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Pharmaceutical Industry Outlook

Contributors: Mike Hackett

Together, industry regulations and healthcare reform are impacting how pharmaceutical companies do business. Drug makers are experiencing a heavy financial burden, due not only to required rebates and the Branded Prescription Drug Fee, but also from investments to secure their supply chain. In addition, increasing pressures from consumer advocacy groups and regulatory agencies are forcing drug makers to reconsider how they engage customers and prove the value of their products.

While the pharmaceutical industry has been a key supporter of the health reform agenda, the Affordable Care Act (ACA) has already begun to impact companies, both financially and operationally. Pharmaceutical companies are responsible for the Branded Prescription Drug Fee, which is expected to cost the industry an estimated $30 billion by 2021, and drug makers are also required to provide rebates to offset the benefits provided to the uninsured. To offset these rising costs, many companies are reevaluating how they market and sell their products in the US.

Value Based Services and ACOs
The ACA creates incentives for providers to move away from a fee for service to a value based model. Many providers are forming Accountable Care Organizations (ACOs) to provide better value, particularly as they bear greater risk when determining which therapies are best for patients. ACOs want to ensure that patients get the right care at the right time, while avoiding duplication of services and medical errors. ACOs will be responsible for a significant portion of healthcare spend, so pharmaceutical companies will have to develop strategies to engage with this new customer base, and effectively demonstrate the value of their products to them.

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