Hey guys! So I found a really interesting article about the pharmaceutical and biotechnical industry that greatly affects this business. The sources I provided all apply to this current event but some have more detail than others. Currently in the pharmaceutical and biotechnical industry, President Obama proposed a cut of $320 billion in Medicare and Medicaid over the next ten years as well as to ban pay-to-delay. This is all a part of his plan to cut the deficit and provide affordable healthcare and prescription drug coverage for all. A lot of factors go into this new proposal and everyone will be affected differently some good and some not so good.
Put simply, pay-to-delay is when larger companies that sell name brand drugs such as Lipitor, pay smaller companies to delay the release of the generic version of that drug so that the public is forced to pay more for the name brand drugs. Pay-to-delay is a way for larger companies to eliminate competition and comfortably charge what they’d like to charge for their products with out worrying about losing their customers. The smaller companies, who would be offering the generic version of a drug, do not mind pay-to-delay because they are being paid by the larger companies to delay their product release thereby making it a win-win situation for all of the companies involved.
By President Obama eliminating pay-to-delay, he would be making it easier for consumers to get affordable prescription drugs because insurance companies historically charge a smaller deductible for generic drugs and even if the consumer has to pay out of pocket, it will be drastically less than paying for the name brand drug. Since many Americans cannot afford brand name prescription drugs in the first place, the offer of a generic version of that same medication would allow the consumer to be able to focus on healing themselves rather than worrying about falling into debt over medication.
President Obama is also requiring that drug companies offer discounts and rebates. Drug makers are not fond of this idea because drug makers of generic products are required to give the government a 13% rebate and makers of brand-name drugs are required to give the government a 23% rebate which is a loss in revenues. “The trade group PhRMA commissioned a study of the rebates, [and they found that] lost revenues could touch off as many as 260,000 job losses.” The issue now is that although customers would be receiving a discount on pharmaceutical products, many jobs would be lost making a lot of people worse off. The last thing our country needs is a greater loss of jobs, which makes this proposal not so appealing.
~ Zenas Wilson
Sources:
This definitely seems like it ill play a key role in the coming years as several well known drugs go off patent. it makes me wonder if drug companies have any other ways to get around their products going off patent
ReplyDeleteI just hope that Obama has more luck passing this than the other legislation that he's made efforts to put through Congress. All the political stalling has gotten ridiculous.
ReplyDeleteAnyway, the legislation sounds very promising for average American consumers, but the thing about the discounts worries me a little. I know that some name-brand drug companies offer preferred customer cards that reduce co-pays and therefore seem to make the meds as cheap as generics, when actually the insurance companies foot almost all of the rest of the bill.