Facing a Crossroads

In a video interview with Pharma Commerce, Philip Sclafani, PwC's pharmaceutical and life sciences lead, he describes how the One Big Beautiful Bill Act (OBBBA) is expected to significantly influence prescription drug spending by reshaping access and reimbursement within Medicaid, certain Medicare segments, and ACA exchange plans. The OBBBA introduces pressure on pharmaceutical revenues, particularly by limiting coverage for high-cost drugs in publicly funded markets. This could reduce patient access to specialty medications and diminish pharma sales in those sectors.

Simultaneously, broader market forces are also impacting prescription drug trends. On the private commercial insurance side, cost inflators like the rapid growth of GLP-1s and behavioral health treatments are emerging, while biosimilars act as deflators. The intersection of these trends—OBBBA and private market shifts—presents a complex environment for pharmaceutical companies.

To mitigate financial risks and preserve innovation, pharma firms are being pushed to accelerate R&D investment and pursue mergers and acquisitions (M&A) that bring in near-term revenue and long-term pipeline potential. There’s also growing interest in global licensing deals, including accessing drug pipelines from China for US or ex-China markets.

At the operational level, companies are responding to tighter margins by improving efficiency—through digitization, AI integration, and reevaluating commercial spend, such as Salesforce deployment and direct-to-consumer marketing.

Overall, Sclafani emphasizes that OBBBA is just one factor within a larger industry shift, and successful pharma companies will need to respond holistically—balancing cost containment, innovation, and strategic partnerships to adapt to this evolving landscape.

He also comments on balancing the demand for innovation with increasing payer pressure to control costs; the role biosimilars play in long-term cost containment strategies; operational and pricing strategies pharma executives should prioritize in order to stay competitive while ensuring patient access and affordability; and much more.

A transcript of his conversation with PC can be found below.

PC: How do you foresee the One Big Beautiful Bill Act (OBBBA) reshaping prescription drug spending, and what strategies should pharmaceutical companies adopt to mitigate its potential impact on innovation, R&D investment, and M&A activity?

Sclafani: Starting out with the One Big Beautiful Bill, I kind of look at a couple things that are happening at the same time. The OBBBA passed, and that's primarily impacting the government side of things, so Medicaid, a little bit of Medicare, and then the ACA exchange plans. At the same point, a happy coincidence—at the same time, we put out our “Behind the Numbers Medical Cost Trend Report,” and that's primarily looking at the private commercial insurance market.

There are significant trends and inflators going on over there, with the rise of GLP-1s and some behavioral health neurosciences, as well as some deflators, with the biosimilars coming in and having an impact. I focus on the totality of it. If you look at all the big trends, that's really what's driving a lot of pharmacy benefits and prescription drug strategies. If you look at pharma companies from multiple angles facing potential loss of sales, having less patients insured on the Medicaid side and ACA exchanges certainly will impact the availability of those patients to use, access, and pay for prescription drugs, particularly specialty medications. Regarding higher cost, there'll be a challenge there.

We think about those patients, unfortunately not being able to get all the prescriptions they would want, spending and pharma company revenues going down there. On the other side, we do see significant innovation coming in from newer therapies, obviously GLP-1s continuing to grow, and others. So I think it's important to look at the totality. It's a challenging environment.

From an overall gross-to-net perspective, pharma continues to pay more discounts and rebates and things like that to payers, PBMs, health plans, hospital systems, etc. And then on the other end, you've got One Big Beautiful Bill reducing access and coverage, which could be a challenge. I think the natural response you look at is there is a near-term revenue gap for some, so that's prioritizing and accelerating R&D investments, looking at M&A activity that adds revenue now, but also has some longer-term either indication expansion or pipeline potential.

We also see some innovative deals starting to access molecules or pipelines from China that potentially could be brought to the US or ex-China markets. And then the last piece, I think, whenever you have this kind of revenue and profitability push, there's a natural look to get more efficient in operations. Some of that is digitizing the operational core of the company. We see a lot of AI and other use cases in there. In other cases, it's reevaluating, just overall, you know, how much are we spending on Salesforce, DTC, other things like that. I think you see a little bit of push from both, and One Big Beautiful Bill is certainly one piece that fits into the overall picture driving that.