The Future of Health Care: "Huge taxes and fees are coming."


As part of his ongoing "Ask a CEO" series, the OC Register's Brian Calle spoke with Allergan's David Pyott about how the Affordable Care Act would reshape the country's health care system:

Pyott started our discussion by saying the health care bill was "laudable" because "32 million more people will have access to health care." But Pyott quickly and astutely noted that "someone is going to have to pay for it." A lot of that burden has been placed deliberately upon companies in the pharmaceutical industry.

What that means for the industry, according to Pyott, is that doctors will see downward adjustments to their payments while drugmakers and device manufacturers will face higher taxes and lower sales.

"Huge taxes and fees are coming," Pyott says. The biggest tax will be on pharmaceutical manufacturers. It will cost the industry about $2.3 billion next year. In 2013 an additional excise tax on medical devices of 2.3 percent of sales will kick in.

As if that were not enough, the pharmaceutical industry will also be required to pay a 50 percent rebate to the government to help close the "doughnut hole," the gap in the Medicare prescription drug plan where recipients run out of coverage and must pay out-of-pocket costs before catastrophic care kicks in (the coverage gap falls between $3,000 and $6,000). Let us not forget where Medicare Part D came from.

But if you are not in the pharmaceutical industry why should you care?

Pyott explained, "When huge new taxes are levied, for people like me, who have a global perspective, other markets overseas just became relatively more interesting than the U.S. domestic market, quite clearly."

For a complete picture of the new taxes levied by the health care bill, see this handy timeline from the Tax Foundation.

Jacob Sullum looked at health care reform's tax hikes here.