The US healthcare System is the Costliest Healthcare System in the World, Yet it Produces Inferior Outcomes Compared to Other Developed Nations
Impact of US Healthcare Reforms - the Extension of Care to 32 Million Uninsured Citizens from 2014 and Implications for the Pharmaceutical Industry
Yet it Produces Inferior Outcomes Compared to Other Developed Nations
GBI Research has found that the US spends the largest sum of money on healthcare, yet produces inferior outcomes. The US spent $2,486.3 billion on healthcare in 2009, higher than any other nation in the world. The per capita healthcare spending in the US in 2008 was $7,538, which was also higher than any other developed nation. Still, the US performs poorly on many health indicators, including life expectancy and mortality, compared to other developed nations. The reasons for this poor performance are the lack of universal access to healthcare, overspending by more than a trillion dollars per year and a faulty payment system that motivates the providers to offer excess healthcare services without any regard for the quality of service. The healthcare reforms in the US are trying to address these issues using various measures to improve healthcare access, reduce waste in the healthcare system and improve the quality of healthcare services.
The Healthcare Reforms will Bring Health Insurance Coverage to 32 Million
Non-elderly US Residents by 2019
The healthcare reforms constituted in the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010 (HCERA), will bring health insurance coverage to nearly 32 million non-elderly US residents by 2019. The provisions related to the expansion of health insurance coverage will start taking effect in 2014. Medicaid expansion to all non-elderly adults earning less than 133% of the federal poverty level (FPL) will account for 16 million new health
insurance beneficiaries and the state-based health insurance exchanges will account for the rest. Improved access to healthcare as a result of this provision will result in increased demand for healthcare products and services, which will benefit various suppliers in the healthcare system including hospitals, pharmaceutical manufacturers, medical device manufacturers and health insurance companies.
The Establishment of State-Based Health Insurance Exchanges will
Transform the Health Insurance Market in the US
State-based health insurance exchanges will start functioning in most of the US states in 2014. The state-based health insurance exchanges are government regulated marketplaces where health insurance companies can provide their offerings to buyers. The buyers here have the advantage of better information and competition, resulting in lower costs and better service for them. US statebased
health insurance exchanges will initially offer health insurance to individuals and small businesses only, but by 2017 the states will have the option to expand access to medium and large businesses as well.
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State-based health insurance exchanges will also be the place where people with incomes between 133% and 400% of the federal poverty level will be able to get government subsidies in the form of tax credit for buying health insurance. The Congressional Budget Office (CBO) expects that in 2019, the state-based health insurance exchanges will collectively offer health insurance to 24 million individuals. The health insurance exchanges are expected to change the way health insurance is sold in the US and will bring more competition in the market.
Biologics Price Competition and Innovation Act 2009 Opens the Gates for
Approval of Biosimilars in the US
The US healthcare reforms include the Biologics Price Competition and Innovation Act (BPCIA), which establishes a regulatory pathway for the approval of biosimilars in the US. The act empowers the Food and Drug Administration (FDA) to develop standards to evaluate and approve biosimilars. The act also grants the FDA with the authority to develop comprehensive guidelines for the approval of biosimilar products or product classes. The act grants a market exclusivity of 12 years and data exclusivity of four years to innovator biologic drugs, which is considered favorable for the manufacturers of these biologics.
The act also puts forward a resolution process for biosimilars-related patent disputes. The process of patent resolution is very complex and not favorable to the biosimilar manufacturers. This patent resolution process is considered to be a major hurdle to the growth of biosimilars in the US.
GBI Research finds that although the approval pathway is not favorable to biosimilar
manufacturers, the US biosimilar market still has a great scope for growth as the patents for many major biologic drugs will expire in the next few years and the demand for biologic drugs is expected to rise. The US biosimilars market was valued at $64.8m in 2009 and is expected to grow to $2.7 billion by 2016 at a compound annual growth rate (CAGR) of 58.8% during the period 2009–2016.
After Short Term Losses, the Pharmaceutical Industry will Gain from US
Healthcare Reform in the Long Term
Pharmaceutical companies initially stand to lose due to the healthcare reforms, as a result of provisions such as the annual fee on the pharmaceutical industry, discounts on brand name drugs for Medicare Part D beneficiaries in the coverage gap and increases in Medicaid rebates. The expiry of patents for blockbuster products before 2015 and the loss of revenues associated with them will also hurt the industry’s margins. As a result, the pharmaceutical industry stands to lose in the initial phases of the healthcare reforms. However, after 2014, when the provisions for the expansion of health insurance coverage take effect, pharmaceutical companies are expected to witness an increase in the demand for medicines and make greater profits in the second half of the decade 2010–2020. The pharmaceutical industry has received many other advantages from the healthcare reform legislation, including 12 years of market exclusivity for biologic drugs, no ban on pay-for-delay settlements for delaying the entry of generics to the market and no provisions on drug re-importation and Medicare drug price negotiation.
GBI Research, the leading business intelligence provider, has released its latest report, “Impact of US Healthcare Reforms - the Extension of Care to 32 Million Uninsured Citizens from 2014 and Implications for the Pharmaceutical Industry”, which provides key data, information and analysis of the US healthcare reforms and their impact.
This report offers a comprehensive insight into the provisions and the impact of the US healthcare reforms. It provides an overview of the US healthcare system and establishes the need for healthcare reforms in the US. It talks in detail about the major provisions of the US healthcare reforms and briefly discusses their implications. It also offers a timeline for the implementation for the major provisions of the US healthcare reforms. Finally it discusses the impact of the US healthcare reforms on various stakeholders including the US government, the health insurance industry, the pharmaceutical and biotechnology industry, the hospitals and the employers.
The report is based on proprietary databases, primary and secondary research and in-house analysis by GBI Research’s team of industry experts to provide a comprehensive view of the impact of the US healthcare reforms.
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