Biotech threats disappear as Supreme Court upholds health law

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By John Carroll, Tracy Staton and Mark Hollmer

Biotech industry leaders breathed a sigh of relief this morning. The United States Supreme Court has narrowly upheld most of the Affordable Care Act, retaining a mandate that requires individuals to purchase insurance or face a penalty. 

While the ruling primarily has major implications on how many Americans have health insurance coverage and how it is paid for, the bill also included some important provisions that the biotech industry had fought long and hard for. In particular, the cloud that hung over a provision allowing 12 years of marketing exclusivity for biologics as well as the regulatory pathway for biosimilars has now disappeared along with the threat that the Supreme Court might have tossed out the entire law.

Just recently at the big BIO confab in Boston top biopharma execs fretted over the future of the law and the potential impact of a far-reaching decision that could have forced all parties back to the drawing board. At worst, though, the industry was looking at an expensive and probably lengthy effort to get the laws back on the books in an election year. With the mandate left in place and the law upheld, with the conservative John Roberts providing the swing vote, the Biotechnology Industry Organization and others can turn the page for now to other matters.  

"The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax," Chief Justice Roberts wrote. "Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness."

In a release BIO chief Jim Greenwood said the group would continue to offer its advice to regulators as they hammer out the rules over biosimilar development. Some of the biggest companies in the industry, like Amgen and Merck and Biogen Idec, have set up biosimilar initiatives. BIO has been advocating that the new biosims that will compete with branded products should be put through a rigorous clinical trial program, avoiding the onslaught of cheap copycats that has blighted traditional small molecule treatments.

"In addition, BIO will continue to support efforts to repeal the Independent Payment Advisory Board (IPAB), which threatens patient access to needed cures and medical breakthroughs," noted Greenwood. 

Drugmakers can rest easy on healthcare reform as well. With the Supreme Court's ruling to uphold the law, pharma's $80 billion worth of horse-trading stays intact. Yes, the discounts that have taken a bite out of U.S. sales will stand. But the insurance mandate stands too. So, drugmakers will see that big influx of patients--the reason they traded away those discounts--when that provision takes effect in 2014.

How big an influx? According to New York Times figures, taken from the Congressional Budget Office's report on the Affordable Care Act, the number of insured Americans under age 65 will leap past 240 million as the mandate takes effect, climbing to 250 million-plus by 2022.

Meanwhile, the number of uninsured will now drop as expected, with a steep decline beginning in 2014 and continuing through around 2106. Rather than 50 million-plus Americans without health insurance, we'll be looking at around 27 million by 2022.

Minutes after the ruling, AdvaMed President and CEO Stephen Ubl issued a statement that reiterated support the device industry's major trade group continues to have for the "goals of health care reform." But the device tax is expected to raise about $30 billion from the industry over a decade to help fund some of the law's major provisions And Ubl said the tax must still be repealed "because of its damaging effects on economic competitiveness, jobs and the research and development needed to find tomorrows treatments and cures."

He noted that the House has already voted to repeal the tax, and that AdvaMed plans to keep pushing for its removal "with policymakers on both sides of the aisle."

- here's the story from The Washington Post
- read the report from Reuters

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