Impact of US Healthcare Reforms - the Extension of Care to 32 Million Uninsured Citizens from 2014 and Implications for the Pharmaceutical Industry by GBIResearch

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Impact of US Healthcare Reforms - the Extension of Care to 32 Million Uninsured Citizens from 2014 and Implications for the Pharmaceutical Industry

Summary

GBI Research 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” that 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 the 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.

Scope

The scope of the report includes -
- Overview of the US healthcare system
- Major provisions of the US healthcare reforms and their impact
- Impact of the US healthcare reforms on stakeholders including the US government, the health insurance industry, the pharmaceutical industry and the employers.

Reasons to buy

The report will enhance your decision making capabilities. It will allow you to -
- Make more informed business decisions from the insightful and in-depth analysis of the US healthcare reforms and their impact on the stakeholders.
- Identify the opportunities and challenges presented by the US healthcare reforms

More Info
									  Impact of US Healthcare Reforms - the Extension of Care to
  32 Million Uninsured Citizens from 2014 and Implications for
                  the Pharmaceutical Industry
 Reference Code: GBIHC108MR                                                                                   Publication Date: June 2011

                                     The US healthcare System is the Costliest Healthcare System in the World, 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
   The US healthcare
                                     Residents by 2019
   reforms are expected to
   bring health insurance            The healthcare reforms constituted in the Patient Protection and Affordable Care Act (PPACA) and
   coverage to 32 million            the Health Care and Education Reconciliation Act of 2010 (HCERA), will bring health insurance
   additional non-elderly US         coverage to nearly 32 million non-elderly US residents by 2019. The provisions related to the
   residents by 2019                 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.
                                     Biologics Price Competition and Innovation Act 2009 Opens the Gates for the 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.




Impact of US Healthcare Reforms – the Extension of Care to 32                                              GBIHC108MR /Published JUN 2011
Million Uninsured Citizens from 2014 and Implications for the
Pharmaceutical Industry                                                                                                                 Page 1
                                                                        © GBI Research. This is a licensed product and is not to be photocopied
                                     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 state-
                                     based health insurance 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. State-based health insurance exchanges will also be the place where people with incomes
                                     between 133% and 400% of the FPL 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.

                                       Healthcare Reforms, The US, Enrollment in the State Insurance Exchanges, Millions,
                                       2012–2021

                                                                30



                                                                                                                               3.7        3.7        3.7    3.6
                                                                25                                                  3.7
                                                                                                        2.9
                                                                                                                               4.1        4.1        4.1    4.2
                                                                                                                    3.9
                                                                20                                      3.7
                                           People in Millions




                                                                                              2.4
                                                                15
                                                                                              2.3


                                                                10                  2.6                                                  19.5        19.6   19.8
                                                                                                                   19.1       19.4
                                                                                                        17.9
                                                                                    1.2

                                                                                              12.1
                                                                 5
                                                                                    7.7


                                                                 0
                                                                     2012   2013   2014      2015      2016        2017       2018       2019        2020   2021

                                                        Subsidized Individually Purchased                      Unsubsidized Individually Purchased
                                                        Employer-based Coverage Purchased through Exchanges

                                       Source: GBI Research, CBO



The pharmaceutical                   After Short Term Losses, the Pharmaceutical Industry will Gain from US Healthcare Reform
                                     in the Long Term
industry stands to gain
from the US healthcare               Pharmaceutical companies initially stand to lose due to the healthcare reforms, as a result of
reform in the long term              provisions such as the annual fee on the pharmaceutical industry, discounts on brand name drugs
due to increased demand              for Medicare Part D beneficiaries in the coverage gap and increases in Medicaid rebates. The
for medicines created by             expiry of patents for blockbuster products before 2015 and the loss of revenues associated with
additional health                    them will also hurt the industry‟s margins. As a result, the pharmaceutical industry stands to lose in
insurance coverage                   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. As a result, the pharmaceutical industry stands
                                     to gain from the healthcare reforms in the long run.



