Biopharmaceutical Companies Continue to Advance and Invest In Rough Economic Times
Filed under: Biosimilars, Drug Pricing, Drugs & Medical Devices, Medicaid, Medical Device, Pharma, Prescription Drugs
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A recent press release from the Pharmaceutical Research and Manufacturers of America (PhRMA) reports that pharmaceutical and biotech companies continue to invest substantial amounts of money into research & development, despite the dismal current economic situation. Research from PhRMA and Burrill & Company shows that “pharmaceutical research and biotechnology companies invested a record $65.2 billion last year in the research and development of new life-changing medicines and vaccines — an increase of roughly $2 billion from 2007.” There are almost 30,000 medicines in development in the country right now.
In a time when most other industries are struggling and the unemployment rate is the highest it has been in 25 years, it is encouraging to see that the biopharmaceutical industry, one whose existence and success directly impacts the health of our nation, is continuing to invest and advance. For example, this week we saw Merck make a serious investment through its $41.1 billion merger with Schering-Plough. In addition, as we posted in December, Merck announced its plan to enter the biosimilars market, which will cost an estimated $1.5 billion.
Biopharmaceutical companies are continuing to spend on R & D, and the great majority of their investments are within the US. According to “The Biopharmaceutical Sector’s Impact on the U.S. Economy: Analysis at the National, State, and Local Levels”, a study out this month by Archstone Consulting and Dr. Lawton R. Burns, this industry creates millions of US jobs and contributed three times as much to the GDP than the average of other industries and sectors in 2006.
Besides the struggling economy, drug companies face other challenges. As we recently reported, President Obama’s health reform plan may negatively impact pharmaceutical companies through an increased discount to Medicaid (from 15.1% to 22.1% of avg. manufacturer’s price). Despite the economic crisis and health care reform changes, it is hopeful to hear the industry’s continued commitment to progress. Said PhRMA President and CEO, Billy Tauzin:
America’s pharmaceutical research and biotechnology companies are not immune to the challenges presented by our current economic crisis. However, the important work that we do every day in the battle with disease cannot stop. The U.S. is the world’s hotbed of medical innovation, and throughout the country, we remain committed today to finding tomorrow’s cures, despite the incredible challenges that are posed by the current economy.
Two New Reports Look at Increases in Health Care Spending
Filed under: Medicaid, Medicare, Private Insurance
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The Wall Street Journal reports that CMS estimates overall U.S. health care spending will reach $4.35 trillion in 2018, accounting for one-fifth of GDP. The findings by CMS were published Tuesday in the journal Health Affairs. In 2009, U.S. health care spending is expected to reach $2.5 trillion, a 5.5% increase from 2008.
The CMS study expects government health care spending to increase by 7.4% to $1.19 trillion this year. However, the study forecasts that, by 2016, the government will pay for more than 50% of total health care spending. The increase in government health care spending is expected to come from baby boomers enrolling in Medicare and increased enrollment in Medicaid.
Meanwhile, The New York Times reports that Medicare spending continues to vary widely across the U.S., according to a report to be published today in The New England Journal of Medicine.
According to The Times, Dartmouth researchers found that:
The regional differences in the growth of Medicare spending suggest doctors are helping to drive up costs when they more frequently order tests or admit patients to the hospitals. In areas where there are plenty of hospital beds and sophisticated imaging equipment available, doctors generally spend more on their patients.
Dr. Elliott S. Fisher, the director of the Center of Health Policy Research at the Dartmouth Institute for Health Policy and Clinical Practice and one of the work’s authors, told The Times that:
[A]ny attempt to rein in health care costs . . . needs to address how doctors and hospitals are paid, where they are rewarded on the basis of the volume of services they perform.
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