ObamaCare Developments Could Have Major Impact on Leading Drugmaker
Bristol-Myers Squibb Executive Tells National Center for Public Policy Research that the Company is Following IPAB Creation "Very Closely"
Obama Administration "Dual-Eligibles" Rebate Plan, if Imposed, Could Have "Significant Impact" During "Pivot Year" for Bristol-Myers Squibb
Plainsboro, NJ / Washington, D.C. - At today's annual meeting of shareholders of Bristol-Myers Squibb, David Almasi of the National Center for Public Policy Research asked company chairman James M. Cornelius about how the Obama Administration's Independent Payment Advisory Board (IPAB) and proposed mandatory drug rebate to the government for patients who are eligible for both Medicaid and Medicare (so-called "dual-eligibles") could affect pharmaceutical innovation.
In response, Giovanni Caforio, M.D., the president of the company's U.S. pharmaceuticals division, said the company is concerned about transparency and public access to medications as a result of increased government management and the "significant impact" Obama Administration proposals could have on the pharmaceutical industry.
"While guarded with their answers, the executives of Bristol-Myers Squibb, who are already in a precarious position due to the loss of the lucrative Plavix patent exclusivity, are cognizant of the threats posed by the Obama Administration to their livelihoods and the health of the countless numbers of people they help worldwide with their products," said Almasi, who is executive director of the National Center for Public Policy Research. "While seemingly content with existing programs such as Medicare Part D that they consider 'effective' and meeting cost projections, they are justifiably nervous about the increased costs of ObamaCare and what lies beyond with the Obama Administration. They are nervously watching Washington."
Almasi asked if the Independent Payment Advisory Board (IPAB) set up by ObamaCare (for which the President has yet to nominate a single member despite the passage of more than three years) will have "a serious negative impact on new drug innovations" when and if the Board, as expected, is charged with either reducing care or reducing federal payments for care when ObamaCare mandates become too expensive.
Caforio responded that Bristol-Myers Squibb management is "following very closely" the developments regarding IPAB and ObamaCare in general. They are working through trade associations such as the Pharmaceutical Research and Manufacturers of America (PhRMA) to ensure implementation is transparent, patient access to products is maintained and research and innovation is not stifled.
Almasi also asked for a prognosis on a recent Obama proposal to "force drug companies to give the rebates they give to Medicaid beneficiaries to low-income Medicare recipients." When this question about so-called "dual-eligibles" was posed by a National Center representative to Eli Lilly and Company CEO John C. Lechleiter on May 6, he said such a requirement on pharmaceutical companies would be "catastrophic" to innovation in the industry.
Caforino praised the pre-ObamaCare Medicare Part D as "very effective" and meeting or even coming in lower than expected costs. Referring to the potential problem of "dual-elgibles," he said: "Obviously, broad rebates in that area would have a significant impact on the industry... We are watching that very carefully as well."
It is a critical time for Bristol-Myers Squibb, as the company lost a tremendous source of revenue after the patent for the blood-thinning drug Plavix expired in 2012. Cornelius called 2013 a "pivot year," and chief financial officer Charles Bancroft said that "innovation is critical" to the future success of the company - particularly since the company divested many of its subsidiary projects to focus on biotech pharmaceutical operations.
A copy of the complete question asked by Almasi, as it was prepared for delivery, can be found here.
"Drug companies such as Bristol-Myers Squibb - on their own and with their PhRMA trade association and others - are now closely watching and hoping to ride out these newfound ill-effects of ObamaCare and the wild policy machinations of the Obama White House. But where were they when ObamaCare was debated in Washington and in town hall meetings across America?" asked the National Center's Almasi. "At that time, they were cutting deals and lending their support to a package they thought they could live with. But they now worry they were crossed by the White House. One hopes they've learned to do more than just watch carefully as ObamaCare is clumsily rolled out and over the American people and the businesses they run and rely upon."
Bristol-Myers Squibb CEO Lamberto Andreotti was absent from the meeting due to a family emergency, so Chairman James M. Cornelius referred Almasi's questions to Dr. Caforio.
The National Center for Public Policy Research is a Bristol-Myers Squibb shareholder.
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