On March 23, 2010, the president signed into law the Patient Protection and Affordable Care Act, Public Law 111-148 (H.R. 3590) (PPACA). One week later, the president signed into law a set of proposed changes to PPACA, the Health Care and Education Affordability Reconciliation Act (H.R. 4872) (the Reconciliation Act). These two pieces of legislation combined (referred to here as the law) constitute the current efforts to reform healthcare in the United States.

The law will have a profound impact on healthcare in the United States, and countless provisions impact the way life sciences companies conduct business. Examples of provisions of the law having a significant impact on the life science industry include provisions relating to new annual fees and taxes to the pharmaceutical industry, a reduction in Medicare coinsurance obligations and an increase in mandatory rebates, and new disclosure and reporting requirements imposed on pharmaceutical and medical device manufacturers.

The purpose of this article is to identify and briefly discuss those provisions of the law that impact the life sciences industry. Many of the provisions solidify previous legislative and regulatory efforts, and involve concepts that are likely already familiar to the various life science industry players. Others may involve initiatives not previously encountered and represent a change from business as usual. The discussion in the attached is divided into four key areas:

1. Tax Changes

  • Exclude over-the-counter drugs from being reimbursed on a tax-free basis
  • Impose annual fees on pharmaceutical manufacturers and excise taxes on taxable medical devices

2. Healthcare Cost Containment Efforts

  • Increase various Medicaid drug rebates
  • Authorize the FDA to approve generic biologic drugs
  • Enhance regulatory oversight for new suppliers

3. Financial Disclosure and Reporting Requirements

  • Require disclosure of financial relationships between any individual provider or provider entity and any manufacturer or distributor of a drug, device, biologic, or medical supply

4. Medicare and Medicaid Payment Changes

  • Provide greater rebates and lower coinsurance rates for Medicare beneficiaries who reach the Part D coverage gap
  • Mandate discounts for brand-name drugs filled in the Medicare Part D coverage gap
  • Provide federal subsidies for general drug costs filled in the Medicare Part D coverage gap
  • Increase certain Medicaid drug rebates

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.