Though biopharmaceutical firms in New Jersey will benefit from expansion in Medicaid enrollment and the creation of health insurance exchanges under the Patient Protection and Affordable Care Act of 2010, increased pressure to lower drug costs and greater restrictions in the number of drugs covered under Medicaid will hurt revenues and drive up competition, industry experts said in a webinar hosted by the industry group BioNJ.
According to Ralph Marcello, a principal in the life sciences consulting practice of Deloitte LLP, many of the drugs in the marketplace will no longer be as prominent in prescription plans’ coverage as the industry is pushed to develop medications with better outcomes under the ACA — resulting in a nearly 14 percent revenue loss nationwide in 2015.
As a result of a focus away from acute care, Marcello said, the industry should move toward larger sales of preventative and other medications consistent with the long-term goals of the ACA.
“States are creating a new insurance market, in a sense, through exchanges, and there are a lot of things states need to do to get off the ground, like determining what will be covered in the prescription area,” said John A. Murphy III, director of state government affairs for the Biotechnology Industry Organization. “That creates an area for advocacy for biopharma to be talking about the value their products deliver. If the exchanges folks don’t know about their products, then they don’t get them to people that need them.”
Murphy said the cost driver embedded in the new accountable-care organization infrastructure — which will monitor the prices and outcomes of pharmaceuticals to determine which drugs will be covered and prescribed under Medicaid — will lead to greater investment in innovation on the research and development side.
“When you think about clinical development, now regulatory approvals are no longer sufficient,” Marcello said. “Now you have to think of designing trials to show what you have is better than what’s in the marketplace. You’ll need to provide data that proves your product is delivering more value to the system compared to your competitors … to help inform decisions and get your products reimbursed in the marketplace.”