Obama Wins: ‘Obamacare’ stays on course… and what it means to India?

Re-election of President Barrack Obama for another four year term, no doubt, sends a clear signal to all concerned that full implementation of the ‘Patient Protection and Affordable Care Act’ of America, which is also known to many as ‘Obamacare’, will keep staying on course powered by passionate and unflagging enthusiasm of the head of state of the most powerful nation of the world. More so, when it has passed this year even the strict scrutiny of the Supreme Court of the country.

Re-elected President will now have no apprehension that this Act will be repealed, as many predicted a Mitt Romney win could mean a reversal or at least a slower adoption of the new healthcare reform process in the U.S.

That said, it is also clear, although President Obama will get another four years in the White House, Republicans will control the ‘House of Representatives’ and the Democrats will control the ‘Senate’, making the job of the re-elected President indeed tougher. Moreover, much anticipated ‘fiscal cliff’ of the country could pose even a greater challenge to fully fund the ‘Affordable Care Act’, the way it has been crafted by the U.S government.

‘Obamacare’: 

Let us now have a brief and a quick review of the ‘Obamacare’.

After getting elected for the first four year term as the President of the U.S, Barrack Obama championed enactment of the historic healthcare reform legislation – ‘Patient Protection and Affordable Care Act’ fulfilling his election campaign pledge deftly to ensure healthcare for all  American. The center piece of this legislation was aimed at providing health insurance benefits to another around 34 million poor and uninsured Americans.

The key highlight of this Act is that it will compel the insurers to extend insurance to even those with any pre-existing illness and impose stringent criteria on expenditure towards medical treatment to cut healthcare costs.

‘Patient Protection and Affordable Care Act’ is expected to cost around US $940 billion over 10 years to the U.S Government. To partly recover this cost, Obama administration had already proposed new fees to the healthcare and pharmaceutical companies along with a new tax for the high income groups.

Thus, so far as the new path-breaking healthcare reform process in the US is concerned, President Obama has ‘walked the talk’ and even ‘talked the walk’.

‘Obamacare’: the key features: 

Cost US$ 940 billion over 10 years. Expected to reduce projected federal budget deficits by US$ 143 billion by 2019
Coverage 95% people would gain coverage, leaving 22 million uninsured
Timeline Most provisions would take effect in 2014
Sources ofFunding:New Taxes • Tax on high-income earners• Tax on “Cadillac” health plans• 10 year industry fees imposed on:1. Insurance Companies

2. Medical Device Manufacturers

3. Drug Makers

IndividualResponsibility Penalty: People without coverage would pay a fine of $ 95 in 2014, which would rise to US$ 695 or 2.5% of income, whichever is higher by 2016.
EmployerResponsibility Penalty: Raises the fee that employers must pay if they do not provide insurance to US$2,000 per employee. Also, exempts companies from paying the fee for the first 30 employees.
Employer Subsidies Small businesses can immediately apply for tax credits of upto 35% of their contributions toward employee health insurance premia. Beginning 2014, these tax credits will cover 50% of contributions toward employee premia.
Fraud and   Abuse Deterrence / Civil and Criminal Penalties: Penalties increased to US$ 50,000 for each false statement or misrepresentation.

‘Medicare’ plan of America:

According to the explanation of the program given by Medicare, it is a prescription drug benefit program. Under this program, senior citizens purchase medicines from the pharmacies. The first U.S$ 295 will have to be paid by them. Thereafter, the plan covers 75 percent of the purchases of medicines till the total reaches U.S$ 2,700. Then after paying all costs towards medicines ‘out of pocket’ till it reaches U.S $ 4,350, patients make a small co-payment for each drug until the end of the year.

Some arguments in favor of the Act: 

The following are some arguments in favor of the Act:

  • More security to the lives of so many Americans
  • Will protect against worst practices of insurance companies
  • Will give chance to uninsured and small businesses choose an affordable plan from a more competitive market
  • Every insurance plan will cover preventive care
  • Reduce cost of premium because of intense competition and regulations
  • Would bring down the deficit by US$ 1 trillion.

