Pharmaceutical Research Fee to Hit Health Insurance Plans in 2012

Expect to find a new fee added to your health insurance plans sometime in the next year thanks to a little-known revision in the Patient Protection and Affordable Care Act. According to the revision, the government will begin charging a fee in order to conduct pharmaceutical research that will help find out which drugs, medical procedures, tests and treatments are most effective.

Pharmaceutical Research to Study Brand Name Drugs vs. Generics

As a part of the new provision in the Patient Protection and Affordable Care Act, also known as the health reform law, the government will take responsibility for determining the effectiveness of various new prescription drugs that are advertised on the market.

We often see drug commercials on television that become popular brand names. The government says that it wants to determine whether these brand name drugs are actually more effective than their generic drug counterparts that cost much less.

The Patient-Centered Outcomes Research Institute is to be in charge of conducting the pharmaceutical research. The quasi-governmental agency was created by Congress specifically for this project and has already received funding to get started.

Pharmaceutical Research Fee May be Viewed as a Tax

While the director of the project is said to be eager for his chance to get started, some think the new pharmaceutical research fee is likely to face a few roadblocks, as suspicions have been raised that the Obama administration may attempt to double the research fee as a tax.

This is especially true as opponents question how the institute will determine which type of drug is better, than actually using those determinations to impact insurance. So far, no clear answers have been given regarding the ins and outs of the research, yet funding has already been provided and fees have already been set.

The institute says medical doctors and patients will make the decisions on how the pharmaceutical research will be used, not the research team. The insurance industry has already said it will use the research to improve workplace health plans with employers.

The Treasury Department says the pharmaceutical research fee will cost $1 per person in the first year then double to $2 per covered person in its second year. In the years thereafter, the fee will rise with inflation.

The IRS is expected to issue guidance to insurers within the next six months, meaning while the fee will go into effect in 2012, it probably won’t be collected for another year.