For Mass. economy, much at stake

Biotech, health firms could see losses under plans

By Donovan Slack
Globe Staff / April 14, 2011

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WASHINGTON — Key Massachusetts industries including the biotechnology and health care sectors are closely monitoring the battle over health care costs, entitlements, and debt that is unfolding in the nation’s capital, saying the outcome could have a hefty impact on the Bay State economy.

Robert Coughlin, president of the Massachusetts Biotechnology Council, said there are pros and cons to both sides of the debate. Republican plans to limit payouts under Medicare and Medicaid could be detrimental to patients as well as to Massachusetts companies who sell drugs and health care through the programs, he said.

But the president’s plan, which shortens the period of market exclusivity for biotech drugs and expands the authority of an independent board to set Medicare reimbursement rates, could devastate Massachusetts companies, he said.

Biotech companies have exclusive control for 12 years over data that they used to develop drugs, effectively blocking cheaper generic competition during that time. The White House has said shortening that period by as much as five years would save Medicare and Medicaid $2.34 billion over 10 years by introducing generic competition faster. But biotech companies, which spend millions in the long development process for those drugs, would suffer, Coughlin said.

“The president’s debt reduction plan in Massachusetts should be called the job reduction plan,’’ Coughlin said. “It’s a job creation bill for India.’’

The medical research, biotech, and pharmaceutical industries account for more than 46,000 jobs and $4.1 billion in salaries for state residents.

The Massachusetts Hospital Association lashed out at the Republican plan to cut $6 trillion over 10 years, partly through turning Medicaid payments into federal block grants to states and transforming Medicare from a wholly government-run program to one in which individuals would use vouchers to buy private insurance. The plan, which also calls for repealing the national health insurance law passed last year, is “ill conceived’’ and “alarming,’’ the association said in a statement.

“If adopted, the House proposal would likely derail Massachusetts’ health care reform successes in coverage expansion, and increase pressure for further MassHealth cutbacks to hospitals and other providers,’’ it said.

“The proposal’s changes to Medicare are equally alarming, since moving seniors into the private marketplace with larger out-of-pocket costs directly conflicts with the need to help people take steps toward improved wellness and preventive care.’’

The association had not conducted a detailed analysis of the president’s plan unveiled yesterday but hinted it would support his intention to preserve Medicare and Medicaid and be critical of proposed changes to government reimbursement rates for care. Obama seeks to trim costs by using stricter methods to account for rises in health costs.

“Reforming the health care delivery and payment systems to be more efficient can’t be confused with simply slashing payments to those who provide care, or access to care, or improvement to care,’’ the association said.

Donovan Slack can be reached at