Some arguments against the Act: 

At the time of the enactment of the new law, following were some arguments against ‘Obamacare’: 

  • Goes against popular wisdom
  • Complex – difficult to implement
  • Expensive
  • Appeasement to Insurance Companies
  • A ‘Political Suicide’

Immediate impact of the Act on US Pharmaceutical Companies:

Following were the reported immediate impact of the Act and reaction of the U.S Pharmaceutical Industry in 2009-10: 

  • Overall adverse impact on sales & profit due to higher rebates on drugs sold through “Medicaid” Program
  • 50% discount for patients in “Medicare” part D Program
  • J&J, Eli Lilly, Abbott, Amgen and Gilead gave guidance on adverse impact on 2010 performance
  • Companies with high US sales dependency like, Forest, King, Cephalon, Amgen and Shire were expected to be the biggest losers
  • Bayer, Sanofi, Novartis and Roche were expected to have lesser impact 

US Pharmaceutical Industry pledged US $ 80 billion towards healthcare reform of the nation: 

Despite adverse financial impact as indicated above, it was reported that the U.S Pharmaceutical and Biotech Companies had at that time offered to spend US $ 80 billion to help the senior citizens of America to be able to afford medicines through a proposed overhaul of the healthcare system of the country.

This was a voluntary pledge by the U.S pharmaceutical industry to reduce what it will charge the federal government over the next 10 years.

Though many experts had said, without this gesture the adverse financial impact on the U.S pharmaceutical companies would have been much more.

US citizens’ support: 

Despite some skepticism around, a leading U.S daily reported that American citizens overwhelmingly support substantial changes in the country’s healthcare system and are strongly behind a government run insurance plan to compete with private insurers.

According to a New York Times/CBS News poll, majority of Americans would be willing to pay higher taxes so that every individual could have health insurance. The survey also highlighted that Americans, by and large, feel that the government could do a better job of holding down healthcare costs as compared to the private sector.

Current American healthcare: High quality – high cost 

85 percent of respondents in the above survey at that time indicated that the country’s healthcare system should be completely overhauled and rebuilt. The poll also showed that American citizens are far more unsatisfied with the cost of healthcare rather than its quality.

President Obama has been repeatedly emphasizing the need to reduce costs of healthcare and always believed that the healthcare legislation is absolutely vital to American economic recovery. 86 percent of those polled in the survey opined that the rising costs of healthcare pose a serious economic threat to the country.

Another interesting study: 

Another study conducted by the ‘George Washington University School of Public Health and Health Services’ reported that as a part of the new healthcare reform initiative in the U.S, if the health centers are expanded to cover from the current 19 million to 20 million patients, the country can save US$ 212 billion from 2010 to 2019 against a cost of US$ 38.8 billion that the government would have incurred to build the centers. This is happening because of lower overall medical expenses for these patients.

Impact on Indian generic business: 

‘Obamacare’ was always considered to make a positive impact on India in general and the domestic Indian pharmaceutical players in particular, because of the following reasons:  

  • U.S is the largest generics pharmaceutical market of the world
  • The Act promotes use of generic drugs boosting the growth opportunity of the market further
  • India produces around 20 percent of the global requirement for generic drugs by volume
  • Indian companies account for over 35 percent of the ANDAs as more and more branded drugs are going off-patent 

However there is also a flipside to it, as follows:  

  • Increase in demand will attract more number of generic players to compete
  • Will attract more MNCs in generic business having stronger marketing muscle power
  • Intense cost competition
  • Severe pressure on margin

 Impact on Indian Bio-similar Drug Business: 

Though a pathway for entry of biosimilar drugs is now in place in the U.S, 12 year ‘Data Exclusivity (DE)’ could pose to be a serious market access barrier for such products. However, some experts believe, since biosimilar opportunity in U.S comes in 2015, many such drugs developed in India will cross 12 year exclusivity period by then.

Keeping an eye on this emerging opportunity many U.S biotech companies are now looking for low cost bio-manufacturing destinations, like India. 

Impact on Indian BPO opportunities: 

The following are the expected positive impact on the ‘Business Process Outsourcing (BPO)’ opportunities in India:

  • Around 35 million more Americans coming under insurance cover would mean as many new enrollment and transactions
  • Will require more customer support services, as the healthcare reform makes digitized records mandatory in the country
  • Currently less than 30 percent physicians in the U.S have Electronic Health Records (EHRs)
  • Conversion of archival data into compatible formats (data entry, validation, maintenance) is a must now
  • Online submission of applications through payors’ portal has commenced
  • High volume claim adjudication is expected to follow 

However, here also there is a flipside to this opportunity due to the following reasons: 

  • ‘Regulatory’ and ‘Privacy’ concerns related to patients’ records
  • Detail knowledge of medical procedures and codes
  • Variation between the states within USA

 Expected Volume of BPO Business: 

The U.S Government is likely to spend around US$ 15-20 billion on healthcare technology services alone and bulk of the business is quite likely to come to India, unless President Obama finally decides to discourage outsourcing opportunities through domestic tax measures.

