07 May 2013 Eli Lilly CEO Dr. John Lechleiter Says Obama Administration “Dual-Eligibles” Rebate Plan Would Lead to “Catastrophic Consequences” for Innovation
Industry Could Face More than $100 Billion in Extra Costs Under President’s Plan, Lechleiter Says, in Response to Questioning from National Center for Public Policy Research
Patients with Private Insurance Could Also Face “Stealth Medicare Tax” if Obama Plan Enacted, Group Says
Company that Backed ObamaCare Legislation Now Openly Calling for Repeal of ObamaCare Advisory Board
Indianapolis, IN / Washington, D.C. – At Monday’s annual meeting of Eli Lilly shareholders in Indianapolis, Indiana, in response to a question from National Center for Public Policy Research Free Enterprise Project Director Justin Danhof, Esq., Lilly’s CEO Dr. John Lechleiter recoiled at the possibility that yet another of President Barack Obama’s health care initiatives could become law and openly called for repeal of a major ObamaCare provision.
“Dr. Lechleiter said this plan would have ‘catastrophic consequences’ for the American pharmaceutical industry, estimating that it would cost the industry somewhere between $100 billion and $135 billion,” said Danhof. “Enacting Obama’s plan would rip billions from innovation and dearly cost American patients. Using $100 billion in additional costs as a baseline, he said drug companies would spend $15 billion less on drug innovation – an unacceptable cut.”
“When it came to passing ObamaCare, the President had an ally in the pharmaceutical industry. However, the President’s political capital appears spent as Eli Lilly – a major player in the PhRMA trade association – appears openly hostile to some of the President’s new health care initiatives,” explained Danhof. “The President has lost is mojo – and his allies.”
President Obama has repeatedly proposed, including in his State of the Union address this year, a plan to force drug companies to give the rebates they give to Medicaid beneficiaries to low-income Medicare recipients, people who are referred to as dual-eligibles, because they qualify for both Medicaid and Medicare. President Obama has said this will save the government money, but at Monday’s meeting, Danhof expressed concern that this would harm the public, and Lilly’s CEO agreed.
“Any law requiring drugmakers to supply rebates to Medicare patients would also result in some degree of cost-shifting to other patients, such as those with private insurance or who pay cash for prescriptions,” added Amy Ridenour, chairman of the National Center for Public Policy Research. “While there are limitations on the amount of cost-shifting that drug makers would or even can do, private patients need to be aware that the Obama Administration’s plan risks artificially raising their prices – essentially a new, ‘stealth Medicare tax.'”
Drug innovation is the lifeblood of the American pharmaceutical industry – a point which is all too clear for Eli Lilly as it is about to lose exclusivity on Cymbalta.
Dr. Lechleiter explained that Eli Lilly is working hard to fight mandatory rebates for dual-eligibles and will continue to work towards innovative new drugs. He also thanked his many allies in the fight to repeal ObamaCare’s Independent Payment Advisory Board (IPAB).
“Even though Eli Lilly was a financial backer of the ObamaCare legislation, its leadership has recognized that the bill is flawed,” said Danhof. “Dr. Lechleiter said IPAB is the wrong approach to cutting costs in the medical arena. Noting that such a board would have no accountability, he thanked those who are working to repeal this provision and see to it that this board never materializes.”
If a government actuary conducts an analysis but the committee that is supposed to receive that analysis doesn’t exist, does the analysis make a sound? The Chief Actuary of the Centers for Medicare and Medicaid Services may soon be asking himself that question. Under Obamacare he is required to determine by this Tuesday, April 30, whether the projected growth rate in Medicare for 2015 will exceed the targeted Medicare growth rate. If the projected growth rate exceeds the target, then Obamacare’s Independent Payment Advisory Board (IPAB) is supposed to develop a proposal to bring Medicare’s expenditures back in line with the target. The only problem is that IPAB doesn’t yet exist.
“Conservatives and free-market leaders who have been hoping that IPAB will go away can count on Eli Lilly as an ally in their fight,” added Danhof. “If ObamaCare cannot be repealed wholesale, it is important to keep chipping away at its building blocks, such as the IPAB.”
A copy of Danhof’s question at the shareholder meeting, as prepared for delivery, can be found here.
The National Center for Public Policy Research is an Eli Lilly shareholder.
The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than 4 percent from foundations, and less than 2 percent from corporations. It receives over 350,000 individual contributions a year from over 96,000 active recent contributors.
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