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12:00 AM
Apr 02, 2012
 |  BioCentury  |  Politics, Policy & Law

Collateral damage

How Supreme Court ruling on Affordable Care could affect biosimilars, drug fees

During oral arguments on the Affordable Care Act at the Supreme Court, attention focused on the constitutionality of the individual mandate to buy health insurance. But for biopharma, what is at stake are provisions that directly affect the industry.

These include the biosimilars pathway at FDA; the rebates and fees the industry already is paying in exchange for a bigger population of insured patients; and the Independent Payment Advisory Board, which would have broad powers to curtail Medicare spending.

If the entire bill is struck down, the uncertainty will continue. With elections looming, Congress is unlikely to act this year on provisions that even had bipartisan support, such as the biosimilars pathway. And whether such revisions will be better or worse for biopharma compared with current law would depend on the political makeup of the White House and both houses of Congress after the elections.

Based on this uncertainty, some Capitol Hill watchers told BioCentury that upholding the rest of the law would be better for biopharma, since companies have been investing and making business decisions based on the law for two years.

"The devil you know is better than the devil you don't," said Jayson Slotnik, VP of reimbursement and innovation strategy for United BioSource Corp., a drug information services subsidiary of Medco Health Solutions Inc.

The court is expected to rule in June.

The arguments

The Supreme Court heard four sets of arguments last week related to the act, scheduled in the order the justices will decide them.

The first arguments focused on whether, under the Anti-Injunction Act, federal courts have jurisdiction to decide the constitutionality of the individual mandate before any penalties are collected. If the court determines it is barred from ruling on the case now, none of the challenges can be resolved until at least 2015.

If the court determines it can rule now, it will decide whether the individual mandate, which requires that most U.S. citizens and legal residents have health insurance or pay a penalty, is constitutional.

If the individual mandate is deemed unconstitutional, then SCOTUS will decide whether it can be severed from the rest of act. If not, the entire law must be struck down; but if so, then only some related provisions might be struck down along with the mandate.

The court also heard arguments about the constitutionality of the Affordable Care Act's expansion of Medicaid to cover individuals with income of up to 133% of the federal poverty level. Should the expansion be deemed unconstitutional, then the court would likely also rule on its severability.

The case was originally brought in the District Court for the Northern...

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