If the Supreme Court finds the “individual mandate” provision of the Affordable Care Act unconstitutional, as now seems surprisingly possible, the biopharma industry could be looking at a worst possible outcome situation.
The Court's five-justice conservative-libertarian majority was frequently relentless in their questioning of the mandate at last week's marathon hearings, leading many Court Kremlinologists to put the odds in favor of partial or total repeal. The court could void the mandate, which would blow up the rationale on which PhRMA negotiated $100 billion in drug discounts for federal programs, or it could void the entire law. Either of those outcomes was regarded as unlikely before the hearings. Not anymore.
“PhRMA negotiated an excise tax recognizing it was a give-back taking into account that the industry would likely benefit from that,” said Acorda Therapeutics president and CEO Ron Cohen, MD. “If the individual mandate gets struck down, now you've got a double-whammy, because those thirty-million people aren't going to show up and pay for innovator drugs. So we're still paying into the system, but we don't have the benefit of people having access to medication, which would add costs the system.”
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