The Pharmaceutical Research and Manufacturers of America (PhRMA) represents 48 pharmaceutical companies and promotes its members interests through lobbying and public relations campaigns. PhRMA’s official political action committee (PAC) name is the Pharmaceutical Research & Manufacturers of America Better Government Committee, and its mission is to, “conduct effective advocacy for public policies that encourage discovery of important new medicines for patients by biopharmaceutical research companies.” PhRMA argues that America’s biopharmaceutical companies contribute to making America the world’s leader in medical innovation and contribute more to the U.S. GDP than any other individual sector in the rest of the economy; therefore, the policies that encourage this sector must be safeguarded.
Thus, PhRMA has a vested interest in health care reform to the extent that reforms impact investment in pharmaceutical companies’ investments and innovations, or patients’ abilities to purchase prescription drugs. In 2010, PhRMA supported parts of the Affordable Care Act (ACA), including the individual mandate, taking the stance that expanding coverage to more than 30 million uninsured Americans was a step in the right direction. PhRMA also supported efforts to put an end to practices such as denying coverage because of pre-existing conditions or charging higher premiums because of gender. The health care reform that PhRMA has been most involved in was the expansion of Medicare to include prescription drug benefits—known as Medicare Prescription Drug Plans (Part D). PhRMA’s website contains extensive links and literature on the success of Part D in terms of cost savings for seniors on prescription drugs, improved access to medicine resulting in reduced hospitalizations, and actual government spending for the program coming in significantly lower than projected.
Furthermore, in 2011, the ACA established a Medicare coverage discount program in which drug manufactures were required to provide a 50 percent discount off negotiated prices on brand-name drugs for Part D enrollees in the coverage gap—known as the “doughnut hole,” according to the Kaiser Family Foundation. At the end of 2011, the Department of Health and Human Services (HHS) reported that since the implementation of the 50 percent prescription drug discount program, nearly 900,000 seniors saved $461 million on their prescriptions. As part of its commitment to comprehensive health care reform, pharmaceutical companies pledged to reduce health care costs by agreeing to, “help eligible seniors and disabled Americans who hit the so-called ‘donut hole’ in Medicare Part D cut their out-of-pocket expenses on brand-name medications in half.” To that end, PhRMA supported an ACA provision that shifts more of prescription drug costs to drug makers and pharmacies by increasing the rebates paid by brand-name drug makers from 15 percent on the average price they charge for their medicines to 23 percent, and increasing rebates from 11 to 13 percent of average prices for generic-drug manufacturers. The final rule was issued on January 27, 2012, and the Centers for Medicare & Medicaid Services (CMS) predicts that it will reduce the government’s Medicaid spending on prescription drugs by $17.7 billion over the next five years.
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