What to cut from growing U.S. healthcare tab?

Two pieces of news on federal healthcare spending today could give a forward-looking pharma executive pause. First, healthcare spending has grown to around 17 percent of U.S. GDP, with the federal government set to foot half that bill by 2012--even without healthcare reform. Meanwhile, a study found that changes to Medicare reimbursements already are affecting drug treatment for cancer.

Imagine, then, how cancer care might fare as healthcare spending continues to grow--at a time when the U.S. is increasingly hampered by budget shortfalls and deficit spending? It's enough to keep a drugmaker with a big oncology business up at night.

Here's the deal on overall healthcare spending. Federal and state programs will pay a bit more than half the U.S. healthcare bill by 2012, a Medicare report shows. "This does mark a pretty stark jump in the data," said Christopher Truffer of Medicare's Office of the Actuary (as quoted by the Associated Press). Meanwhile, healthcare spending will continue to grow, almost doubling by 2019 to $4.5 trillion, estimated to be more than 19 percent of the economy, Bloomberg reports.

And how will this affect drugmakers and patients? Well, if the Community Oncology Alliance's new report is to be believed, not very well. Researchers found that clinics offering cancer care are losing money because of changes in Medicare reimbursement. With Medicare paying the bill for 56 percent of chemotherapy--and that 56 percent set to be cut over the next few years--private insurers will be charged more to make up the difference, or other treatment areas will have to help cover oncology losses. And/or some patients won't be able to get treated with the most expensive drugs. How long can that keep up?

- see the Bloomberg news
- get the AP story
- read the article from Reuters

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