Impact of US Healthcare Reforms – the Extension of Care to 32                                                                        GBIHC108MR /Published JUN 2011
Million Uninsured Citizens from 2014 and Implications for the
Pharmaceutical Industry                                                                                                                                            Page 2
                                                                                          © GBI Research. This is a licensed product and is not to be photocopied
                                     1 Table of Contents
                                     1   Table of Contents ........................................................................................................................ 3
                                         1.1    List of Tables..................................................................................................................... 5
                                         1.2    List of Figures ................................................................................................................... 6
                                     2   Impact of Healthcare Reforms on the Pharmaceutical Industry – Introduction ............................ 7
                                         2.1    GBI Research Report Guidance ....................................................................................... 7
                                     3   The US Healthcare System ......................................................................................................... 8
                                         3.1    Healthcare Facilities and Skilled Manpower...................................................................... 9
                                            3.1.1    Healthcare Providers ................................................................................................. 9
                                            3.1.2    Hospital Beds .......................................................................................................... 10
                                            3.1.3    Healthcare Professionals ......................................................................................... 11
                                         3.2    Manufacturers and Marketers of the Pharmaceutical Products....................................... 12
                                         3.3    Education and Research Institutes ................................................................................. 13
                                         3.4    Healthcare Funding Mechanism ..................................................................................... 14
                                            3.4.1    Private Health Insurance Providers ......................................................................... 15
                                            3.4.2    Public Health Insurance Providers........................................................................... 15
                                            3.4.3    Break Down of National Health Expenditure ........................................................... 17
                                         3.5    Government and Regulatory Authorities in the Healthcare System ................................ 18
                                            3.5.1    Department of Health and Human Services ............................................................ 18
                                            3.5.2    The Food and Drug Administration .......................................................................... 19
                                            3.5.3    Centers for Disease Control .................................................................................... 19
                                            3.5.4    Agency for Healthcare Research and Quality .......................................................... 19
                                            3.5.5    State Department of Health Services ...................................................................... 19
                                            3.5.6    Centers for Medicare and Medicaid Services .......................................................... 19
                                            3.5.7    State Insurance Commissioners and National Association of Insurance
                                                     Commissioners ........................................................................................................ 20
                                         3.6    Types of Healthcare Service ........................................................................................... 20
                                            3.6.1    Primary Care ........................................................................................................... 20
                                            3.6.2    Secondary Care....................................................................................................... 20
                                            3.6.3    Tertiary Care............................................................................................................ 20
                                     4   The Need for Healthcare Reforms in the US ............................................................................. 21
                                         4.1    Low Overall Performance of the US Healthcare System ................................................ 21
                                         4.2    Rising Healthcare Expenditure in the US ........................................................................ 23
                                         4.3    Increase in the Health Insurance Premiums ................................................................... 26
                                         4.4    Rise in the Contribution of Prescription Drugs to the NHE .............................................. 28
                                     5   Major Provisions of the US Healthcare Reforms ....................................................................... 30
                                         5.1    Introduction ..................................................................................................................... 30
                                         5.2    Major Provisions ............................................................................................................. 31
                                            5.2.1    Health Insurance Reforms ....................................................................................... 31
                                            5.2.2    Increased Health Insurance Coverage .................................................................... 37
                                            5.2.3    Medicaid Drug Rebate Program Reform ................................................................. 44
                                            5.2.4    Medicare Related Measures .................................................................................... 45
                                            5.2.5    Provisions for Comparative Effectiveness Research ............................................... 53
                                            5.2.6    Establishment of the Biosimilar Approval Pathway .................................................. 54
                                            5.2.7    Fee from the Healthcare Industry ............................................................................ 62
                                            5.2.8    Tax Related Measures ............................................................................................ 63
                                            5.2.9    Provisions that Impact Primary Healthcare .............................................................. 65
                                            5.2.10 Research-Related Provisions .................................................................................. 66
                                            5.2.11 Provisions Against Fraud and Abuse....................................................................... 68
                                            5.2.12 Provisions Related to Transparency ........................................................................ 69
                                     6   Timelines for Implementation..................................................................................................... 70
                                     7   Analysis of Impact on Major Stakeholders ................................................................................. 74
                                         7.1    The US Government ....................................................................................................... 74
                                         7.2    Impact on Insurers .......................................................................................................... 75


