Thursday, January 04, 2007

2007 Trends: Democrats Take Over (4 of 4)

Here is the fourth of four posts about major health care trends that I am watching for 2007 along with links to my posts from last year. The first three trends are:
Trend 4: Democrats take over

Democrats have health care on their mind, especially with the 2008 Presidential election starting to heat up. The Washington Post had a good overview last week. See Shift in Congress Puts Health Care Back on the Table.

I view direct negotiations for Medicare as a long shot for Speaker Pelosi’s first 100 hours. (The draft text of H.R.4 The Medicare Prescription Drug Price Negotiation Act of 2007 looks like meaningless window-dressing with limited impact on the marketplace anyhow.) However, Congress seems likely to focus on how companies within the U.S. pharmacy infrastructure make money, putting PBMs and wholesalers under greater scrutiny. I would not be surprised to see new Congressional hearings about contracts, rebates, and chargebacks.

The proposed AWP settlement, along with the ongoing litigation around this pricing benchmark, will create further heat. The Wall Street Journal is also adding fuel to the fire with its muckraking against the pharmacy infrastructure with year-end articles on taming middlemen and Omnicare Inc. The theoretical saving from universal health care will also focus attention on the pharmacy infrastructure -- just listen to John Edward's weekend remarks or read Sunday's article in (where else) The New York Times.

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