Government pricing managers for pharmaceutical manufacturers are in many ways in a prolonged ‘freeze’ state. Changes to the healthcare marketplace due to the implementation of the Affordable Care Act (ACA), as well as the still-unclear state of the Centers for Medicare and Medicaid Services’ Average Manufacturer Price (AMP) rule, have had a major impact on how business is done in the medical manufacturing industry, especially in terms of Medicaid and government contracting and pricing.
Government Policy Changes and Their Business Impacts
- Alterations in government pricing schemes could create significant financial challenges for many companies.
- The establishment of the Health Insurance Marketplace will provide a greater array of medical insurance choices for consumers.
- Health Information Exchanges are increasingly being represented, funded and even legislated by states and the federal government.
- Companies bound by the 340B Drug Pricing Program could continue to experience financial losses due to this cost-cutting federal initiative.
- Manufacturers face increasingly complex challenges in the marketplace based on whether their products are generic, branded or specialty.
- Eligibility for the Medicaid Drug Rebate Program may be changing with the new legislation.
- Medicaid will expand its coverage in many states, bringing numerous new, previously non-covered consumers into the medical coverage fold.
- On the other hand, some conservative states will act to reduce the load on Medicaid providers by limiting patient access and tightening the requirements for eligibility.
- Changes in the criteria for government revenue recognition may increase tax liability.
New Opportunities for the Industry
The ACA encompasses a wide range of changes that likely will affect government pricing and ongoing vendor relationships with pharmaceutical firms and healthcare providers. However, in the face of these challenges, some manufacturers see the ACA as an opportunity to reach consumers, such as the formerly uninsured, who will have more access to their products, thus expanding their market presence.
Taken together, all of these legislative and customer-centric changes happening at unpredictable paces have created a sea change within the US pharm marketplace. Commercial payers are playing a strengthened role in that marketplace. As such, manufacturers are seeing both access challenges and massive opportunities to offer powerful products to consumers in a manner that meets those consumers’ financial considerations like never before.