What Obama's victory means for pharma

Market Insight - 21 November 2008

The new US President will push to get more Americans covered by health insurance, which should mean more unit sales of pharmaceuticals. But he also will attack drug pricing, so that higher volume may not equal higher profits, reports Daniel B Moskowitz

The new US President who takes the oath of office on January 20th, 2009 is committed to changing substantially the way the country delivers heathcare. That would have been true regardless of who won the election, but Barack Obama will focus much more attention on elements meant to curb pharma profits than John McCain would have. An October analysis by the Boston Consulting Group pegs the pharma revenue decline from Obama's proposals at at least $10 billion a year – and perhaps as much as three times that amount. Moreover, the election results in two ways give the new President extra clout in pushing his health system reform ideas: his Democratic party made significant gains in both houses of Congress (because of recounts and run-off elections, the final numbers won't be known until December) and the enthusiasm he generated – with the largest voter turnout in US history – gives him a mandate to make big changes.

But it is also true that with the faltering US economy, healthcare was less an issue in the election – and will be less than a top priority issue at the beginning of the new President's four-year term – than it seemed when the Presidential campaign began rolling in early 2008.

In Iowa, where in January the first caucuses were held to pick delegates to the national nominating conventions, more than a quarter of voters told pollsters that the number one issue influencing their pick was healthcare. But by election day only 9% of voters exiting the polls told interviewers that they saw healthcare as the nation's number one issue, while 63% cited the economy.

"Healthcare is still in the top three issues, and it is for every single demographic group," said Republican Congressman Tom Price of Georgia, an orthopaedic surgeon in his private life. But as the New York Times explained it, "polls show not that concern about healthcare has faded significantly, only that the foreboding about energy and the economy has blitzed past it"...


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