Current situation: 

Currently the size of India’s outsourcing industry is estimated to around US$ 70 billion, telecom, banking, financial and other customer services being the main BPO demand from the U.S. Healthcare BPO now represents reportedly only around 5 percent of the total business, though with an ascending growth trend.

Sensing the emerging opportunity, various call centers, medical record transcribers and software developers among others, have already started building commensurate capacities. India’s big outsourcing firms are also expanding their operations in the US.

Interestingly, it has been reported that ‘Obamacare’ could probably be India’s biggest BPO bonanza yet – bigger than even Y2K.

Closer home:

Closer home, during the new U.S healthcare reform initiative, Indian Prime Minister Dr. Manmohan Singh reiterated in his speech delivered at the 30th Convocation of PGIMER, Chandigarh on November 3, 2009, the dire need of the country to strike a right balance between preventive and curative healthcare for the common man. The Prime Minister articulated his thoughts as follows:

“ We must also recognize that a hospital centered curative approach to health care has proved to be excessively costly even in the advanced rich developed countries. The debate on health sector reforms going on in the U.S is indicative of what I have mentioned just now. A more balanced approach would be to lay due emphasis on preventive health care”.

However, the Prime Minister of India has not walked the talk, not just yet.

Conclusion: 

When the world believes that comprehensive healthcare reform measures to provide access to affordable, high quality healthcare services covering the entire population of the country is fundamental to economic progress of any nation, the government of India seems to be keeping its ‘Universal Health Coverage’ initiative still on the drawing board, engulfed by controversies, debates and posturing by different key elements.

If and when the ‘Universal Health Coverage’ initiative will see the light of the day in India, all stakeholders including the pharmaceutical industry will hopefully come forward with their own slice of contribution, just as what happened in the U.S, to ensure access to affordable high quality healthcare to all the citizens of the country.

Be that as it may, a photo-finish win, as it were, of Barrack Obama for the second four year term as the President of the United States, assures all that ‘Obamacare’ stays on course for the Americans, extending its significant spin-off benefits to India and well deserving a ‘thumbs-up’ from the stakeholders of the country .

By: Tapan J Ray   

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Recent global meet on climate change in Copenhagen: what were achieved and what were not.

Long before the commencement of Copenhagen climate change meet, many from all over the world started talking passionately about the “dangerous climate change”, which as we know deals with the issue of increase of global temperature of 2 degrees Celsius (2C) from the preindustrial level.

This issue was discussed at length in Copenhagen and an accord was ultimately announced on December 18, 2009 followed by a plenary session on December 19, 2009.

What does it say?

The Accord is a 12-paragraph document of statement of intents and non-binding pledges to address the “dangerous climate change” issues.

Towards this direction the Intergovernmental Panel on Climate Change (IPCC) at Copenhagen recommended even to the developed countries of the world to reduce carbon emission from their respective 1990 level by not less than 25% by 2020, from when the global carbon emission is expected to start declining.

USA and China were the key partners of IPCC with a strong supporting role played by Brazil, South Africa and India to have an accord that suits the emerging large developing economies of the world. The accord though recommends to the developed countries, barring the US, to ensure their carbon emission cuts, but not under the Kyoto Protocol. Most influential 26 countries of the world agreed with this accord and other 192 countries, though appeared to be unhappy in the plenary session, accepted the same with their ‘silence’, which perhaps means indirect consent.

The key points of the accord:

The main points of the Copenhagen Accord are as follows:

• Cooperation by all in containing emissions within 2 degrees Celsius above preindustrial levels.

• To reduce carbon emission, the developing nations will report in every two years on their non-binding voluntary actions. This report will be subject to international consultations and analysis.

• US $ 10 billion each year will be financed by the developed countries for a three-year program to pay for the projects taken up by the poorer nations to develop clean energy and effectively address drought and other climate-change impacts.

• A goal of mobilizing US $ 100 billion per year by 2020 was also set for achieving the same objectives.

Is this accord a triumph of USA or China or the BASIC countries?

This accord is seen by some as a triumph of the USA to influence the ultimate outcome of the Copenhagen climate change summit. US President Barack Obama, in fact, brought back the negotiation from the brink of collapse, at the last minute, through hectic negotiation with the heads of states of Brazil, South Africa, India and China (BASIC countries).

What will the success of the summit depend upon?

The success of this accord will depend on whether the USA will be able to live up to its promises to reduce carbon emissions in their own country and help other countries to address the same by raising billions of dollars.

