Pharmaceuticals - Political pressure

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Forbes  Feb 25  Comment 
Federal funding of basic research, foundational to America’s future, is eroding as political pressure mounts to focus on the near term and in effect convert science into industrial policy.
Wall Street Journal  Feb 24  Comment 
Turkey’s central bank cut its interest rates for the second consecutive month amid mounting political pressure to boost economic growth, and despite a slower-than-anticipated decline in the rate of inflation.
Financial Times  Feb 20  Comment 
Other companies may find it harder to afford such a response to rising political pressure on pay
Yahoo  Feb 20  Comment 
Shipping executives and union leaders for dockworkers at 29 West Coast ports ended a third straight day of contract talks late on Thursday without a settlement, despite arm-twisting from the U.S. labor secretary, but planned to meet again on...
Forbes  Feb 16  Comment 
This weekend's disclosure of pending changes in the way commercial and recreational drones may be operated is good news for a wide array of potential users.  The Federal Aviation Administration would still impose major limits on drone use in...
Wall Street Journal  Feb 10  Comment 
The Turkish lira dropped to an all-time low against the dollar Tuesday as political pressure on the country’s central bank to lower interest rates continues to discourage investors on the currency.
Financial Times  Jan 13  Comment 
Utility unveils ‘lowest-priced energy tariff’ amid falling oil prices and political pressure
Financial Times  Nov 21  Comment 
The Kurds of northern Iraq face terror from Isis and political pressure from Baghdad – jeopardising their long-held dream of independence
Wall Street Journal  Nov 13  Comment 
Bowing to political pressure, GM Chief Executive Mary Barra has elected not to attend an awards ceremony next week where she was to be honored for her work in the automotive industry.
The Hindu Business Line  Oct 30  Comment 
Reiterating the need to make the Railways independent of political pressure, rail unions have broadly opposed the proposal to restructure the organisation. The All India Railwaymen’...




 
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Prescription drug prices are often brought up in debates about the U.S. health care system as a whole. Many claim that pharmaceutical companies overcharge for their prescription drugs, making quality healthcare too expensive for some to afford. Drug companies cite the high costs of drug development as the reason for high end-user prices. They also often decry the length of patent protection, saying that they have to recoup all the money spent on development within a relatively limited period of time, forcing them to charge higher prices. Nonetheless, there is growing political pressure to lower prescription drug prices and relax the restrictions on generic drug production, despite pharmaceutical companies' warnings that this could slow or hinder the development of life-saving drugs.

An example of this political pressure is the recent bill passed by the House of Representatives aimed at lowering prescription drug costs for Medicare recipients. The bill repealed a previous provision that prevented the Secretary of Health and Human Services from negotiating with drug companies on behalf of Medicare recipients. Instead, the new bill requires that the Secretary conduct such price negotiations. This is aimed at lowering costs for Americans enrolled in Medicare prescription drug plans, though it would save the government money as well.

US Federal Reserve chairman Ben Bernanke warned of rising health costs and the effect it may have on the government budget. Lower income households would be the hardest hit because they depend the most on government help.[1]

Companies that benefit from increased regulation of pharmaceuticals

Health insurance companies

Companies hurt by increased regulation of pharmaceuticals

Pharmaceutical companies

The drug development process is costly and time-consuming, taking an average of $800 million and several years to develop just one commercially viable drug. Pharmaceutical companies cite these as reasons why they're forced to charge seemingly exorbitant prices for their products. If political pressure were to lead to increased regulation of drug prices or a relaxing of rules governing generics, large pharmaceutical companies would be negatively impacted.

Among the biggest issues facing the industry is the meaningful decline in the pace of new drug introductions combined with the pending patent expiration of some of the highest revenue producing drugs in the industry. Merck is likely to lose 25% of its revenue to patent expiration over the next 3 years, drugs like Vasotec, Prinivil, Pepsid, and Prilosec. Pfizer faces the patent expiration of Lipitor, it's $13 billion blockbuster, in 2011. Patented drugs are coming off patent faster than new drugs are being patented. This is steadily eroding the profitability of the industry as price per pill declines dramatically upon the introduction of generic competition, and operating margins move into the single digits. Firms are reacting with cuts in R&D and Sales Expenses, and are finding growth through acquisition and the economies of scale of size. The largest firms are moving toward a model that recognizes their core strength as distribution while innovation is purchased on the outside.

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