PPACA and The US Supreme Court

Next week will probably bring the Supreme Court decision on the Patient Protection and Affordable Care Act. At the time the court accepted the case, my somewhat informed prediction was that their decision would be 7-2 in favor. Lest you doubt my sanity, there were better informed people who predicted 8-1 in favor. My prediction may yet be vindicated if Chief Justice John Roberts takes the view that a partisan decision against the PPACA would reflect poorly on the court's reputation and his own.


The bulk of the media have reported the decision as if they were covering a horse race and made speculative inferences from the oral arguments. This type of coverage has, IMHO, affected the national polls and brought forth the question of how insulated the court's decision-making process might be from the partisan divide which is the national news topic.


Polls and pundits currently predict that the court will break away from past legal decisions supporting the individual mandate as being within the range of powers granted to the federal government, declaring only that part of the PPACA an unconstitutional extension of government power. If the media and poll majorities have correctly predicted this outcome, what of it? The individual mandate as written in the PPACA is unenforceable.


The comparison between Massachusetts' experience under Governor Romney and states such as my native Texas is made by Paul Starr in The New Republic.

The one state with a mandate hardly offers much guidance. Massachusetts now has near-universal coverage, but, even before its recent reforms, only about 10 percent of its population was uninsured. Romney’s program passed with overwhelming support from both Republicans and Democrats in the state legislature. Business, labor, and the health care industry all backed the law. And, when the mandate went into effect, the agency in charge of the program ran TV ads with stars from the Boston Red Sox saying it was time to get health insurance. In some states today, by contrast, the uninsured represent 20 percent or more of the population, and, instead of elite-led support for the health care legislation, there is elite-led opposition. Under those conditions, open defiance of the mandate will be respectable, and compliance with the mandate may be much lower than the official estimates assume.

Sarah Kliff made the comparison to Washington state's repeal of an insurance mandate in two Washington Post articles. A graphic representation of what happened to insurance companies in Washington state selling individual policies is presented by Aaron Carroll of The Incidental Economist.

Experimentation at the state level is one possible answer to a Supreme Court finding that the individual mandate is an unconstitutional extension of the power of the federal government. Charles Goozner presents options in his post at GoozNews, Why Reform Will Survive Mandate’s Fall.

Indian Compulsory Licensing Case May Reveal Research Costs

During the Superbowl, Amy O'Connor published a post on the Eli Lilly official company blog which has stimulated discussion of the research and development costs of a new drug. Her dollar amount was $1.3 billion, based on the methodology of the Tufts Center for Drug Development. In response Matthew Herper of Forbes published an estimate ranging from $3.7-11.8 billion. Merrill Goozner critiques the methodology that produced both these estimates in a blog post on GoozNews. At the other extreme of the range of estimates is the $43 million estimate from Light and Warburton in BioSocieties, rebutted by Derek Lowe in this post and a follow-up post on his blog, In the Pipeline.

Herper's estimated range has the advantage of being based on public information, but his approach is far too simplistic. Since Light and Warburton's article is behind a paywall, Timothy Noah's article in Slate is worth reading as long as you take account of Derek Lowe's criticisms. These high and low estimates revolve around the work done on the subject at Tufts. Their research is funded by various drug companies with the proviso that the dollar amounts of the costs they submit to the researchers remain confidential. Besides the required public information such as used in the Forbes' article, all drug companies are extremely protective of this information

So we arrive at an interesting situation which is developing in India. In my previous post, Compulsory Licensing of Proprietary Drugs, I referred to the public record of Natco's application for compulsory licensing of Bayer's proprietary drug Nexavar (sorafenib). LiveMint gives some history and the recent developments, which include the scheduled disclosure by Bayer of the research and development costs on which they base their price for the drug. Ed Silverman has an excellent post on what is required of drug companies who import brand name drugs to India. He links to articles in the Indian press that are also very worth reading. Compulsory licensing in India and elsewhere is based on the World Trade Organization's Declaration in the TRIPS [Trade-Related Aspects of Intellectual Property] Agreement and Public Health, commonly known as the Doha Declaration since it arose at the 4th Ministerial Conference in Doha, India. The Public Library of Science has published more background in a research article, Trends in Compulsory Licensing of Pharmaceuticals Since the Doha Declaration: A Database Analysis. Table 1 below is a summary from this article.