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12:00 AM
Mar 02, 2009
 |  BioCentury  |  Politics, Policy & Law

Vague in the extreme

In his budget proposal and speech to the joint session of Congress last week, President Obama created a $634 billion frame around the coming healthcare debate in Congress.

Obama did little to dictate what Congress will paint in that frame. Indeed, he was vague in the extreme regarding spending on public health agencies. But the absence of detail was strategic. The president has already demonstrated the power of presenting Congress with broad policy outlines and few constraints on how it accomplishes them.

This strategy was critical to the president's success in enacting one of the largest civilian spending bills in U.S. history just a few weeks after taking the oath of office. Rather than starting by presenting Congress a bill that it could modify, Obama provided a broad outline of his economic stimulus goals and his staff worked with legislators to modify their language (see BioCentury, Feb. 16).

Now the White House has created a context for its healthcare ambitions by assembling a package of tax hikes and spending cuts that provide the first $634 billion to pay for Obama's objectives over the next decade.

In his address to Congress, Obama characterized this as a "down payment on the principle that we must have quality, affordable healthcare for every American."

But he and senior administration officials also made it clear that achieving universal coverage, the most broadly accepted goal for healthcare reform, will cost much more than $634 billion, and that Congress and the administration will have to identify additional sources of revenue and/or savings to achieve their goals.

Thus while drugs constitute a relatively modest portion of the cost-containment or revenue generating directions laid out in the budget plan - at least compared to insurers and hospitals - the innovator drug industry is likely to face more serious challenges. Lawmakers in charge of healthcare and finance now have been given free rein to pursue longstanding ambitions to cut the drug industry down to size.

The industry will not be helped by signs in the budget proposal that the White House supports the notion that drugs are created in labs at NIH, and that biotechnology is no longer celebrated as part of the "new economy."

Pay to play

Universal access can't be accomplished on the back of the drug industry, and the budget document reflects that reality. The Obama plan aims to take a big chunk of its healthcare reform down payment from the pockets of insurance companies.

A single proposal, changing the formula used to pay...

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