As Congress is returns from their August recess, discussions will continue around our federal budget, including ways to reduce costs in our healthcare system. The biopharmaceutical industry will likely again be a target for savings, even though prescription drug costs account for roughly 10 percent of healthcare spending.
One savings proposal that will be considered would extend Medicaid-style rebates to the Medicare drug benefit program (called Part D). This proposal is concerning because it would have serious unintended consequences that would stifle medical innovation, increase costs for seniors, and negatively impact jobs nationally and here in Connecticut.
By all accounts, Medicare Part D is a great success. It helps seniors stay healthy, saves $1,200 per beneficiary in healthcare costs annually, and has achieved a remarkable feat – program costs are 45 percent lower than originally projected . In addition, seniors are happier and healthier; in fact, according to a recent KRC Survey for Medicare Today, 90 percent of enrollees are satisfied with their coverage, and 96 percent say their coverage works well.
From virtually every angle – improving health, keeping costs in check, saving jobs and promoting essential research and development – the proposal to impose rebates in Medicare is short-sighted and harmful. The argument made by advocates of the “rebate” is that the change would put the brakes on drug costs and save money for the federal government. In fact, Part D is already doing just that – and doing it well.
The current Medicare system enables biopharmaceutical companies to support public health and the economy at the state, regional and national levels. In 2011, each job in the biopharmaceutical sector supported a total of more than four jobs across the economy, ranging from manufacturing and construction, to business services and childcare providers. This translates to more than four million jobs across the U.S.
In Connecticut alone, this includes over 58,000 jobs that are supported directly and indirectly through our industry – many of which are high-skilled, good paying jobs . In 2011 the biopharmaceutical sector generated $16.6 billion in total economic output in Connecticut – including $8.9 billion directly, and another $7.7 billion through its vendors, suppliers and the economic activity of its workforce.
As the President and CEO of Boehringer Ingelheim USA, a family-owned research-driven pharmaceutical company which is headquartered right here in Connecticut, I am proud of the work we do each day to bring innovative medicines to patients in need. Boehringer Ingelheim employees come from 142 of the state’s 169 towns and we have major facilities in Ridgefield and Danbury, with additional expansion efforts underway.
The “rebate” proposal could impede the success of Medicare Part D and also adversely impact research, development and jobs here in Connecticut. According to the government and third party analysts, this would result in a loss of up to 260,000 jobs supported by our industry across the nation.
Public policies must evolve. That evolution should support positive, long-term success – for patients, taxpayers, business and the economy. Medicare Part D is already excelling in all of these areas.
The right prescription for Medicare Part D is to continue on its proven path of success, and avoid a focus on reducing short-term costs alone.
Paul Fonteyne is the president and CEO of Boehringer Ingelheim USA Corp.