BASIC countries, especially China, emerged stronger:

The process of this accord also witnessed China coming stronger leveraging their clout in a multilateral forum of the African continent, which is very rich in various valuable natural resources. However, many other less powerful nations, as said earlier, felt left out in this deal brokered mainly by the US initiative and interest.

Thus even after reaching the accord, at the plenary session on the last Saturday, a large number of speakers from the developing nations sharply criticized the deal alleging it as a pact meant only for the rich and BASIC countries.

Lack of a clear roadmap:

Be that as it may, without a clear road map for research and development of low-carbon technologies and no binding collective carbon emission target, achieving 2C by 2020 still remains a pipe dream.

Conclusion:

After the Copenhagen Accord, Brazil, South Africa, India and China (BASIC), the four large emerging economies of the world, were immensely successful to display their joint muscle power to the world as a whole, clearly emerging as a major combined force to reckon with, especially by the developed nations of the world lead by the USA.

However, many will strongly feel that interests of smaller and poorer nations of the world were sacrificed in this first global agreement of the century on climate change at Copenhagen.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Will mandatory disclosure of ‘payments to physicians’ by the pharmaceutical companies be an overall part of “Healthcare reform process” in the US and what about India?

The brief Scenario in India:
In India over 20, 000 pharmaceutical companies of varying size and scale of operations are currently operating. It is alleged that lack of regulatory scrutiny is prompting many of these companies to adapt to ‘free-for-all’ types of aggressive sales promotion and cut-throat marketing warfare involving significant ‘wasteful’ expenditures. Such practices involve almost all types of their customer groups, excepting perhaps the ultimate consumer, the patients.

Unfortunately in India there is no single regulatory agency, which is accountable to take care of the healthcare needs of the patients and their well being.

The pharmaceutical industry of India, in general, has expressed the need to self-regulate itself effectively, in the absence of any regulatory compulsion. However, many activists groups and NGOs feel that the bottom-line in this scenario is the demonstrable transparency by the pharmaceutical companies in their dealings with various customer groups, especially the physicians.

The brief scenario in the US:

Like in India, a public debate has started since quite some time in the US, as well, on allegedly huge sum of money being paid by the pharmaceutical companies to the physicians on various items including free drug samples, professional advice, speaking in seminars, reimbursement of their traveling and entertainment expenses etc. All these, many believe, are done to adversely influence their rational prescription decisions for the patients.

As the financial relationship between the pharmaceutical companies and the physicians are getting increasingly dragged into a raging public debate, it appears that there is a good possibility of making disclosure of all such payments made to the physicians by the pharmaceutical companies mandatory by the Obama administration, as a part of the new US healthcare reform process.

As I said in my earlier article, Eli Lilly, the first pharmaceutical company to announce such disclosure voluntarily around September 2008 has already uploaded its physician payment details on its website.

US pharma major Merck has also followed suit and so are Pfizer and GSK. However, the effective date of their first disclosure details is not yet known.

In the meantime, Cleveland Clinic and the medical school of the University of Pennsylvania, US are in the process of disclosing details of payments made by the Pharmaceutical companies to their research personnel and the physicians. Similarly in the U.K the Royal College of Physicians has been recently reported to have called for a ban on gifts to the physicians and support to medical training, by the pharmaceutical companies.

Conclusion:

Currently in the US, both in Senate and the House of Congress two draft bills on ‘The Physician Payment Sunshine Act’ are pending. It appears quite likely that Obama Administration, with the help of this new law, will make the disclosure of payments to physicians by the pharmaceutical companies mandatory, along with its much discussed new healthcare reform process.

If President Obama’s administration takes such regulatory steps will Dr. Manmohan Singh government prefer to stay much behind?

I shall try to explore that emerging scenario in my next blog post.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Healthcare reform for the needy and poor in the richest and the most populous countries of the world. What about the largest democracy of our planet?

Healthcare reform to ensure access to affordable high quality healthcare services for all, is considered as an integral part of the economic progress of any country. During recent global financial meltdown, this need became visible all over the world, even more.In my last article, I wrote how the most populous country of the earth – China, unfolded the blueprints of a new healthcare reform process in April, 2009, taking an important step towards this direction.Around the same time, in the richest country of the world, after taking over as the new President of the United States of America, President Barak Obama also reiterated his election campaign pledge for a comprehensive healthcare reform process in the USA.

These measures, in both the countries, intend to ensure access to affordable, high quality health care coverage and services to every citizen of the respective nations. In America, the reform process also intends to bridge the healthcare coverage gap in their Medicare prescription drugs program for the senior citizens.

