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Big Pharma Wins Big in Health Care Reform
March 22, 2010 · 3 Comments
The Republicans look a sour lot this morning, but the
pharmaceutical industry, which helps foot the campaign bills of a
sizeable chunk of members of both parties, is delighted with the
legislation, and with its Democratic friends in the White House
and on the Hill.
Members of Congress in both parties generally have lined up behind
the insurance and pharmaceutical industries from the get go. So it
should come as no surprise that the Democrats, who long ago gave
up any pretence of opposing corporate power, found a way to
accomodate the pharmaceutical companies on the way to its tepid
reform. To a large extent, the “debate” over health care was a
show debate, an extended round of Washington smoke and mirrors.
The administration early on cuts its deal with Big Pharma, and
pretty much stuck to it throughout the process.
In fact, the Dems actually made the drugsters look good,
celebrating the industry’s generous “concessions” and “discounts”
while ensuring that no real threat to Big Pharma’s profits would
make their way into the final bill.
The industry’s main goal from the very beginning has been to fend
off any government power to negotiate or seriously regulate drug
prices–and this they did.
Big Pharma’s second big win was to prevent any measure that would
have opened the way for American consumers to buy less expensive
drugs abroad, especially from Canada.
At the same time, the supposed give-backs by the drug industry are
projected to more than pay for themselves. The much-lauded
discounts on brand name drugs for seniors in the Medicare
prescription drug program, for example, are good for Big Pharma
because they discourage oldsters from switching to generics.
And more insured people simply mean more money coming into the
coffers, for Big Pharma as well as for the insurance industry.
Confirmation of the industry analysis came early in the day from
the stock market, where drug stocks initially remained level;
there certainly was no rush to dump shares, which is what would be
expected if the bill actually represented any threat to profits.
And by 1 p, EST, CNN Money was reporting a rally in health care
stocks.
“I was unable to find anything in there that would cause me to
have anxiety if I were a shareholder in a pharmaceutical company,”
Ira Loss, a senior health-care analyst at the research firm
Washington Analysis, told Dow Jones. According to the ticker story:
Billy Tauzin, who led the industry’s negotiations on health
care with lawmakers, said overall drug makers fare well. “While
we’re not totally happy,” Tauzin began, “we generally feel like it
tracks with our principles.”
Sanofi-Aventis SA (SNY) Chief Executive Christopher
Viehbacher said in an interview that the impact of the legislation
will be neutral to slightly negative “but better for the industry
than if healthcare reform didn’t pass.”
Tauzin, head of the Pharmaceutical Research and Manufacturers
of America or PhRMA, and Viehbacher said getting protection for
brand-name biologics is among the important provisions for the
industry. Drug makers pushed hard to get 12 years of exclusive
market protection while the White House and some lawmakers wanted
to lower the protection to seven years.
Despite fees and rebates imposed by the legislation, “analysts say
drug makers will end up recouping those costs through new
customers: The bill would provide insurance coverage to an
additional 32 million Americans.” The Dow Jones story continues:
Chalk up another good round for Pharma and Biotech in health
care reform,” began a note to clients Friday from Concept Capital,
a research firm.Ken Tsuboi, co-manager of the Allianz RCM Wellness
Fund, sees the impact of bill, and its $90 billion in concessions
over 10 years, as relatively minor in an industry that has annual
global sales of about $750 billion, with about $300 billion in the
U.S., and margins close to 30%.”I think that it is actually a
pretty good deal for Pharma,” Tsuboi said.
The GOP, which purports to be the party of big business, ought to
be applauding at least these portions of the health care
reform–and perhaps when the cameras go away, some of them will
quit bitching and count their blessings. As for the obnoxious Tea
Party gang, if they start threatening the real power in this
country, which is vested in corporations, they may well find
themselves whipped and isolated.
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