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The pharmaceutical industry gains certainty but will feel a greater financial squeeze as a result of the US Supreme Court’s decision to uphold most of the Affordable Care Act this week.
Moody’s, the credit rating agency, warned of a negative impact on the sector. It said benefits after 2014 from a boost in drug sales from the newly insured would be more than offset by higher discounts, rebates and taxes. The industry estimates the 10-year cost of the reforms at $85bn, with Pfizer and Merck among those most affected because of their mix of products.
“We respect the court’s decision,” said John Castellani, head of Pharmaceutical Research and Manufacturers of America, the trade body. He added: “We will also continue to work for necessary changes to the Affordable Care Act, such as the repeal of the Independent Payment Advisory Board,” a reference to the agency created by the act designed to achieve Medicare savings.
Angus Russell, head of Shire, the UK-listed speciality drugmaker less exposed to the impact of the reforms, said he welcomed the decision. A more radical overhaul would have risked undermining two attachments to the legislation, creating new uncertainties.
One concerns “biosimilars”, permitting generic competition on off-patent biological medicines only after ensuring a lengthy period of exclusivity of 12 years to the developer. The other authorises continued coverage for people aged up to 26 years old on their parents’ insurance – relevant for Shire’s ADHD franchise.