Big Pharma sweats outcome of Supreme Court ruling

At 18% of gross domestic product, healthcare spending in the United States is the highest in the world. And if the healthcare reform bill gets shot down by the Supreme Court, pharma will pop into the cross hairs of the politicians who have sworn something must be done about that.

Big Pharma came around to support the original bill, trading additional taxes and some price rebates to federal programs for an expanded pool of insureds. But if the requirement that Americans buy health insurance is deep-sixed, then some of the price restraints may remain while the market suddenly shrinks, Reuters reminds.

"The law was a modest positive for them in terms of growth in volume and the ability to charge higher prices," Dan Mendelson, formerly of the OMB and now CEO of consulting firm Avalere Health, tells the news service.

Some analysts expect that the measure that would require evidence of a drug's superiority before it can be used in federal programs is likely to stick, as is the expedited pathway for getting cheaper biosimilars to market. But some of the ideas debated in the first go-round could be resurrected, like deeper discounts for Medicare and Medicaid. Some Congressmen may look to price controls in Europe, where healthcare costs are much lower, as a blueprint.

The fact is other healthcare players like hospitals and insurers are already making more painful revisions in their payment practices. And who are pharma's political defenders going forward? Some Democrats, who think the industry already makes too much money with deceptive marketing, will not be there. And some Republicans, miffed that pharma helped President Barack Obama get the healthcare bill through, are already making things uncomfortable, investigating what promises might have been made for that support.

Repealing the law but not the tradeoffs, Avalere's Mendelson tells Reuters, "would be the most difficult outcome for the pharmaceutical industry."

- here's Reutersanalysis

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