The US Supreme Court ruled yesterday, on a 5-4 vote, to uphold the requirement in President Barack Obama's healthcare reform legislation that most US citizens must obtain health insurance by 2014 or pay a penalty.
The "individual mandate" requirement of the Affordable Care Act (ACA) that "certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterised as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness," write the Justices, in their majority opinion.
However, they also voted to limit the ACA's provision requiring US states to significantly expand Medicaid, the federal/state health insurance programme for people on low incomes, although they did not strike it down altogether.
"Nothing in our opinion precludes Congress from offering funds under the ACA to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use," said the Justices' majority opinion.
"What Congress is not free to do is penalise states that choose not to participate in that new programme by taking away their existing Medicaid funding," they add.
The court challenge to the ACA was brought by 26 US states plus the National Federation of Independent Businesses and a number of individuals. The initial legal challenge was filed by 13 states within minutes of Pres Obama signing the ACA into law in March 2010.
Currently, nearly 50 million people - around 16.3% of the US population - have no health insurance. The Supreme Court decision means that this number will start to decline from 2014, falling to around 27 million by 2022. The number of people with health insurance will total more than 250 million by that date, bringing over time a massive increase in people who can afford prescription drugs, and who need more of them as they age, and this could more than offset the industry's pledge to provide, over 10 years, $80 billion-worth of fees and discounts under Medicare (the federal health programme for the elderly and some disabled people)'s prescription drug programme, as part of its support for the ACA.
The Supreme Court decision also means that drugmakers' plans to develop cheaper generic versions of biologic drugs - "biosimilars" - are able to go ahead.Declaring itself "pleased to move forward on [the] biosimilars pathway" as a result of the ruling, the Biotechnology Industry Organisation (BIO) pledged to continue to work with the Food and Drug Administration (FDA) "to implement the bipartisan-backed biosimilars pathway that was enacted under the law."
"Specifically, we will advocate for implementation approaches that ensure patient safety, expand patient access and competition, and provide necessary and fair incentives that will help spur continued biomedical breakthroughs," said BIO.
In its response to the Justices’ ruling, the Pharmaceutical Research and Manufacturers of America (PhRMA) said: "we respect the Court's decision and recognise that there will be ongoing policy discussions about the future of health care in America, and about the impact of today's decision on the health care law."
"We will work with Congress and the Administration on a bipartisan basis to address these important issues and will continue to advocate for an environment that fosters medical innovation and access to new medicines," said PhRMA.