Uncertainty is frequently cited as a factor in the slow economic recovery. At various levels of the economy, fiscal ambiguity is thought to prevent individuals from making decisions about everything from hiring and investing to relocating and making purchases. The effects of this indecision have been acute for many physicians, who are often small business owners and thus particularly sensitive to decreased consumer spending.
Complicating matters, healthcare reform legislation is instigating doubt in the economy: patients, insurers, pharma, big businesses, small businesses, and physicians all face uncertainty over the new legislation, aspects of which are already being implemented. Again, many physician business owners are doubly affected by the legislation. As employers, they provide benefits to their staff, while their businesses often depend on third party reimbursements.
Even as the legislation is being debated in the courts, changes are being made. The legislation as it stands upholds a 12-year exclusivity window for novel biologic agents. However, in his recent budget proposal, Mr. Obama has called for cutting that exclusivity down to seven years, a move projected to save $3.5 billion over 10 years. That, reports note, is just a sliver of the Federal deficit.
Even if it makes sense fiscally, cutting the exclusivity on biologics makes little sense for patients. There's no doubt that biologics have revolutionized the treatment of psoriasis and, at the same time, reinvigorated the specialty of dermatology. Yes, the manufacturers are making money on these drugs. But they also spent a lot to develop them and continue to invest in studies and post-marketing surveillance to ensure their safe use. If companies can't recoup their investment, development will suffer. Furthermore, as our article in the May issue described, development of follow-on biologics continues to pose laboratory and regulatory challenges.
One thing the government can do to save taxpayers money and improve the lot of physicians-and patients-is to repeal the Sustainable Growth Rate. As explained by the AMA (in a video you can view at DermTube.com; Just search for “SGR.”), every year that the SGR stands it becomes increasingly expensive to eliminate. Instituted to keep Medicare costs down, the SGR may actually be restricting patient access and adding to government healthcare spending. It's an example of how difficult it can be to predict the effects of policy and could support the need to more thoughtfully consider the implications of fast-tracking biosimilars.