Saturday, July 4, 2015

Supreme Court upholds ACA and Pharma can 'exhale'

The pharmaceutical industry had hesitantly backed the Affordable Care Act, hoping to sell more pills, but device manufacturers hated the 3.4 percent tax.

Supreme Court upholds ACA and Pharma can 'exhale'


The Supreme Court upheld most of the Patient Protection and Affordable Care Act by a 5-4 vote and a link to the decision is here.

The main part struck down was the threat that the federal government would withhold all of its Medicaid contribution to a state if the state did not increase coverage.

University of Michigan business professor Erik Gordon said the decision is somewhat good for pharmaceutical companies and bad for medical device companies.

But aside from pluses or minuses for individual sectors, Gordon said, the national need to reduce overall health-care costs was going to affect businesses, individuals and governments, which pay the tab through Medicaid, Medicare and other insurance programs.

Pharma companies had backed the measure, hoping to sell more pills.

"Pharma has been holding its breath and now it can exhale," Gordon said. "But down the road, I don't think they will be as happy as they think they will be. In 2014, when this fully takes effect, they will be selling a lot more pills, but making even less money. You can mandate insurance, but we can't continue to spend unending amounts on health care."

Device companies particularly objected to the 3.4 percent tax on the sale of devices that is included in the measure.

"The device guys are glum, but I don't think they were surprised," Gordon said. "Their recourse is political, in Congress."


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About this blog
David Sell blogs about the region's pharmaceutical industry. Follow him on Facebook.

For Portions of this blog may also be found in the Inquirer's Sunday Health Section.

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