every once in a while.
Because, that time, it was right.