Wednesday, February 13, 2008

Healthcare: Who Would Be Worse for Big Pharma, Obama, Clinton, or McCain?

Guy has been blogging for a while now about the upcoming Presidential election’s impact on Big Pharma. He didn’t seem to have much good news. All this got me thinking. Who would be worse for Big Pharma, Obama, Clinton, or McCain? It’s an interesting question. Here’s my thinking.

What is very clear is that all three leading candidates have the pharmaceutical industry in their cross hairs. So, we may be faced with a "best of the worst" scenario.

Let’s begin with the Democrats. First, Barack Obama. He’s relatively new to the national political scene but he comes from the liberal, big government tradition of the Democratic party and as Guy pointed out, Obama has some very specific proposals for what he would do to Big Pharma. His plan to have the U.S. government negotiate with drug companies over pricing that would eliminate $30 billion in revenues alone (nominally a 5-10% revenue reduction should this plan be adopted). The reimportation of drugs is high on his agenda, another revenue reduction to the industry of 5-10%). He also has plans to extend healthcare coverage to all Americans, perhaps a nominal increase in demand to the industry, the majority of this demand likely going towards generics. His campaign's summary on pharmaceuticals is: "Obama will work to increase the use of generic drugs in Medicare, Medicaid, and FEHBP and prohibit big name drug companies from keeping generics out of markets." Definitely, not someone who is looking to be a friend of Big Pharma.

Next, let’s talk about Hillary Clinton. Long an advocate of universal healthcare and government oversight of the healthcare industry. There is nothing in her program that would alleviate any of Big Pharma’s concerns. Further, she is an accomplished politician and has mastered the intricacies of Washington’s convoluted politics. In her "Americas Health Choices Plan", she states: "Insurance and Drug Companies: insurance companies will end discrimination based on pre-existing conditions or expectations of illness and ensure high value for every premium dollar; while drug companies will offer fair prices and accurate information". Depending on what "fair prices" mean, the impact on the industry can be substantive to say the least.

Finally, John McCain. As Guy has pointed out, this Republican isn’t turning out to be a pro-business friend of Big Pharma. On cornerstone of his plan on healthcare states: "Foster the development of routes for safe, cheaper generic versions of drugs and biologic pharmaceuticals. Develop safety protocols that permit re-importation to keep competition vigorous." His program almost sounds like a Democratic broadside. Many elderly, retired people are his supporters. Not too many friends of Big Pharma there.

So, let me return to my original question, who would be worse for Big Pharma? While it seems a bit like a Hobson's choice, I think that it would be Barack Obama. But, first, let me explain why it’s neither Clinton nor McCain.

Clinton brings much experience and intelligence with her should she be elected. However, she also brings a history of acrimony and controversy. If the Democrats don’t achieve significant increases in both Houses of the Congress then she may not be able to achieve the consensus necessary to drive what will be a very contentious program. Clinton despite her very real political skills may not be able to break free of her past.

John McCain, if elected, would probably work towards some of his programs but without Republican party support probably wouldn’t enact legislation as comprehensive and far reaching as his competitors would. However, if the Democrats achieve substantial gains in the Congress they might be able to initiate legislation comparable to Obama’s and Clinton’s and with a “fellow traveler” in the White House make it happen. However, I think that’s a bit of a stretch.

Now, Obama. I believe that he would be the worst choice for Big Pharma for several reasons. First, he has no baggage and is perceived as an agent for positive change. Second, he expresses a willingness to reach across the aisle and compromise. Finally, his programs appear to be more realistic, reflecting the reality of the American economic system. The country wants change, fresh positive change, and he seems to be able to answer that need. If Obama wins the election then Guy may be right with his prediction of a decade long slump for Big Pharma.

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Contributed by Lawrence Rothman, PhD.

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