Drugmakers don't see major U.S. reform boost

NEW YORK Tue Nov 10, 2009 3:25pm EST

NEW YORK (Reuters) - Drugmakers do not expect a major boost to their industry from wider insurance coverage under a proposed U.S. healthcare overhaul, the chairman of a pharmaceutical trade group told Reuters on Tuesday.

Manufacturers have pledged to contribute $80 billion over a decade to help pay for an expansion of health insurance, an agreement reflected in legislation pending in the Senate.

The overall impact on the industry will depend on final details, but so far "there is not an obvious upside" that makes up for those cuts, AstraZeneca Plc (AZN.L) (AZN.N) Chairman David Brennan told the Reuters Health Summit in New York.

Brennan currently chairs the Pharmaceutical Research and Manufacturers of America (PhRMA), the industry's largest lobbying organization.

As many as 39 million more people could gain healthcare coverage under legislation being debated in Congress. Asked if that would provide a net positive to the industry, Brennan said: "It depends on the access they are given."

"If it's private sector coverage in the existing programs where we compete, then we'll have an opportunity," he said. But he added that generic drugs now make up about 70 percent of prescriptions, and "we compete in a much smaller segment of the market than we did before."

Higher rebates paid to the government, discounts on some drugs offered under Medicare and other parts of the $80-billion pledge will "happen relatively quickly," while "it's going to take a couple years for a system to form that gets new people" covered with insurance, Brennan added.

Analysts have said the industry's agreement was a move to head off deeper cuts, and company discounts on some Medicare drugs could provide an incremental increase in demand.

The pharmaceutical industry remains supportive of a healthcare overhaul despite concerns about some provisions, Brennan said. Legislation in the U.S. House of Representatives would "put a much more significant burden on the industry," he said. The House bill would impose more rebates and require the government to negotiate lower prices under Medicare, something the industry opposes.

"We remain committed to seeing what we hope will be comprehensive healthcare reform to take place this year," Brennan said.

Merck & Co Inc (MRK.N) Chief Executive Officer Richard Clark, also speaking at the summit, said he was cautiously optimistic that Congress would pass a bill that could eventually increase pharmaceutical use.

He added it would not be clear what the exact impact would be on his company, which recently merged with Schering-Plough to become the nation's second largest drugmaker, until both the Senate and House combine their bills into a final measure that passes.

"You may see a slight increase or an increase in volume, but if there is a substantial issue around rebates or pricing or controls then I think it puts our industry at risk," he said.

(Editing by Gerald E. McCormick)