The first major piece of legislation from the new Obama Administration was the $787-billion American Recovery and Reinvestment Act (ARRA). Passing the law proved to be a highly politicized event with both political parties drawing up lines for how legislative action will go forward in the early months of the new Administration. And the law is one of those omnibus monsters that emanate from Washington periodically, with many different fiscal, social, technological and political agendas being touched.
Overall, the law splits money among tax cuts ($287 billion), aid to states ($181 billion) and federal programs ($319 billion). Certainly, the most immediate effect of this law to the biopharma industry is simply providing additional funding to federal and state health insurance programs: the pharma industry will get a bump in sales (or, at least, a lesser reduction in the current recession) because of the additional funding.
Within the federal program part, $18 billion is allocated to healthcare information technology (HIT). The HIT part follows through on one of the campaign planks of both parties during 2008: that better HIT would result in savings to healthcare costs while potentially providing better healthcare for all.
Included in the legislation was an instruction to Health and Human Services (HHS), where both FDA and CMS reside, to allocate $2 billion for the Office of the National Coordinator (ONC) for Health Information Technology. By comparison, in the runup to the FY 2009 budget legislation last fall, the ONC budget request was just over $66 million.
The ONC office, created in the middle years of the Bush Administration, has played a coordinating role in getting a variety of HIT projects established among federal agencies and key federal contractors, but without mandating specific practices among them. Most of the HIT efforts have been directed at how Medicare and Medicaid programs (the biggest-ticket items among several other federally funded health programs) are managed.
But there are numerous areas where the ONC efforts touch on issues of importance to the biopharma industry. One is electronic prescribing; there are now incentives in place for Medicare providers to file information electronically, which will streamline a number of information-gathering practices for reimbursement, patient monitoring, pharmaceutical consumption, and health outcomes.
One of the activities hanging off ONC over the past few years has been the American Health Information Community (AHIC), which was legislated out of existence at the end of 2008. A successor organization, the National eHealth Collaborative, was supposed to be set up as a nonprofit with private and public funding. But that organization may have had its rationale removed by the terms of ARRA, which specify two HHS advisory committees, one for healthcare IT standards and one for IT policy. No decisions had been made about the programs through late February; the Obama Administration has only been able to nominate a new HHS secretary, Kathleen Sibelius, in that time frame, and appointments for the new FDA Commissioner and many HHS offices will come after.
Commentary among HIT observers put a political spin to this situation: the National eHealth Collaborative was to have been a privatization of HIT policy activity; ARRA points to pulling the effort back inside HHS.
Enabling healthcare providers
The vast majority of the HIT initiatives specified in ARRA are for electronic health or medical records, and as such, will engage hospitals and clinics more so than pharmacies and pharma manufacturers. But the pharma industry will be an indirect beneficiary of the efforts, especially with regard to patient registries, monitoring for medication errors, and, ultimately, better tracking of health outcomes.
“Needed and appropriate investments in prevention and wellness programs, health IT, electronic health records, e-prescribing and interoperability will improve quality of care, reduce costs, decrease or eliminate medical errors and enhance information about the use of pharmaceuticals,” said the Healthcare Distribution Management Assn. in a statement about the stimulus package.
A December Principles of Healthcare Reform statement that the Am. Pharmacists Assn., National Assn. of Chain Drug Stores, National Assn. of Health-System Pharmacists and several other pharmacy and pharmacist groups laid the groundwork for their seat at the HIT table. Reform efforts should “provide pharmacists electronic access to critical patient health care information, including diagnosis and laboratory values. This information must be provided through an interoperable electronic health record system, including electronic prescribing, that supports multi-directional communications among various health care providers and settings.”
The National Council for Prescription Drug Programs (NCPDP), an ANSI-accredited standards development organization supporting the pharmacy services sector of health care, supports the goals of stimulus law. “Pharmacists and pharmacies will play a greater role in improving continuity of patient care and therefore medication adherence and outcomes,” stated. “NCPDP is expanding its activities to support these goals by engaging its members and other stakeholders in removing barriers, enhancing system interoperability and developing the standards needed to support the patient-centered pharmacy care model of the 21st century,” says Catherine Graeff, RPh, SVP for communications for the Scottsdale, AZ, organization. NCPDP members (primarily IT professionals at pharmacies, PBMs, manufacturers and distributors) have been toiling in the trenches since 1977 to develop the standards by which prescription data are coded for dispensing or reimbursement.
From a pharma perspective, then, the HIT initiatives in ARRA fit the role of reinforcing the infrastructure of business processes in healthcare. On the clinical side, better health records will be a resource for risk mitigation studies and drug development. On the business side, standardized data communications will improve order processing and reimbursement, and the manifold reporting responsibilities of the industry.
For the time being, it appears as if IT funding for FDA will be handled in specific legislation for that agency. Already, there are a number of bills that are targeting drug tracking in the supply chain, and requirements for more data collection for adverse events and post-marketing compliance commitments are adding to FDA’s IT burden. PC