The pharmaceutical industry response to healthcare reform in the USA:

Responding to this major policy initiative of the government, very responsibly David Brennan, Chief Executive Officer of AstraZeneca and the Chairman of Pharmaceuticals Research and Manufacturers of America (PhRMA) announced recently:

“PhRMA is committed to working with the Administration and Congress to help enact comprehensive health care reform this year. We share a common goal: every American should have access to affordable, high-quality health care coverage and services. As part of that reform, one thing that we have agreed to do is support legislation that will help seniors affected by the coverage gap in the Medicare prescription drug benefit.”

For this purpose Brennan publicly announced the following:

1. America’s pharmaceutical research and biotechnology companies have agreed to provide a 50 percent discount to most beneficiaries on brand-name medicines covered by a patient’s Part D plan of Medicare, when purchased in the coverage gap.

2. The entire negotiated price of the Part D covered medicine purchased in the coverage gap would count toward the beneficiary’s out-of-pocket costs, thus lowering their total out-of-pocket spending.

American Pharmaceutical Industry pledges U.S$ 80 billion towards healthcare reform of the nation:

With the above announced commitment, it has been reported that the US Pharmaceutical and Biotech companies have offered to spend U.S$ 80 billion to help the senior citizens of America to be able to afford medicines through a proposed overhaul of the healthcare system of the country.

This is a voluntary pledge by the American pharmaceutical industry to reduce what it charges the federal government over the next 10 years.

What is the Medicare plan of America?

According to the explanation of the program given by Medicare, it is a prescription drug benefit program. Under this program, senior citizens purchase medicines from the pharmacies. The first U.S$ 295 will have to be paid by them. Thereafter, the plan covers 75 percent of the purchases of medicines till the total reaches U.S$ 2,700. Then after paying all costs towards medicines ‘out of pocket’ till it reaches U.S $ 4,350, patients make a small co-payment for each drug until the end of the year.

American citizens’ support on the new healthcare reform of President Barak Obama:

A leading American daily reports that American citizens overwhelmingly support substantial changes to the country’s healthcare system and are strongly behind a government run insurance plan to compete with private insurers.

According to the latest New York Times/CBS News poll most Americans would be willing to pay higher taxes, so that every individual could have health insurance. Unlike in India, Americans feel that the government could do a better job of holding down healthcare costs than the private sector.

Current American healthcare: High quality – high cost

85 percent of respondents in this survey said the country’s healthcare system should be completely overhauled and rebuilt. The survey also highlighted that American citizens are far more unsatisfied with the cost of healthcare rather than its quality.

President Obama has been repeatedly emphasizing the need to reduce costs of healthcare and believes that the health care legislation is absolutely vital to American economic recovery. 86 percent of those polled in the survey opined that the rising costs of healthcare pose a serious economic threat.

An interesting recent study from the George Washington University School of Public Health and Health Services:

A recent study conducted by the George Washington University School of Public Health and Health Services reports that as a part of the new healthcare reform initiative in the US, if the health centers are expanded from the current 19 million to 20 million patients, the country can save U.S$ 212 billion from 2010 to 2019 against a cost of U.S$ 38.8 billion that the government would have incurred to build the centers. This is happening because of lower overall medical expenses for these patients.

Last year the health centers already generated health system savings of U.S$ 24 billion.

What then is happening in the largest democracy of the planet – our own India, towards such healthcare reform?

India in its 1983 National Healthcare Policy committed ‘healthcare to all by the year 2000′. However, the fact is, in 2009, only 35 percent of Indian population is having access to affordable modern medicines. So many commendable policy announcements have been made by the government thereafter. Due to poor governance, nothing seems to work effectively in our country.

Conclusion:

People with access to the corridors of power appear to believe that when the country will clock the magic number of GDP growth of 9 percent, India will have adequate resources to invest in healthcare. Till then frugal healthcare initiatives will continue at the abysmal level of speed of execution, denying access to affordable modern medicines to 65 percent of population of the country.

If and when the healthcare reform plans will be unfolded in India, hopefully like in the USA, all stakeholders will come forward with their own slice of contribution to ensure access to affordable high quality healthcare to all the citizens of our nation.

When the world believes that healthcare reform measures to cover the entire population of the country to provide access to affordable, high quality healthcare services is fundamental to economic progress of a country, the government of India seems to nurture a diametrically opposite view in this regard. The policy makers appear to sincerely believe that 9 percent economic growth is essentiall to provide access to affordable high quality healthcare to all.

Are we engaged in the well known “Catch 22” debate at the cost of health to all?

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.