The companies that make your drugs fear price cuts from the Obama administration. Biotech companies already price drugs at very high gross margins, they fear Barack Obama’s health care reform will cut into their profits. Obama supports lowering drug prices as a requirement for making health care coverage affordable to all Americans.
Under President-Elect Obama health care plan, drug prices would be challenged on three levels: the use of cheaper generic drugs would be increased due to low-cost drugs being imported into the United States. This would open up competition and force drug makers to negotiate for lower prices. Obama’s plan estimates this change in drug care prices could save consumers as much as $30 billion.
Although drug companies are bracing for change, a venture capital executive believes the loss from negotiating drug prices won’t hurt as much as biotech companies fear.
According to James Thomas, co-founder of Thomas, McNerney & Partners, drug prices are priced with a very high gross margin, drug company’s measure growth by the number of units sold versus the price of the units. He actually sees the Obama health care plan as a “good” thing that is good “for units and good for us.”
Attorneys for the drug companies see the Obama plan as an attempt to strengthen the under funded and ineffective current FDA. Opponents of the health care plan fear the revenue from increased units sold won’t be realized at first. Complex lengthy negotiations may be forthcoming against the plan.
Drug companies expect to be more scrutinized than before. Under the Bush administration biotech companies focused on the industry development of new products, no matter the cost. Under the new Obama administration, drug companies will now be held more accountable to consumer pricing and safety.
Part of the Obama health care package addresses stricter regulations than the FDA currently has. Especially where imported food is concerned. Care will be taken to prevent the recent salmonella outbreak from occurring in the future. Drug companies won’t be the only ones under scrutiny.
The tobacco industry is also preparing for changes under the new health care reform. Obama is a former smoker trying to break the habit by using nicotine gum; he is also the sponsor of a legislation that seeks to enable the FDA to control tobacco products. Political rumors say that new institutions will be able to ban cigarettes and other tobacco products.
The Bush administration was criticized for being too lenient with regards to food and drugs safety measures, making consumer protection issues a mandate for Obama. One of the first things Obama will do is appoint a new commissioner for the FDA. Cleveland Clinic cardiologist Dr. Steve Nissen, former director of the FDA’s women’s health office Susan Wood and Baltimore Health Chief Dr. Joshua Sharfstein are three names that have come up to head the office.
Dr. Nissen is credited with sounding the alarms over heart risk related side effects of medicines including the diabetes drug Avandia and the pain killer Vioxx.
Not only does Obama’s health plan call for drug price reform, he is also expected to implement a tracing system for fresh produce. The system is another one expected to tighten the regulations surrounding consumer protection. An increase in inspections of imported food will also occur under the Obama health plan.
Foreign drug manufacturing plants will also come under more scrutiny under the Obama health plan. Lawmakers say the Bush administration blame eight years worth of neglect at the risk of consumer health. The FDA has approved unsafe medications and hasn’t done enough to block tainted imports of food and drugs according to more criticism from lawmakers.
The new FDA commissioner must be confirmed by the Senate first, will oversee an agency that employs about 11,000 people and has a budget of more than $2 billion. Usually a new president will first hire a secretary of Health and Human Services, who then helps pick an FDA commissioner. Former Senator Tom Daschle name has been tossed around as health secretary.
Whoever becomes FDA commissioner will have a heavy charge. Over hauling the drug manufacturing agency will not be easy. Pricing consideration as well as public health at large must be a focus. Consumers want to save money and have safer food and drugs as promised by Obama’s campaign for change. Change the president elect has stated will not come without sacrifices.
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