How could the AHCA Impact Pharma?

Forecasting Legislation and Industry Changes in the Trump Administration

Forecasting Legislation and Industry Changes in the Trump Administration

 

With the recent passing of the American Health Care Act (AHCA) through the U.S. House of Representatives, many industry leaders are anticipating the possible changes the AHCA may bring. Repealing and replacing the Affordable Care Act (ACA) could both hurt and strengthen the healthcare industry as a whole.

The pharmaceutical industry in particular is facing many changes. Though the possible legislation specifics have not been released, the AHCA could impact patient populations, industry taxes, and drug pricing:

Patient Populations

Repealing and replacing the Affordable Care Act may have a larger impact on the pharmaceutical industry than previously thought. The mandate for Americans to buy health insurance has continually decreased the uninsured population by half over six years. This has increased the industry’s consumer base as more Americans have been able to seek medical and pharmaceutical care.

Following the release of the American Health Care Act’s CBO score, the pharmaceutical industry may see a drop in patients by about 23 million. This heavily decreases the industry’s consumer base while potentially decreasing the amount of spending allocated towards new disease research and development.

A lack of insured consumers means that many medical products would likely be unable to reach their intended patients and the industry could suffer financially. Drug pricing will continue to be a focal challenge for the industry as consumers pay may pay for treatment out-of-pocket.

Tax Repeal, Tax Replace

A major facet of the AHCA for the pharmaceutical industry is the proposed repeal on many Obama-era industry taxes. Consumers may see the benefits of this repeal in lower pharmaceutical costs when coupled with other proposed industry incentives. The GOP has not confirmed whether the Senate will replace these taxes with new ones.

Uncertainty surrounding the industry’s financial responsibility towards the new healthcare bill has caused pharmaceutical stocks and other investments to in recent months. Though unlikely, the possibility that the AHCA imposes more severe financial burdens to the industry is causing a major investment shake-up.

Pricing Pressures

A continual challenge in the industry has been increasing pressure from lawmakers to reduce the cost of pharmaceutical products. In the early days of his administration, President Trump met with leading drug-makers to discuss pricing struggles and strategies, vowing to reduce the cost in his presidential term.

The ACA may have increased the amount of Americans receiving health insurance throughout its seven years, but it failed remarkably in terms of drug prices. The AHCA has the possibility to reverse this, and many pharma . Though a drug pricing mandate has not yet been introduced to the American Health Care Act, past proposals from President Trump have included tax cuts and American-manufacturing incentives.

Legislative Uncertainty

Though the bill has not been reintroduced to the public, or passed through the U.S. Senate, the AHCA could have a large impact on the pharmaceutical industry. Though forecasts indicate both positive and negative facets of the bill coming toward the industry, many industry leaders have expressed an interest in working with the government to provide the best possible products for patients.

To learn more about policy and the pharmaceutical industry, follow Q1 articles on the Q1 Newsletter or check out our pharmaceutical events here.

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