Health Care Reform and Effect on Prescription Drug Costs Research Paper

Health Care Reform and Effect on Prescription Drug Costs - Research Paper Example Introduction The Patient Protection and Affordable Care Act, or PPACA, and the Health Care and Education Reconciliation Act of 2010, better known as Health Care reform law enacted on March 23, 2010 have been viewed with both appreciation and concerns by the major stakeholders of the health care system. Healthcare reform legislation’s general impact and consequences on the prices of prescription drugs are not quite easy to comprehend, by the fact that certain provisions will not take effect for several years, courts actions and rulings, conflicts and contentions at state level, or partisan stand in Congress and Senate could cause significant delays or major revisions to the legislation. Nonetheless, there is going to have significant impact on the healthcare economy and bottom line of manufacturers as there are many provisions in the health-care-reform law that are likely to have the direct or indirect consequence of increasing the volume of product sales that include prescript ion drugs. The supply chain of prescription drugs from manufacturers to consumers has a series of stakeholders, for example, wholesalers, pharmacies, and insurers. The impact of any legislation on prices is quite complex due to intricate mechanisms of fixing prices that involve many stakeholders in the value chain. The price paid by a pharmacy to buy a brand-name drug from the manufacturers is generally not the net cost of buying the drug from the manufacturer because manufacturers give discounts/rebates on brand name drugs to insurers. There are many different prices paid along the supply chain. It will be interesting to analyze the impact of new reform law on the prescription drugs. Healthcare System before the Enactment of Reform Law The current U.S. system of federal healthcare came into being in 1965 through Congress’s amendment of the Social Security Act and the establishment of Medicare and Medicaid. Medicare began as a national health insurance program for persons age 65 and over, regardless of income or wealth. In 1973, coverage was extended for those on disability for at least two consecutive years. Medicare provides enrollees with a basic program of hospital insurance and supplementary assistance program to aid in paying healthcare bills (Raffel and Raffel 1994). Through this, everyone who is old enough receives some healthcare.   Medicaid is also a national health insurance program, but it is administered by states and it can potentially assist a broader range of people than Medicare. It serves to provide services for the â€Å"categorically needy,† such as those who are blind, aged, or disabled, and for the â€Å"medically needy,† those who can afford to live, but cannot afford to pay for medical care (Raffel and Raffel 1994). People may enroll in these independent health insurance plans through their employer or on their own if they can pay for it.  It is meant for a person with high medical costs and is not old enough. H owever, financial burdens greatly limit the system’s accessibility. Census estimates from 1999 indicate that 43 million Americans live without health insurance even though 75 percent of them have a full-time job or live in a household with at least one member working full-time (Mueller 2001) for Medicare. The Americans