Now that the presidential election is over, we can better predict the administration’s policies for the next four years. Right now, a few things are certain:
- The sun will still rise in the east and set in the west.
- We will still have to file our taxes.
- Changes for life sciences manufacturers are still going to occur.
The reelection of President Obama has maintained the status quo with regard to the Patient Protection and Affordable Care Act (PPACA). That is, the uncertainty about the potential overturning of the act has been taken out of the equation. The PPACA is here to stay. What remains to be seen, however, is how much change manufacturers can expect to occur. Three questions come to mind:
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- Will changes as a result of managing the “fiscal cliff” mean more changes to healthcare funding and, in turn, for manufacturers?
- What further changes will occur that affect PPACA, Medicare, and Medicaid?
- Will new regulations be introduced that require manufacturers to report sales in new ways?
The answer to all of these questions is . . . maybe. Government compliance is nothing if not a changeling. Consider the rules that applied just two years ago. In many calculations they look very different now.
The changes could range from the mundane to foundation-shaking. The passage of the PPACA itself was more akin to the latter than the former. And although no changes as disruptive to manufacturers’ operations are sure to come in 2013-2014 (we hope), there is still time to prepare for the act’s mandates.
To mitigate the uncertainty, manufacturers need a solution that is at once auditable to ensure compliance and flexible to easily adapt to changes brought forth by the evolution of the PPACA. How is your company positioned? Have you taken steps during the last two years to prepare for the changes being brought on by the PPACA? These are the questions to answer now.
These are three takeaways from the election for the pharma industry.
1. PPACA is here to stay
Even though the Supreme Court upheld the PPACA in June, many hoped that a Romney win would mean the dismantling of the law. What flavor that would have taken is anyone’s guess, but now with Obama’s re-election and the Democrats retaining control of the Senate, it is certain that the law will remain intact. Deadlines which have been looming large are now more certain, and you can expect to see many pharmaceutical and medical device manufacturers who, until this point, have chosen a “wait and see” approach to provisions, such as the Physician Payment Sunshine Act, start to scramble to get prepared.
2. Expect increased regulatory scrutiny and heavy fines
During Obama’s first term, the number of pharmaceutical industry settlements increased exponentially. In fact, in the first three years alone, they were up 45 percent over the entire past decade’s settlements combined. And that trajectory has only continued in 2012. The amount of the fines in the first half of this year alone has set new all-time records with totals in excess of $6 billion, nearly three times the amount of the fines from the previous year. Both federal and state governments are getting wise to the fact that there is a lot of money to be recouped by enforcing existing regulations prohibiting overcharging government health programs, unlawfully promoting products, shelling out kickbacks, following poor manufacturing practices, and concealing study findings. In hard economic times – which these certainly are – the pharmaceutical industry can expect to be scrutinized more closely for compliance to existing regulations with heavy penalties for any violations.
3. Look for some high profile examples to be made in the next two years
My prediction is that the government will pursue some high profile cases in the next few years specifically pertaining to the PPACA, such as the 340B Integrity Provision or the Sunshine Act. These test cases will serve as cautionary examples to manufacturers who might otherwise ignore or only loosely follow regulations imposed by the government. Admittedly these are uncharted territories where confusion and individual interpretation still prevail. It is my belief that legal action, more so than clarification by any government body like CMS, will help to define exactly what is expected of the life sciences industry with regard to the PPACA.
