Branded Pharma (Merck) Revenue Benefits, As The ACA of 2010 Has "Half-Closed" The Donut Hole

Tonight, most major media outlets are highlighting the slowing growth in overall US health care spending, as delineated in the latest comphrensive US health-care spending report, out of US Health and Human Services Department's CMS -- The New York Times, the PBS Online Newshour and the Wall Street Journal among them. However, I've seen no extended media coverage of how the Affordable Care Act of 2010 (or "Obamacare," if you prefer!) has benefitted brand name pharma manufacturers' bottom lines. Mr. Frazier mentioned it in passing tonight, at the JP Morgan conference in San Francisco -- but only in passing.

While I understand the political sensitivities here -- multi-billion dollar branded pharmas appearing to reap a large benefit from Obamacare, while small employers claim to be unduly suffering from it -- Mr. Frazier should be highlighting the fact that this means that many more hundreds of thousands of real people of modest means can now afford life saving branded medications, year round. That should be celebrated -- even if it means that pharma's political manuevering in late 2009 is once again dragged back into the spotlight.

It does also mean that Obamacare, or the ACA of 2010, was -- in part -- a real piece of reform, of the delivery system.

Rather than quoting the media -- I'll quote the actual HHS/CMS report (reprint page 92):

. . . .[T]he Affordable Care Act offered a 50 percent discount on brand-name prescription drugs to Medicare Part D enrollees whose out-of-pocket spending for drugs reached the coverage gap, or “doughnut hole.” This provision led to somewhat greater use of brand name drugs by Medicare beneficiaries in 2011 and decreased the amount that Medicare beneficiaries spent out of pocket on drugs. Other provisions affecting Medicare expenditures in 2010, 2011, or both years included coverage for new preventive services and reduced costsharing requirements for existing ones, together with lower payment rate updates for hospitals and certain other providers. . . .

As ever, much more to come -- as the ACA implementation provisions really get rolling, here in 2013.



The historical backgrounder video:

Mr. Obama Wins; States Have 9 Days To Create Health Exchanges

So much for the mantra of "Repeal!", eh? Governor Perry in Texas ought to be particularly embarrassed that he has put millions of his own citizens at risk of not receiving federally-supported benefits in the provision and purchasing of more affordable and more comphrensive health care insurance and reimbursement.

Many of the nation's largest law firms have spent almost no time explaining to clients and potential clients what full implementation of the ACA of 2010 will mean to them. Thta is unfortunate -- as many of them bought into the notion that Mr. Romney couldn't lose in 2012. I don't yell at people for their mistakes -- but it is appropriate that they pay for them.

Time to pay up -- per Bloomberg reporting, this very morning:

. . . .State officials who held off implementing some aspects of the 2010 Affordable Care Act now face pressure to make decisions almost immediately. They have nine days to advise the federal government how they plan to manage state-run exchanges created by the law to provide medical coverage to the uninsured, or face a de facto U.S. takeover of their insurance markets. . . .

Thirty-four states have accepted at least two grants from the federal government to start planning an exchange, according to the U.S. Department of Health and Human Services. That puts about 20 states in a position to build an exchange or partner with the federal government on one, in addition to the 13, plus the District of Columbia, who have already said they’ll run their own.

The rest “have either explicitly said ‘no’ or have taken so few steps that you can’t really see them shifting quickly enough to play an active role,” said Alan Weil, executive director of the National Academy for State Health Policy, which assists states implementing the health law, in an interview. . . .


“The message to governors is the verdict is now in,” said Ron Pollack, executive director of Families USA, a consumer advocate that backs the law. “The Affordable Care Act is moving forward. Either they help cooperate with its implementation, or people in their state could be left out in the cold. . . .”

[A]ll but 13 governors had taken a wait-and-see approach. Now those that “thumbed their nose” at the president must quickly reassess, said Mississippi Insurance Commissioner Mike Chaney, a Republican who said he will submit a plan for his state’s exchange by the Nov. 16 deadline. . . .

We will keep you posted, but this result -- a mad scramble by the various partisan and thus recalcitrant states -- was an entirely avoidable result. The citizens of these states -- Texas in particular -- ought to demand better of their governors.

Some Additional Small-Employer Health Care Tax Subsidy Discussion

I've received some very good commentary on my post, from this past weekend, about the small employer health care tax subsidy -- so I'll reprint the back and forth, here:

Anonymous said...

Great idea!! Give tax incentives to keep salaries low. Way to help the little guy.

September 21, 2010 8:48 AM

Condor said...

I take it you mean as opposed to returning the tax break to the richest 1/10th of one percent -- a break President Obama is ending.

In any event, arguing that the health care package will keep salaries low is -- at best -- a selective reading. Afterall, with health care, the effective salary is actually increased (for at least 50 million Americans without health benefits, at present).

So -- it boils down to this will cost some group something -- in order to secure our future. Would you rather that the wealthiest carry their share, or not? If not, vote with the Republicans -- that is the center plank of their entire platform, this time around.

Namaste, and thanks for your observations!

Do stop back.

September 21, 2010 11:16 AM

Anonymous said...


Don't get me wrong, I think there are good things in this law that Fox News is not mentioning, but I think this particular part misses the mark. Why is it tied to salary at all?

If you have 10 employees earning an average of $25K or less you get a 35% tax credit. If you give them a raise or hire more people, your tax credit goes down.

Seems like they're incenting the wrong behavior. If I can think of that, why can't the New York Times? That's all I'm saying.

September 21, 2010 1:47 PM

Condor said...

I do hear you, but I certainly think that small companies with much-higher-per-employee average salaries ought to be able to fund their own health plans, with only a graduated tax subsidy.

If your particular business has only 11 employees, but all are making $100,000 or more (like many a small architectural, accounting, or law firm), it is not clear in my mind that taxpayers should subsidize health care, there.

The measure we are talking about should help lower-skill, lower income positions at small companies remain eligible for some form of affordable health care coverage. Just as the NYT example suggested -- think of a "mom & pop" independent bookstore here.

So, I think it is actually wise policy. In both of our minds, I think, the number of employees ought to be indexed to average earnings -- to be eligible for a sliding-scale tax subsidy -- so I don't think we are arguing about whether a line should be drawn -- only about WHERE it gets drawn, right?

Thanks for the additional input, here.

Namaste

September 22, 2010 8:12 AM. . . .

Now, what do you think?