Wednesday, April 21, 2010

Pharma's ObamaCare Math: It All Adds Up, But...

Posted by Princess Eva Angelica at 4:38 AM
Drug companies are already claiming a loss of income due to costs related to the new U.S. health-care overhaul (aka, "ObamaCare"). First, Lilly claimed costs associated with higher rebates to the Medicaid government health program for the poor, etc. will reduce its 2010 revenue by $350 million to $400 million. Then, Johnson & Johnson said its 2010 revenue would be cut between $400 million and $500 million (see "Pharma Sales Set to Grow 5%-8%; Overhaul Effects Unclear").

It seems that the top 20 pharma companies got together and decided how to divvy up the $80 Bn that Billy Tauzin promised the drug industry would kick in to help pay for health care reform over 10 years. If each of these 20 companies claim losses of about $400 million per year for ten years, it all adds up to -- you guessed it: $80 billion!

Not included in these calculations is the 5%-8% annual increase in global pharmaceutical sales over the next five years predicted by IMS Health, which also predicted that the health system overhaul may “spur fundamental change in the market” [due to new sales of drugs to previously uninsured Americans] starting 5 years from now.

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