Thursday, April 17, 2014
Inquirer Daily News

Will Federal Healthcare Reform Help Put New Jersey Drugmakers 'In the Money'?

Discussions about the Affordable Care Act dominate the airwaves, as pundits and politicians weigh in on the continuing saga of the federal health insurance marketplace. But lost in all this chatter is the fact that Obamacare may have a profound -- though rarely discussed -- effect on New Jersey's economy by increasing the amount of prescription medication that's likely to be consumed.

Will Federal Healthcare Reform Help Put New Jersey Drugmakers 'In the Money'?

Discussions about the Affordable Care Act dominate the airwaves, as pundits and politicians weigh in on the continuing saga of the federal health insurance marketplace. But lost in all this chatter is the fact that Obamacare may have a profound -- though rarely discussed -- effect on New Jersey's economy by increasing the amount of prescription medication that's likely to be consumed.

The law is expected to expand the number of insured Americans by an estimated 32 million people and, consequently, play a key role in boosting pharmaceutical industry revenue by 33 percent by the end of the decade -- to $476 billion by 2020, up from $359 billion last year, according to GlobalData, a market research firm.

In other words, more people with health insurance can be expected to purchase more medicines, which presumably should ring registers for the pharmaceutical industry for the foreseeable future. Yet drugmakers say they are uncertain about the extent to which they will benefit from the larger pool of insured patients, or when that benefit will be realized.

There are other potential advantages for drugmakers. For one, the ACA will close the "donut hole" in the Medicare Part D prescription drug program by 2020. It's already shrinking, as drug companies discount the price of brand-name drugs for patients in the donut hole and Medicare picks up the cost of generic drugs. This is particularly significant, since the number of people on Medicare is climbing. GlobalData indicates that the elderly will make up 22 percent of the population by 2020, up from 19 percent today.

What's more, the ACA puts in place extended patent protection for expensive biologics (brand-name medication), which was granted in exchange for creating a system to approve so-called biosimilars (generic drugs).

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