Impact of US Healthcare Reforms – the Extension of Care to 32                                                                        GBIHC108MR /Published JUN 2011
Million Uninsured Citizens from 2014 and Implications for the
Pharmaceutical Industry                                                                                                                                                    Page 3
                                                                                       © GBI Research. This is a licensed product and is not to be photocopied
                                          7.2.1    Increased Coverage for Health insurance ............................................................... 75
                                          7.2.2    Impact of Annual Fee .............................................................................................. 75
                                          7.2.3    Impact of Medicare Advantage Plan Payment Cuts ................................................ 75
                                          7.2.4    Increase in Insurance Premiums ............................................................................. 76
                                          7.2.5    MLR-Based Regulation ........................................................................................... 76
                                          7.2.6    Impact on Insurance Brokers and Agents ................................................................ 76
                                       7.3    Impact on the Pharmaceutical Industry ........................................................................... 76
                                          7.3.1    Pharmaceutical Companies to Gain from Increased Insurance Coverage .............. 78
                                          7.3.2    Impact of the Annual Fee on the Pharmaceutical Companies ................................. 79
                                          7.3.3    Impact of Closure of the Donut Hole ........................................................................ 80
                                          7.3.4    Impact of Medicaid Price Rebates ........................................................................... 80
                                          7.3.5    Biosimilar Legislation ............................................................................................... 80
                                          7.3.6    No Provision for Pay-for-Delay Ban ......................................................................... 81
                                          7.3.7    Increase in the M&A and Licensing Activity ............................................................. 81
                                          7.3.8    Increase in Outsourcing ........................................................................................... 81
                                          7.3.9    Impact of Comparative Effectiveness Research Related Provisions ....................... 81
                                       7.4    Impact on Employers ...................................................................................................... 82
                                          7.4.1    Small Businesses .................................................................................................... 82
                                          7.4.2    Medium and Large Sized Businesses ..................................................................... 82
                                       7.5    Impact on Hospitals ........................................................................................................ 82
                                       7.6    Impact on Medical Equipment Providers ......................................................................... 82
                                     8 Impact of the US Healthcare Reforms – Appendix .................................................................... 83
                                       8.1    Market Definitions ........................................................................................................... 83
                                       8.2    Abbreviations .................................................................................................................. 83
                                       8.3    Research Methodology ................................................................................................... 85
                                          8.3.1    Coverage ................................................................................................................. 85
                                          8.3.2    Secondary Research ............................................................................................... 85
                                          8.3.3    Primary Research .................................................................................................... 86
                                          8.3.4    Expert Panel Validation ........................................................................................... 86
                                       8.4    Contact Us ...................................................................................................................... 86
                                       8.5    Disclaimer ....................................................................................................................... 86
                                       8.6    Sources ........................................................................................................................... 87




Impact of US Healthcare Reforms – the Extension of Care to 32                                                                        GBIHC108MR /Published JUN 2011
Million Uninsured Citizens from 2014 and Implications for the
Pharmaceutical Industry                                                                                                                                                   Page 4
                                                                                       © GBI Research. This is a licensed product and is not to be photocopied
                                     1.1     List of Tables
                                     Table 1:    Healthcare Reforms, The US, Healthcare Providers, 2008 .............................................. 9
                                     Table 2:    Healthcare Reforms, The US, Community Hospitals by Bed Distribution, 2006–2008.. 10
                                     Table 3:    Healthcare Reforms, The US, Number of Healthcare Professionals, 2008 .................... 11
                                     Table 4:    Healthcare Reforms, The US, Uninsured Residents, Millions and %, 1988–2009 ......... 22
                                     Table 5:    Healthcare Reforms, The US, Estimated Proportion of Population with a Pre-Existing
                                                 Condition, %, 2009 ......................................................................................................... 32
                                     Table 6:    Healthcare Reforms, The US, Penalty on the Uninsured Individuals, $, 2014–2016 ... 38
                                     Table 7:    Healthcare Reforms, The US, Estimates of Direct Expenditure on State Insurance
                                                 Exchanges, $bn, 2012–2021 ......................................................................................... 43
                                     Table 8:    Healthcare Reforms, The US, Reduction in Medicare Spending due to Readmissions,
                                                 $m, 2013–2019 .............................................................................................................. 52
                                     Table 9:    Healthcare Reforms, The US, Biosimilar Market, Market Forecasts, $m, 2009–2016 .. 56
                                     Table 10:   Healthcare Reforms, The US, Annual Fee on Branded Prescription Drug Manufacturers,
                                                 $bn, 2011-2019 .............................................................................................................. 62
                                     Table 11:   Healthcare Reforms, the US, Annual Fee from the Insurance Industry, $bn, 2014–2019
                                                 ....................................................................................................................................... 63
                                     Table 12:   Healthcare Reforms, The US, Timeline of Provisions, 2010–2011 ................................ 70
                                     Table 13:   Healthcare Reforms, The US, Timeline of Provisions, 2012–2013 ................................ 71
                                     Table 14:   Healthcare Reforms, The US, Timeline of Provisions, 2014 .......................................... 72
                                     Table 15:   Healthcare Reforms, The US, Timeline of Provisions, 2015–2018 ................................ 73




