Clouds on the Horizon, Part 4

J0400462 Sometimes, in the Clouds on the Horizon series, you may see some repetitive subject matter.  That is because things don’t happen in a vacuum, but rather in conjunction with one another to bring new emphasis to bear on the matter.  Sometimes, things just bear repeating to get attention.  Herein, there are elements of both.

Yesterday I had stated that I would be talking about crisis today and my presentation at the Second Summit on Pharmaceutical Public Relations.  However, I’m drawn away from the topic of crisis, in general, to talk about some specific budding issues that, if not crises, are nevertheless poised to deliver some problems for the pharmaceutical industry on the eve of the election cycle.  It involves a confluence of events and circumstances that when combined, can be potent.

  • First, there is the Medicare Part D donut hole, written about several times in this space.  It is the part of the Medicare Part D benefit that attempts to instill some savings for government by causing seniors to lose their benefit after they have received a certain level of benefit, only to be picked up again by catastrophic insurance once seniors have paid a few thousand dollars out of pocket.  That gap is called the donut hole.  See posting of April 7, 2006.
  • Second, there is the article that appeared in the New York Times yesterday regarding a one time windfall that pharmaceutical companies will receive this year as a result of the advent of Medicare Part D.  The story about the windfall is occurring at exactly the same time that many seniors will find themselves without a benefit due to the donut hole.  The story then becomes that pharmaceutical companies reap a benefit, while seniors lose one.
  • Third, add to this situation an upcoming election cycle in which much hay will undoubtedly be made by critics of Medicare Part D who have denounced the benefit because the way in which it was structured explicitly forbids the U.S. government from negotiating pricing with the companies, a criticism that is most certainly likely to resonate with greater volume given the windfall noted in number 2 above.
  • Fourth, the patient assistance programs (PAPs) run by pharmaceuticals have been in a state of flux during the past few years, as the industry has geared up to better coordinate access.  But one thing that is uncertain is the role of  PAPs in delivering support to seniors during their experience in the donut hole mess.  Will any support given by a PAP be permissible under the law?  Moreover, will any support given to seniors be counted as spending that will propel an individual towards the other side of the donut hole – to the catastrophic coverage.  Industry could be in a lose/lose situation here.  If the support for seniors in the donut hole is not counted, then private industry will have to decide how fart its commitment extends.  But they must do so in an environment in which they are reported as having high profits from the very benefit that is letting down seniors. 

This said, it is incumbent on each company to enunciate now:

·                    How it will treat seniors in the donut hole;

·                    To what extent it will support seniors

Further, there will be tough questions by both the public, the media and policy makers on the Hill as they come to debate issues of FDA and industry reform.

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