One of the issues on which U.S. President-Elect Barack Obama campaigned was tackling the problems with the U.S. health care delivery and financing system. Despite the global economic downturn, U.S. Congress is still expected to be active on a number of important health-related issues that are of paramount interest to industry stakeholders.

Stakeholders have opportunities to weigh in on these initiatives and either affect their shape or capitalise on them as vehicles for accomplishing other health-related goals. In addition, understanding the health legislative and regulatory landscape remains a critical element of sound legal and business strategy and decision making for businesses that provide health care related benefits to employees.

Medicare Reductions

Physicians face dramatic Medicare payment reductions of at least 20 per cent unless those reductions are averted by Congress before 1 January 2010. If Congress does rescue physicians from these cuts, the cost will be between U.S. $40 and U.S. $100 billion, and will likely force cuts from other sources. President-Elect Obama has supported efforts to strategically cut spending for Medicare Advantage to support other Medicare priorities.

Even if cut, the Medicare Advantage program will not provide ample funds to avoid physician payment reductions. Congress will have to look to other funding sources, which could include payment reductions for hospitals and new restrictions on physician ownership of hospitals.

Physicians will be significantly affected by the scheduled 20 per cent payment reduction should it be realised, or by a positive update. Other providers will feel the bite from reductions that will be needed to offset increases to doctors.

Health Information Technology

Lawmakers widely view the U.S.-wide implementation of interoperable health information technology (HIT) as critical to efforts to improve efficiency in the health sector. Areas of controversy, however, include how to incentivise providers to adopt HIT and whether to penalise them for failure to do so, whether patient privacy and security protections would need to be expanded and/or refined, and how to manage the investment costs in new health information systems and new privacy and security protections.

The ability of pharmaceutical companies, academic medical centres and health systems to use data and aggregated data to improve care and population understanding could be undermined by new privacy and security provisions that may accompany HIT legislation.

All providers could face new cost and standards of practice resulting from new privacy and security requirements and from the initial outlay for hardware and software.

“Follow-On” Biologics

President-Elect Obama has called for an approval pathway through the U.S. Food and Drug Administration for generic or “follow-on” versions of biologicals. Congress began to entertain proposals in this regard in 2008, setting the stage for stand-alone consideration in early 2009. A key area of concern is how long manufacturers of brand name biologicals would have market exclusivity.

Brand name manufacturers seek to protect their market exclusivity for as long as possible. Some of these manufacturers may be able to make a case for singling out specific types of products that should not be subject to market exclusivity established timeframes.

Medicare Prescription Drug Benefit

President-Elect Obama identif ied the Medicare prescription drug benefit as an arena ripe for early revision. Key areas of debate include the importation of prescription drugs from other countries, how to craft federal authority to negotiate drug prices and whether to expand the benefit. Obama supports allowing re-importation provided that safety is assured. In addition, he favours expanding the Medicare prescription drug benefit to eliminate the “doughnut hole” into which beneficiaries fall when their total drug spending exceeds a certain amount each year.

Pharmaceut ical manufacturer s are vulnerable both to price negotiation authority and also to re-importation from other countries. As with “follow-on” biologics, certain manufacturers may have the opportunity to seek carve-outs from these provisions for products with certain distinct characteristics