Impact of US Healthcare Reforms – the Extension of Care to 32                                                                           GBIHC108MR /Published JUN 2011
Million Uninsured Citizens from 2014 and Implications for the
Pharmaceutical Industry                                                                                                                                                         Page 5
                                                                                      © GBI Research. This is a licensed product and is not to be photocopied
                                     1.2       List of Figures
                                     Figure 1: Healthcare Reforms, The US, Components of the Healthcare System, 2011 .................. 8
                                     Figure 2: Healthcare Reforms, The US, Community Hospitals by Bed Distribution, %, 2006–2008
                                                 ....................................................................................................................................... 11
                                     Figure 3: Healthcare Reforms, The US, Healthcare Research Expenditure, $bn, 1995–2009 ...... 13
                                     Figure 4: Healthcare Reforms, The US, Flow of Funds in the Healthcare System, 2011 .............. 14
                                     Figure 5: Healthcare Reforms, The US, Types of Health Insurance Plans, Public Versus Private,
                                                2009 ............................................................................................................................... 15
                                     Figure 6: Healthcare Reforms, The US, National Health Expenditure Shares, %, 2009 ............... 17
                                     Figure 7: Healthcare Reforms, The US, Healthcare Regulators, 2009 .......................................... 18
                                     Figure 8: Healthcare Reforms, The US, Benchmarking of Healthcare Systems, 2010 ................. 21
                                     Figure 9: Healthcare Expenditure as a Proportion of the GDP, Major Pharmaceutical Markets,
                                                %,1980–2007 ................................................................................................................. 23
                                     Figure 10: Healthcare Reforms, The US, Increase in Per-capita Healthcare Expenditure, $,
                                                1990–2019 ..................................................................................................................... 24
                                     Figure 11: Healthcare Reforms, Comparison of Spending on Healthcare, 1985–2008 ................... 24
                                     Figure 12: Healthcare Reforms, The US, Increase in Insurance Premiums, %, 2010 ..................... 26
                                     Figure 13: Healthcare Reforms, The US, High Per-Capita Insurance Overheads $, 2009 .............. 27
                                     Figure 14: Healthcare Reforms, The US, Year-on-Year Growth in Major Components of Healthcare,
                                                %, 1995–2009 ................................................................................................................ 28
                                     Figure 15: Healthcare Reforms, The US, Proportion of Out-of-Pocket Expenditure for Prescription
                                                Drugs, %, 1960–2009 .................................................................................................... 29
                                     Figure 16: Healthcare Reforms, The US, Funding for the Healthcare Reforms, $bn, 2010–2019... 30
                                     Figure 17: Healthcare Reforms, The US, Estimates of People with Pre-existing Condition, Millions,
                                                2009 ............................................................................................................................... 32
                                     Figure 18: Healthcare Reforms, The US, Provisions of the Employer Mandate, 2014 .................... 39
                                     Figure 19: Healthcare Reforms, The US, Enrollment in the State Insurance Exchanges, millions,
                                                2012–2021 ..................................................................................................................... 42
                                     Figure 20: Healthcare Reforms, The US, Estimates of Direct Expenditure on State Insurance
                                                Exchanges, $bn, 2012–2021 ......................................................................................... 43
                                     Figure 21: Healthcare Reforms, The US, Break Down of Additional Medicare Spending, %,
                                                2010–2019 ..................................................................................................................... 45
                                     Figure 22: Healthcare Reforms, The US, Break Down of Medicare Savings, %, 2010–2019 ......... 46
                                     Figure 23: Healthcare Reforms, The US, Medicare Part D Plan Structure, 2010 ............................ 47
                                     Figure 24: Healthcare Reforms, The US, Closure of Medicare Part D Coverage Gap for Brand-
                                                Name Drugs, 2010–2020 ............................................................................................... 48
                                     Figure 25: Healthcare Reforms, Closure of Medicare Part D Coverage Gap for Generic Drugs,
                                                2010-2020 ...................................................................................................................... 49
                                     Figure 26: Healthcare Reforms, The US, Rise in Medicare Spending, $bn, 2000–2009................. 50
                                     Figure 27: Healthcare Reforms, The US, Biosimilar Market, Market Forecasts, $m, 2009–2016 .. 56
                                     Figure 28: Healthcare Reforms, The US, Biosimilar Approval Pathway, Patent Litigation Provisions
                                                in the BPCIA – Round 1, 2010 ..........................
								
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